This is a "Potemkin market", says David Rosenberg of Gluskin Sheff it might look normal on the surface, but dig deeper and it's anything but. Even "after ten years of free money" from central banks, "we are stuck in a deflationary debt trap", the oft-bearish analyst argues. This unpromising, disinflationary backdrop has helped to prop up equities, but only because low interest rates have enabled companies "to buy back their stock in droves and mask a downturn in corporate profits".
Another sign that investors should be cautious? Warren Buffett has been pulling money out of stocks this year. During the three months to the end of June, the US investor's investment vehicle, Berkshire Hathaway, sold $1bn more worth of stocks than it bought, according to Bloomberg. So "someone out there with deep pockets recognises that the fundamentals' are not so great after all", notes Rosenberg.
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