Central Banks should know by now that you cannot have negative interest rates with low bond yields and strong growth. One or the other.

Central banks have chosen low bond yields at any cost, despite all the evidence of stagnation ahead. This creates enormous problems and perverse incentives.

The United States’ jobs recovery is extremely poor, especially if we consider the size of the monetary and fiscal stimulus and the spectacular upgrade to GDP estimates. After a massive consensus increase in GDP recovery estimates to 6.5% in 2021, no one should be cheering a 5.9% unemployment rate, 58% employment to population ratio, and, even worse, a 61.6% labor force participation rate that has remained stagnant for ten months. Furthermore, Bloomberg Economics shows that the United States unemployment rate would be 8.4% excluding the participation decline.

Despite an endless chain of monetary and fiscal stimuli, the Eurozone consistently disappoints in growth and job creation. One of the reasons is demographics. No monetary and public spending stimulus can offset the impact on consumption and economic growth of an ageing population, as Japan can also confirm.

However, there is an especially important factor that tends to be overlooked. The lack of competitiveness of the Eurozone industry due to rising and non-competitive power prices.

The United States retail sales and jobless claims weakness, significantly below estimates, coincides with the largest fiscal and monetary stimulus in history. Something is not right when these figures come significantly below estimates in an environment of massive upgrades to Gross Domestic Product (GDP). Why?