Bull's Eye: Don't say we didn't warn you

Read certain analyst reports, such as RMB's Friday morning note titled "Back in the sweet spot for global risk appetite", and you may well be fooled into thinking that there is nothing but blue sky ahead.

Not that the RMB crew is out to deceive you. Far from it. It is just that they have to call things as they see them, not as they wish they were or believe they should be. And, right now, with the help of the US Federal Reserve and Japan's central bank, the flow of easy money is unlikely to let up for at least the next six months.

The result will be successive new peaks on global stock indexes. You may as well put your money on it because everybody else is . for now.

There is, however, the small matter of company profits. The Wall Street Journal's website marketwatch.com on Friday described it as "an abysmal earnings season" for blue-chip corporations.

Naturally, much hoopla was made about Amazon, Microsoft and Samsung shooting out the lights, but their performance disguised some dreadful numbers elsewhere in the tech universe: LG, the world's third-largest smartphone maker, missed earnings forecasts by a mile.

Other sectors were even worse. Deutsche Bank, Europe's largest investment bank by revenue, said it expected profit to fall 42% in the third quarter as trading earnings dwindled.

But perhaps the most ominous signs for the world economy came from names linked to heavy industry and mining. Zerohedge.com posted a chart showing the correlation between Caterpillar's fortunes and global GDP. When the manufacturer of earth-moving equipment this week reported a shocking fall in sales and revenue, the omens were clear.

So too with Volvo, the world's second-biggest truck maker. Then Renault and Sweden's home-goods behemoth Electrolux . grim figures all round.

Of course, global capital is desperate for returns right now, and there is enough liquidity around to buy even the most risky earnings outlook - hence RMB's "sweet spot". But one has to ask when the game of musical chairs is going to stop.

Many fund managers, to their credit, have long cried caution. A lot of them missed gains from the crazy momentum trade as a result. Daft as it sounds, I take comfort from that. Now, more than ever, we should be battening down the hatches.

On Friday Norway's sovereign wealth fund, the world's largest and Europe's biggest equity investor, said it will not use new inflows to buy more shares. The $810-billion fund, which holds 1% of all the world's equities, is mandated to keep at least 60% in the stock market, but it doesn't fancy the prospect of holding a cent more.

Its biggest holdings are solidly defensive: Nestlé and Royal Dutch Shell. In wonderfully understated fashion, the fund's CEO, Yngve Slyngstad, said he was preparing for a "correction" in stock prices. Pretty fair warning, you'll agree.