CARL ICAHN WARNS: The red-hot stock market is being supported by an unsustainable earnings mirage

29-Sep (BusinessInsider) — Carl Icahn warns that trouble is coming to the financial markets.

In a new video titled “Danger Ahead,” the billionaire Wall Street veteran lays out the major problems coming out of both Washington and Wall Street to argue that what’s coming next will be “very dangerous and could be disastrous.”

…For the financial markets and the economy, Icahn says the core problem is the Federal Reserve and its ultra-easy, zero-interest-rate policy. While Icahn credits the Fed with getting us out of the most recent crisis by using these policy tools, he also argues that it was the Fed that got us into that crisis to begin with.

Icahn observed that while low rates are intended to boost business investment, in reality they have actually led corporate managers to employ financial engineering and accounting shenanigans to boost earnings per share.

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PG View: Icahn does an excellent job of explaining how companies engineered their stocks higher, thanks in large part to cheap financing courtesy of the Fed, even as the economy remains soft. He also explains why it’s not sustainable . . .