Mr Edwards is unconvinced.

"What we see is a market zig-zagging down the street in befuddlement after being given yet another quick fix by the central bank dealers in easy money," he says.

"Every major central bank in the world has done its bit to inject another dose of euphoria into its market patch. The Fed has been the most visible and dominant dealer, cruising the block and turning heads with the screeching sound of the handbrake turn it just pulled."

Mr Edwards, though, pointed to talk among some European Central Bank members of resuming cheap loans for eurozone banks and Bank of Japan governor Haruhiko Kuroda last week promising parliament he's ready to bolster liquidity as required. China's central bank also has reassured investors by allowing a record $US480 billion ($672 billion) surge in bank loans last month.

Withdrawal symptoms

The Reserve Bank of Australia isn't immune to peer pressure. This month, governor Philip Lowe said the chances of a rate cut were now evenly balanced with a hike. Last week, Westpac chief economist Bill Evans said he was now anticipating two RBA rate cuts this year, in August and November, which would take the cash rate to 1 per cent.

"Having got the investment community hooked on monetary opioids, the central banks are making it clear that they will be there for the addicts if the withdrawal symptoms get too severe," Mr Edwards said.


"Free money is now the drug of choice and the central banks have basically declared it legal and readily available. The problem with this strategy is that investors are now becoming detached from the reality of their surroundings, which could easily prove fatal."

Mr Edwards pointed to a surge in pedestrian deaths in the United States since 2012, particularly in the seven states where the recreational use of marijuana has been legalised, as a red flag.

"Investors, like marijuana users, are high once again on the promise of renewed monetary injections. But with their senses now numb to the reality around them, investors could miss the fact that the economic cycle is deteriorating sufficiently rapidly that it is about to crush their equity portfolios."

The Fed's rate pause shouldn't be dismissed, Mr Edwards said, as the end of a Fed tightening cycle is more often than not "a prelude to recession". He pointed specifically to misreading January's unexpectedly bullish US payroll data and overlooking the separate household survey measure of employment and unemployment rate.

In addition, Mr Edwards said initial unemployment claims "have been creeping up" and are "a clear recession warning".

The 1.2 per cent drop in US retail sales in December was "shocking", Mr Edwards said, representing "another recessionary straw in the wind".

Mr Edwards' final words of advice: "Free money may have numbed our senses, but at this very late stage of the economic cycle, think very hard before stepping off the sidewalk."