Off the Cuff: Out of Order
In this week's Off the Cuff with Mish & Chris podcast, Mish and Chris discuss:
- Fiscal Cliff Follies
- Whatever 'solution' is enacted won't solve much
- The Broken U.S. Education Model
- We are graduating a generation of debt slaves
- Dangerously Optmistic Stock Prices
- Assuming elevated earnings in perpetuity
- Pension Fund Posion
- No way these funds will meet their actuarial targets
While there are no guarantees that any progress will emerge from the Obama-Boehner showdown, what is clear is that the impact of any agreements (higher taxes and spending cuts) struck on the "Fiscal Cliff" will be GDP-negative. So plan for the headwinds on our economy to strengthen in force next year.
Despite this certainty, as Chris and Mish look across the markets today, they see way too much 'pricing for perfection.' For example, corporate profits are far above their historical norm due to a number of extraordinary events over the past few years. But their underlying stocks are priced as if these elevated earnings levels will continue unabated far into the future.