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Off the Cuff: The Belief Bubble

Thursday, May 3, 2012, 11:36 AM
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In this week's Off the Cuff with Mish & Chris podcast, Mish and Chris discuss:

  • Europe
    • Led by Spain, it's quickly getting worse there again
  • Limits of Monetary Policy
    • Why the Fed and other central banks can't provide much more "help" even if we wanted them to
  • The Stock Market
    • Why prices are now in a "belief" bubble

With the US stock markets at near-record highs, Mish and Chris are getting extremely nervous about how far prices have diverged from fundamentals. By twisted logic, bad data has come to equal 'positive' news - with investors expecting more liquidity from central banks as the economic news becomes gloomier. At some point (likely very soon) reality will intervene, and when it does, it will be very painful for those investors long the market.

 

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