Washington passed a fiscal cliff deal that honors the most famous cliff diver in history – Wile E. Coyote. Just as Mr. Coyote obtained complex and ludicrous devised plans from a mail-order company Congress cobbled together yet another bill that pretends to have answers but leaves lots of questions and more frustration.
Just as the template for the Road Runner cartoon saw contraptions used by Wile E. Coyote “invariably fail in improbable and spectacular ways” each issue that gets resolved in Washington these days is doomed to failure. Part of the reason failure is inevitable is because core problems are not only not addressed, but often they are worse after would-be cures have been applied. The thing is, the United States economy is as durable as Mr. Coyote – we can take a lot of hits and stay in the game…until we can’t anymore.
That being said, you have to be in the market making changes to exposure but not panicking. Picking the point of implosion is next to impossible and I will tell you now the global economy is going to rebound this week and that will carry a lot of American-based companies. There is a disconnect masked by the notion the stock market is a report card on the US economy. It used to be that way, but over the last fifteen years it’s changed dramatically. Add in the fact Wall Street loves all the money-printing of the Fed and we have ample reasons for a much higher stock market even as, like Mr. Coyote, our economy will end up “burnt to a crisp, squashed flat or at the bottom of a canyon.”
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