Faith Vs Fate

Tyler Durden's picture

The S&P 500 P/E ratio is testing 15x - its highest in 19 months. This takes the stock market's valuation back to its highest since the debt-ceiling debacle and USAAA downgrade (as if nothing ever happened). Since that time, expectations for GDP growth in 2013 has plunged from 3.2% to a measly 2.0%. The 'Market of Dreams' economy continues as Bernanke's "If you BTFD, we will recover" is the only mantra left. Was it only August 2007 that Bob Pisani was reminding us all that: "improved policies on the part of those steering the economy are the likely reason we have avoided recessions."

 

Though perhaps, just as we feel invincible, it is worth remembering how quickly that multiple expansion can collapse...

 

and from everyone's favorite floor-talker, Bob Pisani - August 2007:

Talk about a recession from a very small group of people need to be balanced against the fact that no major strategist is predicting a recession. Many are trimming their forecasts slightly, but that is a long way from a recession.

 

...

 

Looking at across the uneven economic history of the United States, one thing is very striking: how few recessions we've had in recent memory. The National Bureau of Economic Research (NBER) has noted that there have been only two recessions (1990-91 and 8 months in 2001)-- both of them mild--in the United States over the past 25 years; over the previous 35 years, they noted, there were eight.

 

...

 

This "great moderation" of the economy has been explained many ways--luck, structural changes in the economy, etc., but in the end even the cautious NBER admits that improved policies on the part of those steering the economy are the likely reason we have avoided recessions.

 

It seems we will never ever learn...

 

Charts: Bloomberg