Christmas Blues

Best Buy’s report this morning confirmed previous reports from other store chains – the Christmas season was poor. Of course the government report was bullish but I think most people ignore those in this era where the instinct of government is to lie even in the face of readily available refutation.

Of course, bad news is good news because it will trigger more money-printing.

GMO joined Hussman and others in forecasting negative returns for the stock market over the next 7 years, based largely on valuation concerns a.k.a. the bubble. Given Grantham’s track record one really can’t argue with this forecast, which foreshadows a massive pension crisis in state and local governments. These groups, their liabilities underfunded on even 8+% assumptions, have to keep writing checks even as the value of their assets decline, making it virtually impossible for them to ever recover. Detroit is just the beginning, but the outcome may well be something of a roadmap for those to follow.

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  • jbmarwood  On January 17, 2014 at 3:21 pm

    Plenty of companies seem to be giving bad outlooks could this be the start of a down move you think?

  • reality  On January 17, 2014 at 3:30 pm

    Very possibly. But fundamentals haven’t had much impact for a long time – look at Europe at multi-year highs in the midst of disastrous recessions in several countries.

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