Be quiet Washington, the adults are speaking now. (italics mine)
Kicking the proverbial can down the street does not address the long-term fiscal imbalances. The twin decisions of a taper timing push out and the discord in Washington being swept under the rug until January and February roll in could keep P/E multiples more compressed as equity risk premiums stay elevated. Investors typically do not like uncertainty and it is hard to determine how these recent almost non-decisions can be seen as reinvigorating confidence aside from some relief that an imminent likely disaster has been avoided. Nonetheless, one cannot respectably believe that things truly have turned for the better as opposed to averting the worst. The long-term growth of non-discretionary government spending can still prove to be an overwhelming liability and it has not been the primary focus for legislators.
The twenty four hour news cycle, social media and the underwhelming intellectual ability of our current crop of legislators all put the focus on procedure, perception and emotion. Substantive conversation about what is really going on and where this is all headed doesn’t get more than the briefest lip-service during each of these debt ceiling showdowns. One day the entire stinky mess will hit the fan and there will be a very good reason to be emotional.
Because that’s all that will be left to do.