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News Link • Economy - Economics USA

The Market Rally Is Based On Hope Rather Than Substance

• Business Insider
 It seems to us that Wall Street is automatically assuming that the fiscal cliff will be settled by year-end, that the economy will subsequently recover at a stronger pace and that the market is significantly undervalued. We disagree on each count.

While we don't know the outcome, the odds that we go over the fiscal cliff are greater than the market is discounting. Although Wall Street and Washington are only 250 miles apart, they speak different languages, and market experts have never been too good at interpreting political events. The investment community's main interest is to find some solution that will help the market, while Washington's main goal is to get incumbents re-elected.

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