Off the Cuff: To The Moon And Back

In this week's Off the Cuff podcast, Chris and Mish discuss:

• Highs And Lows
  • How high will the markets climb? And how fast/far will they fall?
• The Magic Fed
  • The backstop of last resort. But what will happen when it fails?
• It's Net Energy, Stupid
  • The measurements for our economic decisions are all wrong
• Prostitutes & Drugs
  • The lengths we go to fool ourselves

Chris and Mish begin this week's podcast with some speculating as to how much higher markets can go from here. Both agree with John Hussman's recent thoughts that given its trajectory, the market is more likely than not to go up tomorrow — BUT, when that trend finally breaks, the ensuing reversal from our current dizzying height will be severe and swift.

Yes, the market *should* be much lower on a fundamentals basis than it currently is, but the vast majority of market participants are conditioned and committed to playing for ever-higher gains. It takes a long time for the herd to change that behavior. But when it does get spooked enough (and there's a growing mountain of frights piling up), the stampede in the opposite direction will be immediate.

For that to happen, though, faith in the Fed and its famous "put" will need to be shaken. What will that take? Uncertain at this point as to the specific trigger, but the choice of weak fundamentals is vast and growing.