US economy at risk of rationally irrational exuberance
Believing that fundamentals don't always pin down asset prices isn't the same as believing they're irrelevant.
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THE timing was exquisitely ironic: equity markets peaked - and a week later began crashing - just as pundits left this year's World Economic Forum meeting in Davos, where they concluded that the global economy was on a steady upswing. In the weeks since, experts have divided into two camps.
Some, including new US Federal Reserve Board chairman Jerome Powell, believe that economic fundamentals are strong, and that what stock markets experienced in early February was only a temporary hiccup. In this view, there is nothing keeping major central banks from carrying out "beautiful" (that is, gradual and painless) monetary-policy "normalisation".
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