Mispricing of Bonds and Stocks

The chapter delves into the mispricing of bonds and stocks, exploring the lack of buyers for treasuries and the twin deficit issue in the US. The speakers predict that these problems will worsen in the future and argue that equities are even more mispriced than bonds due to high growth expectations and falling inflation. They discuss factors such as rate cuts, credit spreads, and the wage price spiral that are not yet reflected in equity markets.