THE BOTTOM LINE: Gary Shilling on expensive stocks and Alibaba vs. Amazon

This week:
Alibaba has been one of the best-performing mega-cap stocks of the year, surging 100%. Most recently, they had a blockbuster quarterly earnings report, and hedge fund manager David Tepper took a large stake in the company. It's is now closing the gap on Amazon, another rapidly-growing tech giant. Business Insider executive editor Sara Silverstein compares the two companies, then discusses just how high Alibaba's stock price can go as it attempts to expand more into international markets — which is when it'll start to compete more directly with Amazon.
Silverstein discusses the views of Jurrian Timmer, the director of global macro at Fidelity Investments, ahead of this weekend's Jackson Hole economic symposium. Timmer says that right now, the Federal Reserve and the market have differing views on how the schedule of rates hikes will unfold.
Dr. Gary Shilling, the president of A. Gary Shilling & Co., spoke to Business Insider CEO Henry Blodget about how the market is in the process of working off the excesses that built up in the 1980s and 1990s, and breaks down a market forecast he nailed several years ago. He says that we haven't seen income growth, which is putting a lot of pressure of politicians to do something. While monetary policy hasn't done the trick, he predicts that massive fiscal stimulus is in the cards, and says that it's the one thing in the Trump agenda that's actually going to happen. Shilling goes on to break down his economic growth forecast which he also ties to fiscal stimulus, then discusses how tech innovation creates productivity. A bit later, he breaks down his views on wages and the labor market, and how he doesn't necessarily agree with the Fed's view that the economy is due for an explosion in wage inflation.
Shilling discusses the stock market, which he views as expensive, citing the Shiller P/E ratio, which is roughly 40% above its historical norm. He doesn't necessarily see them falling apart, but says they're starting at a high level. Shilling shares his thoughts on the end of the eight-year bull market, saying that some sort of exogenous shock could derail it, as well as tightening from the Fed. He notes that, since World War II, tighter Fed conditions have resulted in a recession 11 out of 12 times. He does say, however, that this could come at some point much further down the road.
Shilling breaks down his forecast that the 10-year US Treasury will go to 1%. He notes that we're likely to see deflation than inflation, which is beneficial to his forecast, and also highlights that US yields are higher than any other industrialized nation.
Shilling provides his thoughts on online shopping, which has says could ultimately hurt retail, because 50% of purchases are impulse buys, which only happen in brick-and-mortar stores. He notes that Amazon is trying to do this, but haven't yet seen much success.
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