Are stocks cheap? Is the 'Stock-Market' "priced-for-perfection"? Here is your answer...
The answer is - Yes and Yes-er!
h/t @Not_Jim_Cramer
Simply put, the S&P 500's forward earnings based valuation has never (in the history of the time series) been higher relative to consensus expectations of economic growth... ever.
BMO's Mark Steele is a man of few words, preferring pictures to make his points... but they matter:
Let’s just keep it simple. When bank risk breaks to the upside, it’s bad for equities...
European bank risk is breaking out...
which has arrested the pullback in U.S. bank risk - which is now soaring...
And that bodes ill for global stocks...
Just 10 days after "Moody's Put Over Half A Trillion Dollars In Energy Debt On Downgrade Review", moments ago S&P decided it wanted to be first out of the gate with a wholesale downgarde of the US energy companies, and announced that it was taking rating actions on 20 investment-grade companies, including 10 downgrades.
The full release is below:
Year-to-date, BofAML's Baraby Martin notes that the market narrative has swung wildly. "US recession...", “global recession...", "China devaluation...", "commodity bust..." and "energy defaults..." have all been blamed as the major drivers of risk assets thus far in ‘16. The bearish concoction has left markets way down from their January levels. In credit, investment-grade spreads widened 16bp last month, and high-yield 36bp – the worst start to the year since 2008.
Dear Bank of Japan, how do you spell unintended consequences:
Here is the full Nikkei report on this absolute stunner of a development: