Archive for June 26th, 2009
Global Equity Market P/E Ratios
Friday, June 26th, 2009
Below is a chart showing global equity market valuations, as produced by Bespoke Investment Group. Canadian stocks are currently fetching a P/E of 13X, and given Canada’s relatively stronger economic fundamentals, from a fiscal and banking industry standpoint, and its significant commodity complex, are relatively attractive. It is notable that Canada’s P/E was around 9X back at the beginning of March, so the strong rally since has aided significant P/E multiple expansion off the lows.
Bespoke: As shown, Russia currently has the lowest P/E ratio at 6, followed by Italy (10) and France (11). At 14, the US is more attractive based on its P/E ratio than most countries. Taiwan has the highest P/E at 60, and the UK is surprisingly bad at 34. It’s valuation is worse than China’s. Germany also has a very high P/E ratio at 27.
Tags: 13x, Banking Industry, Canada, Canadian Stocks, China, Commodities, Commodity, Economic Fundamentals, Equity Market, Germany, Global Equity, Investment Group, Italy, Lows, Market Valuations, Rally, Ratios, Russia, Standpoint, Taiwan
Posted in Markets | 3 Comments »
Global Stock Markets – Positive Breadth
Friday, June 26th, 2009
In order to measure stock market breadth, I find it very useful to monitor the percentage of stocks in the S&P 500 Index (or on the Nasdaq or New York Stock Exchanges) trading above their 50- and 200-day moving averages. These measures serve as yardsticks of the direction of the secondary and primary trends of the broad market.
In the same way as one applies this methodology to the constituents of a specific index or stock exchange, one can also consider the percentage of country indices trading above their respective averages. I am somewhat restricted as far as with data are concerned, but have managed to include 26 mature markets and 23 emerging markets in the research sample.
The chart below shows the percentage of countries in the overall group trading above their 50- and 200-day lines respectively. Interestingly, the majority of the markets (87%) are trading above the 200-day average - an indicator of a bullish primary trend. As far as the secondary trend is concerned, 68% of the countries are still trading above the 50-day average, having corrected from an overbought level of 100% a few weeks ago.
Click on the images below for larger graphs.
When considering developed and emerging markets separately, similar patterns emerge, although a larger component of developing markets (95%) is in primary bull markets (see charts for emerging markets below).
In short, based on the 200-day indicator global stock markets in general are trading in bullish territory, but the 50-day indicator signals that the secondary correction might not have played itself out fully yet. However, as always, one should be careful to base decisions on a single tool.
I am about to catch a plane to Europe, but will do more work to refine these indicators upon my return.
Tags: Base Decisions, Broad Market, Bull Markets, Cape Town, Constituents, Emerging Markets, Global Stock Markets, Graphs, Indices Trading, Market Breadth, Mature Markets, Methodology, Moving Averages, Nasdaq, New York Stock, New York Stock Exchanges, Postcards, Stock Exchange, Stock Market, Target
Posted in Emerging Markets, Markets | No Comments »
Goldman Sachs: “Engineering Every Major Market Manipulation Since The Great Depression”
Friday, June 26th, 2009
Matt Taibbi, the controversial Rolling Stone investigative columnist who has been stalking Goldman Sachs, et al, to unearth the deep dark secrets as well as the alchemists of the current credit crisis, boldly alleges that Goldman Sachs has been “engineering every major market manipulation since the Great Depression.” The article covers a lot of ground, and while it may be difficult to agree with all of it, there are some glaring and enlightening confirmations that a good deal of it is plausible. For certain, this Rolling Stone article will make for great weekend reading.
Felix Salmon: Matt Taibbi’s 12-page screed on Goldman Sachs has appeared on newsstands… Suffice to say that in the second sentence of the piece Taibbi describes Goldman as “a great vampire squid wrapped around the face of humanity”; later on, he calls it “the planet-eating Death Star of political influence”. He’s also a dab hand at the pen-portrait:
Rubin was the prototypical Goldman banker. He was probably born in a $4,000 suit, he had a face that seemed permanently frozen just short of an apology for being so much smarter than you, and he exuded a Spock-like, emotion-neutral exterior; the only human feeling you could imagine him experiencing was a nighmare about being forced to fly coach.
Taibbi makes the case that it’s not just wheat futures which have been overrun by index speculation, but commodities in general and oil in particular. Indeed, Taibbi puts Goldman, Zelig-like, at the center of no fewer than four speculative bubbles: one in the 1920s in which Goldman-controlled entities ended up losing an astonishing $475 billion in today’s dollars; the tech bubble; the housing bubble; and the oil-price bubble ending in 2008. He calls the US “a gangster state, running on gangster economics”, and is very explicit about exactly who he thinks the gangsters are. (Clue: they paid just $14 million in tax on $2 billion in 2008 profits.)
To view the whole article, click here.
Hat tip: Zero Hedge
Source: Felix Salmon, Reuters, June 24, 2009 - Matt Taibbi vs. Goldman Sachs
Tags: Alchemists, Click The Button, Columnist, Commodities, Confirmations, Credit Crisis, Current, Dab Hand, Dark Secrets, Death Star, Goldman Sachs, Great Depression, Hat Tip, Housing Bubble, Major Depression, Market Manipulation, Matt Stone, Matt Taibbi, Newsstands, Nighmare, oil, Oil Price, Pen Portrait, Political Influence, Rolling Stone, Screed, Speculative Bubbles, Stalking, Stone Article, Top Hat, Wheat Futures, Zelig
Posted in Gold, Markets | 3 Comments »
