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, Canadian Market, 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 Canadian Market, 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.

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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 | Comments Off

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 »