As we noted in our last post, the absolute level of EPS growth estimates has fallen to the lowest level since 2009 in North America and Europe, but has remained fairly stable in Asia and EMs.
The trend is your friend, so they say…as long as you are on the right side of it. That saying is particularly relevant to the trend in bond yields (30-year down 7bps) as today we get new all-time lows in the US long bond despite the large net short positioning of speculators.
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New initial unemployment claims fell slightly for the week ending on January 16th from 316K to 309K.
Yesterday we highlighted that our Weak Stock Market Close Indicator indicator had surged to the highest level since 2012 and today a client made the good point that our Weak Stock Market Close indicator seemed to give more false signals when the Fed was engaging in QE.
As we highlighted yesterday, stock valuations jumped again in December to another cycle high. As the first two charts show, the cyclically adjusted P/E multiple has only been higher on several occasions and the median stock is trading at a record price to cash flow multiple as far back as we have data.
While plans change, the Federal Reserve has made it clear that it intends to begin raising interest rates in 2015. It spent most of 2014 laying the groundwork, managing the taper, and in 2015 it will continue to make preparations for lift-off.
Following up on our earlier post today regarding estimate revisions, we thought we’d point out that both top and bottom line growth estimates have continued to fall in recent weeks and are at levels not seen since early 2013.
As was widely reported yesterday, 3Q GDP growth was the strongest since 9/30/2003. However, less widely reported was the fact the intellectual property products contributed the most to real GDP in 32 quarters (9/30/2006). Fixed investment overall contributed 121 basis points to real GDP.