Chart of the Week and Weekly Report Highlights
This week: Equity Sentiment, Asset Valuation Trends, Global Equity Valuations, Equity Relative Value, Equity Risk Premium, Commodity Value...
This email provides a look at what we covered in the latest Weekly Insights report
The weekly insights report presents some of the key findings from our institutional research service, providing an entrée experience (in terms of price and size).
Chart of the Week - Global Equity Valuations
Global PE10 Valuations: this chart compares the PE10 ratio (i.e. price vs trailing average earnings over a rolling 10-year look-back period) across the major chunks of global equities: i.e. USA, Emerging Markets [EM] and Developed Markets excluding-USA [DM ex-US].
The clear standout is US valuations, which are approaching dotcom bubble levels in absolute terms. Not only that, US is trading at a very sharp premium relative to the rest of the world (at 2.25x that of global ex-US — which is the highest valuation premium ever recorded!).
Although emerging markets and developed ex-US are up quite a bit from the extreme cheap levels they were last year, they still offer a significantly cheaper valuations compared with the US, and look reasonable vs their own history.
Key point: US PE10 valuations look stretched, especially relative to EM & DM ex-US.
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Topics covered in the latest Weekly Insights Report:
Cross-Asset Risk Index: Risk sentiment is spiking after trending up for weeks.
Stockmarket Selloff: We argue fragile markets were looking for an excuse.
Asset Valuation Trends: Most asset valuations are now expensive.
Global Equity Valuations: Finding value in global equities is difficult.
Equity Relative Value: We look at where to find value.
Equity Risk Premium: Factoring in the reality of low bond yields.
Commodity Value: Surprising results from our new commodity indicators.
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