With the dollar finally catching a bid, the S&P cannot outperform the world like it has. It is almost as if the market views tax cuts and deficit spending as the key to prosperity. I strongly believe that the American stock market has been the hiding place for those that have to maintain equity exposure. The market always gets to the hiding places LAST. So when we panic, the S&P should finally play catch up on the downside to European equities. The Eurostoxx 50 is at fall of 2008 panic levels while the S&P is still 10% above the summer 2010 lows.
I don't believe today is a repeat of last Tuesday. I am expecting a weak close as traders don't want to stay long overnight.
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Do you think there is much more downside to the european equity market?
There is more downside, I wouldn't touch Europe yet. I just think the S&P is setting up worse because of relative overvaluation.
Europe hasn't had the event yet, wait til mkt push ESFS to be $2trn plus before touching equities and also wait for Greece default or confirm of bailout, they still think it is just about them ratifying current plan. Agree with Owl now USD rallying US equities with 40% approx of Dow earnings from overseas US will get crushed, Europes problems much worse than Big Ben's printing press
Just like so often in the last 2 years: hard to believe the market can or will go higher. Which means it's probably going higher.
s&p500 is no longer a proxy for US economy and increasingly reflective of chinese economy as most s&p companies are exporters. There are twice as many mcdonalds in china than the USA.
What are we know 10X earnings on the s&p.
Next year expecting $112, so we are 9.5X future...very very cheap.
Valuation based on earnings sans repeating one time expenses is fake. If you are going purely on valuation, you should be buying Europe. Dax trading at 7x fake forward earnings.
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