Over the weekend, we humbly suggested that the dream of ongoing US equity market multiple expansion may be over. It would appear SocGen not only agrees but finds current valuations very stretched. On the basis of Price-to-Book (valuation) and return-on-equity (profitability), the US equity market is extremely 'expensive'; and "hoping" for further expansion on the RoE to save the day is whimsical given the limits to leverage. Still, despite Obama's sell signal, it appears from today's open that the BTFATH crowd remains alive and well.
The Euro area is no longer the centre of all the stress... EM countries are! Despite their significant correction in recent months, SocGen notes that valuations remain far more extreme (or cheap) and outflows are dominating (despite a 24% discount on a price-to-book basis across EM stocks, they reain rich historically). Significant structural issues like balance of payments, deficit or inflation may lead to further turmoil in emerging markets, potentially destabilising the underlying economies. Simply put, SocGen warns, valuations have further to fall; do not catch the falling knife (yet).
The first phase of the boom has already taken place, the pullback seems to have run its course and Phase II is set to deliver fortunes.
Amid the cozy world of X-Factor, American Idol, and Dance Moms, we can often be lulled into the belief that all is well in the world. But once the cocoon of mind-numbing media is shrugged off, the realities of the world are all too 'Matrix-like' exposed. Simon Black's travels have exposed these three things...
- Pentagon Plans for the Worst in Syria (WSJ)
- Russia and US agree to Syria conference after Moscow talks (FT)
- Hedge Funds Rush Into Debt Trading With $108 Billion (BBG)
- Detroit is the new "deep value" - Hedge funds in search of distress take a look at Detroit (Reuters)
- Commodities hedge funds suffer weak first quarter (FT)
- But... but... Abenomics - Toshiba posts 62% decline in Q1 net profit (WSJ)
- Americans Are Borrowing Again but Still Less Than Before Freeze (WSJ)
- Man Utd announce Alex Ferguson to retire (FT)
- Asmussen Says ECB Discussed ABS Purchases to Spur SME Lending (BBG)
- Benghazi Attack Set for New Review (WSJ)
- Belgium Says 31 People Arrested Over $50 Million Diamond Theft (BBG)
- Brazilian diplomat Roberto Azevêdo wins WTO leadership battle (FT)
- Bangladesh Garment Factory Building Collapse Toll Reaches 782 (BBG)
Using cheap debt to buy assets makes a lot of sense right now, but only if it's done right. That wasn't the case with the world's largest retail M&A deal this year.
Was It Just The Common Folk, I Mean Equity Investors Who Got Hosed By The Bank of Ireland - Preferred Stock, & I Mean It!Submitted by Reggie Middleton on 04/25/2013 12:39 -0500
A bank losing billions of dollars in a recessionary environment, REDUCES regulatory capital, failing to report liabilities - in order to pay special investors a special dividend! Sounds about right doesn't it? Unless your a common shareholder!
- The Inland Empire bubble is back: BMW to Amazon Space Demand Spurs Rush to Inland Empire (BBG)
- Tamerlan Tsarnaev was on classified government watch lists (Reuters)
- Brothers in Boston Bombing Case Said Drawn to Radicalism (BBG)
- Germany Spurns Calls to Loosen Austerity Stance (WSJ)
- Spain poised to ease austerity push (FT)
- What ever happened to France's voice in Europe? (Reuters)
- U.S., South Korea Reach Nuclear Deal (WSJ)
- U.S. Sees No Hard Evidence of Syrian Chemical Weapons Use (BBG)
- RBA Set to Invest Foreign Currency Reserves in China, Lowe Says (BBG)
- FedEx Wins $10.5 Billion Postal Contract as UPS Shut Out (BBG)
Shareholders Join Bankers, Economists, Financial Experts, Regulators and the American People In Calling for a Break Up of the Giant Banks
You could even make a case that QE is part of TBTF. Chew on that for a while Shirley.
More and more in fashion lately in the financial world is companies taking huge write-downs of some flopped acquisitions....
The NY Fed is the single most powerful entity in charge of the Fed’s daily operations. How can any investor believe that the Fed can manage the system and restore trust when the NY Fed granted MF Global primary dealer status a mere nine months before the latter went bankrupt?
The 2008 crash resulted from the bursting of the biggest bubble in financial history, a ‘credit super-cycle’ that spanned more than three decades. How did this happen? Some might draw comfort from the observation that bubbles are a long established aberration, arguing that the boom-and-bust cycle of recent years is nothing abnormal. Any such comfort would be misplaced, for two main reasons. First, the excesses of recent years have reached a scale which exceeds anything that has been experienced before. Second, and more disturbing still, the developments which led to the financial crisis of 2008 amounted to a process of sequential bubbles, a process in which the bursting of each bubble was followed by the immediate creation of another. Though the sequential nature of the pre-2008 process marks this as something that really is different, in order to put the 'credit cuper-cycle' in context, we must understand the vast folly of globalization, the undermining of official economic and fiscal data, and the fundamental misunderstanding of the dynamic which really drives the economy.
A Potentially Nasty Snapshot Of Risk Resulting In Another Trillion Of Taxpayer Funded Bank Bailouts - A WalkthroughSubmitted by Reggie Middleton on 12/21/2012 11:55 -0500
Bigger Tax Payer Bank Bailouts Cometh? If You Think Taxes Are Gonna Be Higher You Ain't Seen Nothing Yet! I welcome one and all to show me how it will not be so.
Investors in the TBTF banks need to understand that the business model for this industry has changed. Thank Liz Warren