"Valuation Is The Market's Biggest Headwind"

Tyler Durden's picture

Yesterday, as the S&P closed above 2,000 for the first time, mainstream media pundits were trotted out to proclaim that either "stocks are 'fairly' valued" or "stocks are cheap" and the "money on the sidelines" must come in now. Aside from the 'idiocy' of the last comment, we thought BMO's Jack Ablin's comments were of note. "Valuation is the market’s biggest headwind,” he wrote, adding that sales “have to catch up” for stocks to sustain the rally. One glimpse at the following chart and it is clear that not only are stocks "not cheap" or "not fair" they are extremely rich with the only fall-back now being that "they're not as expensive as they were at the top of the biggest bubble in stocks ever."




Seems like BTFATH makes perfect sense in that light...

Source: Bloomberg

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i_call_you_my_base's picture

Reality is fantasy's biggest headwind.

Oldwood's picture

But it is fantasy that keeps the wind in the sails. Economists currently believe that demand must always be faked if you want "real" growth. These headwinds are likely to turn into a hurricane.

asdasmos's picture

They are increasing the cost to renounce US citizenship to $2,350 after record renunciations.


The amount of people renouncing are undercounted. Waiting times around the world do not add up as they can process many per day. In Toronto, Canada, the amount they can process in a year is just about the same as the official number of renunciants and relinquishments for the wolrd per year.

Cognitive Dissonance's picture

That will be 2 pounds of flesh...payable in advance. Here is your cheese grater and there is the bathroom. Please don't bleed on the carpet.

damicol's picture

On doing some checking it appears you can buy fake certificates that I am assured are relatively easy to copy as they have no special characteristics embedded in them, ans that their is NO actual checking with an embassy to verify them after you submit for your new passport.

It seems there is a thriving underground in Manila for these at around $500 each especially with such a big US expat community

KnuckleDragger-X's picture

Chrome plated dog turds as far as the eye can see......

stocktivity's picture

Futures are up....It's all Bullshit!!!

buzzsaw99's picture

not to mention that the BHC's books stink to high heaven

Cognitive Dissonance's picture

Hard to compare numbers going back 15-20 years when "price" and 'sales' are both meaningless simply because they are manipulated by the companies themselves. When have we last seen GAAP numbers used in any meaningful way to calculate 'price'?

<You're gonna need a bigger boat.>

KnuckleDragger-X's picture

GAAP is for squares daddio, creative bookkeeping and magic numbers is where it's at.

starman's picture

So how much of this headwind is  by the federal reserve? I keep wondering whos going to buy all the treasury bonds after QE is turned off? Putin? Belgium? God? Devil?

Cognitive Dissonance's picture

Your IRA, pension and annuity money.

<Sitting ducks all lined up ready to contribute 'your' fair share to the fiat fiasco.>

Cognitive Dissonance's picture

"For when the metal ones decide to come for you. And they will."  :-)

darteaus's picture

Voter IQ is Hillary's greatest headwind.

Dazman's picture

You mean tailwind. As in, the lack of voter IQ will propel her forward.

Rompoculos's picture

The only thing that matters in this case is how Bass's "we're just going to kill the dollar" plays out. When the market finally figures out that they are "just going to kill" all of their fiat wealth, things will get very interesting very quickly.

HUGE_Gamma's picture

Problem is this little stock called AAPL which is coming out with a new product version 6! and makes up 15% of NDX and about 8% of SPX

disabledvet's picture

This is a VERY good point and was a big problem with the 90's mania (financials were 30% of the market.). Having said that there are other market players that are moving this thing higher too...natural gas, cloud computing, 3d printing, Tesla's, Amazon.com.

Very valid observation however. The irony of course being Apple has real sales and real profits.

It has been said that I it's entire history the airline industry has never made a dime...

darteaus's picture

I'd love a piece of that Ebola vaccine company.

Wild Theories's picture

and even the vaunted Apple is already at its peak.

All the latest tech news out of Asia shows Apple losing traction to local competitors in both China and India(some of those local handset makers are only a few years old and outdoing Apple hand over heel).

Without new market growth, Apple is just going to sit on the fortunes of Europe and the west.

and with the way the west is going in general, Apple won't be going anywhere.

Captain Jack Sparrow's picture

What does BTFATH stand for?

Buy The Fucking Ass out of this Top Heavy bullshit market

disabledvet's picture

"You fell for ye olde banana in he tail pipe trick? You fell for the banana in the tail pipe???!!! Bwhahahahahaha."

Listen up and listen good: there is no greater tail wind for this market than a p/e expansion. That's why the job of the Fed is so easy (wind down QE) "just shut up about it."

Anything that has to be stated in advance does not matter. Least of all "what your thinking" (aka "forward guidance."). A simple continued enactment of the stated policy is almost "saying" too much.

An ideal Fed would have no reports given period.

Having said that you don't see a bull market like this anywhere else in the world right now. Jessica Alba? Fer real?

thetruthseeker's picture

If you factor in small and mid caps, I would imagine it looks even worse today.  People forget that the small/mid cap space was not egregiously overvalued in 2000, as the large caps dominated the forefront of bubble valuations.

TheRideNeverEnds's picture

When the SPX prints 3000 then you can start to worry about being overvalued, till then just buy every down-tick; its free money.  

AdvancingTime's picture

 The really big earners in recent years have benefited greatly from the surging stock prices as much of their income has come from financial markets and gains in equities. Many people seem to think this is the hope of our future.

When you have more than you need or want to put money away for a rainy day where do you store it? If you rated people on a "wealth chart" by how many tangible assets they owned you might be shocked to find much of the wealth people own is in paper and this is full of risk. More on this subject in the article below.