For Those Who Still Care About Fundamentals, A Troubling Chart

Tyler Durden's picture

We realize that fundamental analysis, especially in light of recent events, is dead and buried, but for those few who still keep track, here is a troubling chart showing how fast the S&P's cash flow is sinking relative to its debt load. As Bank of America helpfully points out, the USA is now trading at 13x EV/EBITDA, a 90th percentile since 1995.

And for those equity analysts who have not encountered such arcane concepts as cash flow and EBITDA, here is a table from Goldman showing that the median stock is currently trading in the 99th percentile of historical valuations.

The good news, as we noted up top, is that when it comes to momentum ignition higher (thanks to HFTs) and multiple expansion (thanks to central banks) none of this actually matters.

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KnuckleDragger-X's picture

Fundamentals are so 20th century. Now we use advanced techniques like reading chicken entrails, and consulting oracles. Just look at wonderful everything is now......

knukles's picture

Now, fundamentals is Loretta Lynch meeting personally with Bill Clinton on a private jet at the back side of the Phoenix airport.
That's called some serious fundamental you like breathing, power talks.

NotApplicable's picture

Welcome to the New Normal. You may now proceed to muddle-through your life.

Good luck! (You're gonna need it.)

nuubee's picture

Honestly, what more is there to say than this:

$11.7 Trillion in negative yielding debt... So we're now printing debt that generates the opposite yield of the previous debt... so we'll just have one big paper system where old debt interest pays back other debt interest and everyone is happy exchanging meaningless digital promises.

What more can anyone say? How many other ways are there of demonstrating the base fraud on which the system exists than that statistic?

Mr. Schmilkies's picture

This must be the "new nomal" people are talking about. 

knukles's picture

I've seen a couple of those people recently. 
All hunched over looking at something emitting an ungodly light from their hands.
Nope.  I like my old models better, I do.

Squid Viscous's picture

numbers lol...


HopefulCynical's picture

BTFATH too! To the moon, Alice!

TradingIsLifeBrah's picture
TradingIsLifeBrah (not verified) Jun 29, 2016 3:00 PM

For those that still care about fundamentals, I have some very bad news...Santa Claus is not real, it has been your parents and/or your spouse this entire time.

N0TaREALmerican's picture
N0TaREALmerican (not verified) Jun 29, 2016 3:00 PM


Sounds like all our stocks are above-average too.

This just make sense as we've had many generations of above-average children, who are now running our above-average corporations.

TradingIsLifeBrah's picture
TradingIsLifeBrah (not verified) N0TaREALmerican Jun 29, 2016 3:02 PM

Everyone gets a trophy! :)))

HopefulCynical's picture

Made out of tinfoil.

Doubles as a hat.

peddling-fiction's picture

Fundamentalism will get you killed these days.

Spungo's picture

You know someone is full of shit when they start using EBITDA for anything. That's as useless a metric as mouseclicks per eyeball.

The real metric is (dividends + share repurchases + equity growth) / EV

khakuda's picture

It's all about the CB put and ever lower interest rates raising valuations.

Of course, CBs are out of powder and interest rates don't belong anywhere near these levels, but when has that ever stopped a good algo?

Devils Advocate's picture

When interest rates are 0 to negative, which we still have some ways to go here in the US, that EV/EBITDA multiple may go to 20!!!   Who gives a flying F***!!  Make me rich and give me some slaves!

The Real Tony's picture

100 percent manipulated bullshit with the Punch & Judy sideshow on CNBC to further con the public if there's still anyone stupid enough to buy stocks long.

Iconoclast421's picture
For Those Who Still Care About Fundamentals? And who might those be? hahahahhahhaha
Tall Tom's picture





Those who want the quantitative evidence of the Market Fraud being perpetrated on an extremely unwary public are interested in the "fundamentals".

HopefulCynical's picture

So - you, then?

Anyone else? Anyone? Bueller?

Tall Tom's picture





You did. Isn't it apparent that you not only clicked on the article but also replied to my comment?

allamerican's picture

its a directional trading mrkt, thinking no longer permitted.  historical= hysterical..

viator's picture

Fundamentals; you mean The Bank of Japan, The Bank of England, The European Central Bank, The Fed, and The Swiss National Bank?

Spungo's picture

Maybe there is a country called Fundamentals and its central bank is the Bank of Fundamentals.

blindman's picture

right beside fundamentals would be a thing
called order of operations. very few that i know
could even contemplate such a paradigm regarding "money",
economy, production supply and demand. it is beyond
the imagination of most mortals. i, myself, certainly
could not explain it. but, i have noticed a thing or
two concerning the current system of bullshit fraud and
stealing in broad daylight. and the wash over media
covering it up at the root with innuendo, emphasis and
sharp editing. there is a sucker born every minute and
a fool and his life force are soon parted.
life in the big city.
anyway, it has all been said somewhere along the line.
repeating it doesn't fix much?
good luck and god bless.

south40_dreams's picture

A printing press fundamentally makes a mockery of science and mathematics. 


balz's picture

I'll go against the grain, but with ZIRP or NIRP, it's normal that people want to pay more for good businesses. If a bond gives you, let's say, 1% yield, and you can get a 5% FCF yield in a solid business, why not doing it?

damicol's picture

You are not against the grain.. That is exactly what the muppets are told and beleive.

Uttery false.

In this current climate the only possible logical conclusion is that the $ producing such returns is in fact worth far less than what you imagined.

Reality is that in order to compesate for that you should be demanding ever higher returns, and the lower bonds and the higher the price the less those dollars wre worth ..

The same is precisely true of stawks. the whole shit show shooting match  is priced in overvalied untrinsically far less worth dollars and the trick they pull is to fool you that your dollar in your pocket is actually worth the same as the dollar you had last year.


 That is the fallacy of the markets, the lie that underpins all this shit.

think Argentina, Brazil, Zimbabwe,, stock markets rocketed when the currency collapsed ,  The clever cunts are fooling you into thinking the dollar is worth far far more than it really is.

The currency is the real bubble.