MSCI USA
Calculate The Next Low... With The Last Peak?
How does one value a stock market in which 12-month forward EPS estimates show their widest dispersion in history? A good start might be with methods we use when forward estimates show practically no dispersion (like three months ago). In either case, we place little weight on such estimates; each revision usually has only marginal impact on our 5-Year Normalized EPS.
The Two-Tiered Global Market
We should emphasize that our characterization of stocks as dangerously overvalued applies only to the U.S. market.
The "Mo-Mo" Market Probably Isn't Finished
Momentum has had a terrific year relative to all other quant factors, but Wednesday’s action forewarns of the mayhem that will likely accompany the eventual rotation out of Momentum (and Growth) and into Value stocks.
Global Valuation Checkup
Foreign equities beat the U.S. in the first quarter, but the performance gap that’s opened up since the 2007 market highs remains astounding. While foreign equity valuations (especially within EM) have rebounded from February 2016 lows, the bounce has done little to close the enormous P/E discounts relative to the U.S. market.
America’s Already First...
Thanks to the U.S. dollar’s recent spike, foreign equities in dollar terms declined during November while the U.S. markets were celebrating a Trump victory. Thirty-nine of the 49 MSCI country indexes are in bear market territory from the perspective of a dollar-based investor.
Xenophobia Gone Too Far?
Donald Trump’s all-but-certain Republican nomination is somehow a fitting capstone to a stock market era in which it’s paid to be provincial.
Finding Value In “Forward Earnings”
Forward earnings might be the greatest Wall Street innovation in history: a tool that makes the stock market look cheap all the time.
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