Bubble

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Stock Market Warning Siren is Blaring

So the Wall-Street hype machine is cranking at maximum RPM to propagate the great news that earnings are soaring, and that this is the reason why stocks should also be soaring, and forget everything else. The hype machine carefully avoids showing the bigger picture which is dismal for earnings and ludicrous for stock valuations. 

Aggregate earnings per share (EPS) for the S&P 500 companies on a trailing 12-months basis rose for the second quarter in a row. That’s the foundation of the Wall Street hype. But here’s the thing with these EPS: they’re now back where they had been in… May 2014. 

Yep. More than three years of earnings stagnation. No growth whatsoever, even for “adjusted” earnings. 

In fact, on a trailing 12-month basis, aggregate EPS of the S&P 500 companies are down about 5% from their peak in Q4 2014. 

And yet, over the same three-plus years of total earnings stagnation, the S&P 500 index has soared 

34%!

 August 14, 2017

Broadening Internal Dispersion

John P. Hussman, Ph.D.

Nothing in history leads me to expect that current extremes will end in something other than profound disappointment for investors. In my view, the S&P 500 will likely complete the current cycle at an index level that has only 3-digits.

 Indeed, a market decline of -63% would presently be required to take the most historically reliable valuation measures we identify to the same norms that they have revisited or breached during the completion of nearly every market cycle in history.

Shiller PE as of  8-11-17 is 30.16

BREAKING AWAY FROM THE WEST: Gold Investment In Germany & The U.K. Surged

While gold demand in the West continues to languish, something has recently motivated renewed interest in the yellow precious metal in Germany and the United Kingdom.  Now, when I say “renewed interest”, I am referring to a surge in gold investment by Germans and British that we haven’t seen for quite some time. 

This big increase in gold investment in Germany and the U.K. over the past year and a half is not from the diehard physical bar and coin investors, rather it is from a source that is even more interesting… it’s coming from investors in the retail Gold ETF Market.  You see, this is a much different segment of the population who move into the Gold ETF Market versus the 1% that buy physical bar and coins.  When there is a surge of Gold ETF buying, it means the institutional or regular mainstream investor is worried about the overall market.

 DYI