Normal posting should resume tomorrow.
“Cyclically-adjusted price/earnings multiples (CAPEs), as made famous by Yale’s Professor Robert Shiller, are growing inconvenient for the brokerage community.
Last week, BofA Merrill Lynch’s Savita Subramanian pointed out that of 15 popular measures of equity valuation, CAPE (which compares share prices to a 10-year moving average of real earnings) was the only one that made stocks look expensive. The list of valuations suggesting US stocks are either cheap or at fair value includes:
forward consensus p/e
trailing normalised p/e
forward PEG (p/e ratio divided by growth)
price/operating cash flow
price/free cash flow
market-based equity risk premium
normalised equity risk premium
S&P 500 in WTI oil terms
and S&P 500 in gold terms
CAPE is thus beginning to stick out like a sore thumb. As it has been showing that stocks are expensive throughout most of the current rally, there is now a widening attempt to discredit or ignore it.”
“Industrial production grew by 0.7% from the previous month, according to official data from Eurostat.
The rise was driven by a 4.9% surge in the production of durable consumer goods, such as cars and computers.
Greece, the first eurozone country to receive an international bailout in May 2010, also saw production rise 2.5%.
However, Portugal saw production drop by 2.8% and the Netherlands by 4.1% month-on-month.”
“India’s inflation rate rose by more-than-expected in July as a weaker currency brought higher import costs.
India’s main gauge of inflation, the Wholesale Price Index, rose 5.79% from a year earlier, up from 4.86% in June.
The Indian rupee has fallen 10% against the US dollar this year.”
“Network equipment giant Cisco Systems has announced plans to cut 4,000 jobs, about 5% of its workforce.”
“The pace of US consumer price inflation increased in July, pushing the annual rate of inflation to 2% – the rate targeted by the Federal Reserve.
That was up 0.2% from the previous month, with petrol prices still rising.”
“Earlier today Egyptian security forces sent bulldozers and riot police to break up protest camps belonging to supporters of ousted Islamist President Mohammed Morsi. The raids set off clashes that have resulted in dozens of deaths, reportedly as high as 150, and as many as 1,400 injuries. Police used tear gas, rubber bullets, and live ammunition to disperse the protesters who had been in place for six weeks, demanding Morsi’s return. Several fires erupted, destroying makeshift campsites and killing some of the people inside. The government has now imposed a state of emergency, as Egypt braces for a possible further escalation of the violence.”
“The health of the German economy may improve Angela Merkel’s chances of winning next month’s elections, but on the streets of Berlin there was scepticism about whether the increased growth would bring widespread prosperity. “
“The cost of splitting Royal Bank of Scotland into a “good bank” and a “bad bank” would outweigh the benefits, according to Fitch Ratings. “
“Smartphones have outsold basic mobile phones on a global basis for the first time, according to industry analysts. “
“Unemployment has fallen to 16.4pc from a record 17pc at the start of the year, bringing signs of respite to a nation struggling with tax hikes and cuts in public sector wages and spending.
The first sign of a turnaround in Portugal came with an upturn in exports from April to June compared with the previous quarter but economists were quick to point out that seasonal considerations could account for the boost. “
The problem with Lenovo is that it is a Chinese company and both the Canadian and US governments are still big users of Blackberry.
“China’s Lenovo, the world’s largest PC manufacturer, has doubled sales of smartphones and tablets as it is tipped for a takeover of BlackBerry. “
The data suggest that the US is in full recovery mode. This recovery is not gangbusters. It is weak but it is still ongoing and will continue for a while given the present macro background.
“Retail sales rose 0.2 percent in July, the Commerce Department said.
While the reading fell short of analysts’ expectations, a closely-watched category of sales that strips out cars, gasoline and building materials posted its largest gain in seven months, rising 0.5 percent.”
This is yet more evidence that tapering is top on the agenda for the Fed in September. We would have to see awful data for tapering not to happen.
“The economy expanded by 0.7 percent, seasonally-adjusted figures from the Statistics Office showed. It was more than the median forecast in a Reuters poll of economists for expansion of 0.6 percent and was the biggest quarterly rise since the first quarter of 2012.
German growth was largely driven by an increase in domestic private and public consumption and came after the economy only narrowly avoided a recession earlier this year.”
“France pulled out of a shallow recession in the second quarter with better-than-expected economic growth of 0.5 percent, preliminary data from the INSEE statistics agency showed on Wednesday.”
“The economies of Germany and France grew faster than expected in the second quarter, bettering a widely heralded expansion in the United States and pulling the euro zone out of a 1-1/2 year-long recession.
The increased pace was primarily driven by renewed business and consumer spending in the 17-country bloc’s two largest economies. The euro zone economy was fragile overall, however, with some countries, notably Spain and Italy, still struggling.”
“According to a new survey, some 45 percent of Green Party voters would like to see Angela Merkel remain in the Chancellery following fall elections.
To be sure, 53 percent of those queried by the pollsters at Forsa on behalf of the business daily Handelsblatt said they would like to see a change at the top. But the high share of Merkel supporters shows that the Greens have left their rambunctious beginnings far behind.”
““The European recovery needs to be significantly stronger before it starts to reduce unemployment,” said Michael Saunders, chief western European economist at Citigroup Inc. in London. “Unemployment is going to be stuck at extraordinarily high levels.” “
“Car sales in July rose in Germany, France, the U.K. and Spain, and the decline in Italy was the least this year, following a drop across the region in June to the lowest demand since 1996. Ford Motor Co. (F)’s deliveries last month in its 19 main European markets increased 8.7 percent from a year earlier to 90,000 cars, the Dearborn, Michigan-based company said today. “
“Google is taking a lot of heat today after Consumer Watchdog uncovered a brief filed by Google attorney’s on July 13th, 2013 in regards to privacy concerns over the way Google handles users’ emails. In a class action complaint filed against Google to the United States District Court for Northern District of California, Google said that their users should assume that anything electronically sent through Google’s servers is fair game to used for ads, or other purposes.
To put it bluntly, Google says, “a person has no legitimate expectation of privacy in information he voluntarily turns over to third parties.” It’s Google’s statements found in the brief that have Consumer Watchdog’s Privacy Project director John M. Simpson so worked up.”
I am expecting some releveraging but this is continued Deleveraging and that’s not a growth story. Think of this as US economic weakness.
“In its latest Household Debt and Credit Report, the Federal Reserve Bank of New York announced that outstanding household debt declined by $78 billion from the previous quarter, due in large part to a decline in housing-related debt. Total auto loan balances increased $20 billion from the previous quarter, the ninth consecutive quarterly increase and the largest quarter over quarter increase since 2006.”