Monday, June 9, 2014

9/6/2014: 2 charts, 2 markets, same nagging sensation...


Two charts worth paying close attention to:

The first one from Deutsche Bank:


The above is showing ratio of S&P500 Price/Earnings ratio to VIX (quarterly) volatility indicator. Recent uplift in the series is down to simultaneously:

  • Rising equity price relative to earnings, and
  • Falling markets volatility
The second one is via TestosteronePit, showing the first bit: rising equity prices relative to falling earnings, except not for S&P, but for European equities:



Care to draw any conclusions as to rational expectations vs short-term profit chasing?..

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