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CHART OF THE DAY: S&P 500, Shiller PE & Forward-Looking Returns

Editor's Note: Below is a brief excerpt and chart from today's Early Look written by Hedgeye Financials analyst Josh Steiner. Click here to learn more.

 

"... Now consider the longstanding relationship described by Cliff Asness between current CAPE ratio levels [aka Shiller PE] and forward 10yr market returns (HERE). What he shows is that there’s a near perfect relationship between forward 10yr returns on the S&P 500 and starting CAPE ratio multiples over the last 85 years (see table below).

 

The market is currently trading at a CAPE ratio of 26.4x, which puts it in the 10th [the most expensive] decile. Forward 10yr real returns from this decile have averaged just +0.5% per year over the 1926-2012 period. The best period saw returns for this decile of +6.3% per year, while the worst saw losses of -6.1% per year."

 

CHART OF THE DAY: S&P 500, Shiller PE & Forward-Looking Returns - Cliff Asness Guide to CAPE implied future returns

Source: Cliff Asness, AQR (An Old Friend: The Stock Market’s Shiller P/E)


REPLAY | Healthcare Earnings Preview of Top Ideas and Q&A - $ZBH $ATHN $MDRX $MD $HOLX $ILMN

Key Earnings Previews Ahead of Healthcare Earnings Season

CLICK HERE to access the associated slides.

 

 

 

Join Hedgeye Healthcare Sector Head Tom Tobin and analyst Andrew Freedman today at 12:00PM ET as they discuss their top ideas and what they will be focused on as earnings season progresses.

 

Topics will include:

  • ZBH: Read-through from SYK and JNJ earnings
  • ATHN: Tracker Update, will they miss the doc count?
  • MDRX: latest thoughts on attrition
  • MD: Maternity Tracker Update
  • HOLX: Facility Penetration by MSA
  • ILMN: Opportunity or is the end just beginning?

Have a question on a specific name? there will be a live q&A session at the end of the show!


Cartoon of the Day: Painting Themselves Into A Corner

Cartoon of the Day: Painting Themselves Into A Corner - Central bankers in corner cartoon 04.20.2016

 

The #BeliefSystem that central planners can arrest economic gravity is breaking down.


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5 Worrisome Charts Via Financials Analyst Jonathan Casteleyn

Takeaway: Two words .. be careful.

5 Worrisome Charts Via Financials Analyst Jonathan Casteleyn - Bull SCREAM 01.06.2015

 

Below are five charts and brief analysis from Hedgeye Financials analyst Jonathan Casteleyn.  Spoiler Alert ... all is not well in credit markets, equities and the U.S. economy.

 

You can follow him on Twitter @hedgeyeJC.

Click on Each chart to enlarge

#1

Global growth is on fire for sure!

 

5 Worrisome Charts Via Financials Analyst Jonathan Casteleyn - JC bond yields 

 

#2

S&P 500 earnings to be up +11% for 2018? Giddy up (not)!

 

5 Worrisome Charts Via Financials Analyst Jonathan Casteleyn - JC s p earnings expec

 

#3

Upgrade to Downgrade ratios in corporate credit has ALWAYS lead equity prices and the ratio is declining again

 

5 Worrisome Charts Via Financials Analyst Jonathan Casteleyn - JC upgrade downgrade ratio

 

#4

The current short squeeze in EM stocks is right within the +20% gain which has happened 8 times since '11

 

5 Worrisome Charts Via Financials Analyst Jonathan Casteleyn - JC EM

 

#5

U.S. distressed rates lead defaults and the distressed category is again breaking out for a new bankruptcy cycle

 

5 Worrisome Charts Via Financials Analyst Jonathan Casteleyn - JC default


U.S. Economy Enters Most Difficult Part of Cycle

 

In this brief excerpt from The Macro Show, Hedgeye Senior Macro analyst Darius Dale discusses how the U.S. economy has entered the toughest part of the cycle and why our growth estimate remains so bearish.


Reading Between The Lines: China's Cryptic Commentary

Reading Between The Lines: China's Cryptic Commentary - China growth cartoon 11.19.2015

 

Truth out of China? 

 

If only the truth were black and white.

 

Here's analysis in a note sent to subscribers this morning in which our Macro team pieces together recent comments from the PBoC and the country's state-owned news agency Xinhua to arrive at some interesting conclusions:

 

"The Shanghai Composite Index dropped -2.3% overnight despite the PBoC injecting 250B of liquidity into the banking system, which represents the largest such injection since February 26th. Weighing on sentiment was a Xinhua report that monetary policy will likely be more prudent in 2016 than it was last year, according to sources close to the PBoC, as well as PBoC Chief Economist Ma Jun commentary about future monetary policy needing to guard against financial risks.

 

With Chinese corporate leverage high and getting higher (166% of GDP) and property prices running up 30% YoY in first tier cities, we expect the PBoC to rein in the liquidity provision meaningfully from here now that economic stabilization is in the rear view mirror."

 

More from China's state-owned news agency Xinhua:

 

"China will continue to implement a prudent monetary policy this year, and, in the context of the economic slowdown, top officials have described the prudent policy as one 'with a slight easing bias.'

 

As the economy is yet to fully restore its strength, China will not shy away from using the ample tools at its disposal to bolster the economy. But it will be more careful to prevent the easing from going too far."

 

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