30-Jul-16 World View -- Fearing more Brexit-like votes, EU abandons fiscal rules for Spain, Portugal, Italy

Discussion of Web Log and Analysis topics from the Generational Dynamics web site.
John
Posts: 8712
Joined: Sat Sep 20, 2008 12:10 pm
Location: Cambridge, MA USA
Contact:

30-Jul-16 World View -- Fearing more Brexit-like votes, EU abandons fiscal rules for Spain, Portugal, Italy

Postby John » Fri Jul 29, 2016 10:22 pm

30-Jul-16 World View -- Fearing more Brexit-like votes, EU abandons fiscal rules for Spain, Portugal, Italy

Earnings fall, but central bank liquidity floods markets, pushing up stocks

** 30-Jul-16 World View -- Fearing more Brexit-like votes, EU abandons fiscal rules for Spain, Portugal, Italy
** http://www.generationaldynamics.com/pg/xct.gd.e160730.htm#e160730





Contents:
Portugal and Spain will not be fined for breaching deficit rules
Italy's Monte Paschi bank gets 5 billion euro bailout from other banks
Earnings fall, but central bank liquidity floods markets, pushing up stocks


Keys:
Generational Dynamics, Portugal, Spain, Jeroen Dijsselbloem,
European Central Bank, ECB, Markus Ferber, Pierre Moscovici,
Jean-Claude Jüncker, Greece, Italy, Banco Monte dei Paschi di Siena, MPS,
Bank of Japan, BOJ, Bank of England, BoE

gerald
Posts: 1681
Joined: Sat May 02, 2009 10:34 pm

Re: 30-Jul-16 World View -- Fearing more Brexit-like votes, EU abandons fiscal rules for Spain, Portugal, Italy

Postby gerald » Fri Jul 29, 2016 11:16 pm

regarding price/earnings ratios --

From the land of unthinking delusion and insanity in the hall of mirrors ---
Suppose, just suppose, the market is being kept up, so the right people are elected, and after the elections are over, wherever they may be, the market is left to fall, so the few can buy companies cheep, after the little people have lost their a**s. --- Hail feudalism! Clever? No?
cheers

jldavid47
Posts: 27
Joined: Mon Aug 24, 2009 3:30 pm

Re: 30-Jul-16 World View -- Fearing more Brexit-like votes, EU abandons fiscal rules for Spain, Portugal, Italy

Postby jldavid47 » Sat Jul 30, 2016 4:10 pm

Notice that the "tenured professor" (as if that matters) chose his words and data very carefully. He said "over the past 25 years." If you take the P/E ratio on January first of every year from 1992 through 2016 (25 years) you get an average of 24.5 which is "close" to 25. That includes two recessions where earnings were close to nothing which inflates the ratio. If you remove those two anomalous years, then the ratio drops to 21.6. If you go back 30 years instead of 20, the average PE ratio is 22.8, 20.4 if the two anomalous years are removed. Note that P/E ratios skyrocketed after each of the past two extreme peaks in the market - not because valuations got ridiculous, but because earning went completely in the tank. Since the market is somewhat of a discounting mechanism, the mood was that those earnings would rebound.

A better indicator is the median PE on the S&P which is 21.3 over the past 25 years and 20.0 over the past 30 years. FWIW, the current long term average P/E on the S&P 500 is now 15.6, the median 14.6. That's what 25 years of irrational exuberance will do for you.

(data from http://www.multpl.com/table)

John
Posts: 8712
Joined: Sat Sep 20, 2008 12:10 pm
Location: Cambridge, MA USA
Contact:

Re: 30-Jul-16 World View -- Fearing more Brexit-like votes, EU abandons fiscal rules for Spain, Portugal, Italy

Postby John » Sat Jul 30, 2016 5:39 pm

You're giving the professor way too much credit. He didn't say "the
past 25 years" because he was choosing his words carefully. He said
it because he doesn't believe that anything prior to 1990 matters.

Or as one reader put it a few years ago, he believes that "history
always begins this morning."

jldavid47
Posts: 27
Joined: Mon Aug 24, 2009 3:30 pm

Re: 30-Jul-16 World View -- Fearing more Brexit-like votes, EU abandons fiscal rules for Spain, Portugal, Italy

Postby jldavid47 » Sat Jul 30, 2016 8:41 pm

John, I'm not defending the professor, nor am I giving him ANY credit. He picked the past 25 years because he thinks it supports his idiotic argument. The entire paragraph smacks of an egotistical educated idiot and economists are the most dangerous type of educated idiot. Technically, what he said was not a "lie" as the carefully chosen "facts" were correct. However, his selection bias makes his argument pointless.

gerald
Posts: 1681
Joined: Sat May 02, 2009 10:34 pm

Re: 30-Jul-16 World View -- Fearing more Brexit-like votes, EU abandons fiscal rules for Spain, Portugal, Italy

Postby gerald » Sun Jul 31, 2016 6:28 pm

jldavid47 wrote:John, I'm not defending the professor, nor am I giving him ANY credit. He picked the past 25 years because he thinks it supports his idiotic argument. The entire paragraph smacks of an egotistical educated idiot and economists are the most dangerous type of educated idiot. Technically, what he said was not a "lie" as the carefully chosen "facts" were correct. However, his selection bias makes his argument pointless.


In a court of law one is required ( I guess, depending who you are , to tell the truth the whole truth and nothing but the truth ) {I have on various occasions been in a court of law - on both sides - not at the same time of course} the problem today is the whole truth is not stated. and there in lies the problem. With a half truth you could prove almost anything.

Gold bug

Re: 30-Jul-16 World View -- Fearing more Brexit-like votes, EU abandons fiscal rules for Spain, Portugal, Italy

Postby Gold bug » Sun Sep 25, 2016 11:39 am

You don't seem to put much faith in gold, which is surprising because you are such a doom and gloomer.

What about people who say the flight into gold will be huge when economic crisis occurs? It seems to make sense to me. Don't you consider panic and government collapse when calculating future gold prices?

http://kingworldnews.com/the-stunning-r ... 6000-gold/

With many investors worried about the economic turmoil that has engulfed the globe, is gold headed to $26,000?


John
Posts: 8712
Joined: Sat Sep 20, 2008 12:10 pm
Location: Cambridge, MA USA
Contact:

Re: 30-Jul-16 World View -- Fearing more Brexit-like votes, EU abandons fiscal rules for Spain, Portugal, Italy

Postby John » Sun Sep 25, 2016 11:43 am

Gold bug wrote:> You don't seem to put much faith in gold, which is surprising
> because you are such a doom and gloomer.

> What about people who say the flight into gold will be huge when
> economic crisis occurs? It seems to make sense to me. Don't you
> consider panic and government collapse when calculating future
> gold prices?

> http://kingworldnews.com/the-stunning-r ... 6000-gold/

> With many investors worried about the economic turmoil that has
> engulfed the globe, is gold headed to $26,000?


As I've written many times in the past, gold is in a bubble, just like
the stock market. The long-term trend value of gold is around $500
per oz. When the bubble bursts, the price will overshoot and fall to
the $200-300 range, which is where it was around 2000.

Here's an article I wrote in 2011:

** 28-Jul-11 News -- Washington follows Brussels in fraud and extortion
** http://www.generationaldynamics.com/pg/xct.gd.e110728b.htm#e110728b


Image


Return to “Weblog News Comments and Discussion”

Who is online

Users browsing this forum: Bing [Bot], MSN [Bot] and 24 guests