Story telling about current markets

I have attached a presentation I have been giving over the past 2 weeks.

It’s where I talk and try to put into perspective where the pendulum currently is, within the current market goings-on.

I touch on extremes in pessimism and sentiment measures, surveys and ratios.

Followed by a brief visit showing the extremes in interest rates. The corollary is that the rising cost of capital crimps profit margins and crucified valuations of equities whose cashflows and profits are years from materialising. So the pondering is what if these rates temper and abate?

I show you that forward consensus earnings estimates are moving lower and that P/E Ratios aren’t demanding, especially if you exclude the still overvalued “growth” and unprofitable companies.

I spend a little time chatting about currencies and the extremes that many are sitting at.

Then I move onto bond yields and yield spreads.

You’ll see that many equity indices are at their lower ebb.

and I finish up marrying up moments when commodities are undervalued compared to equities.

Of course, there is more to this analysis (than looking at P/E ratios) and ultimately narrowing down investment decisions, but it reminds me that much is nearer to the bottom than the top.

I paraphrased that last sentence in my recent newsletter, which was title, “Preparing for the last decile”

October 7, 2022

by Rob Zdravevski

rob@karriasset.com.au