Societe Generale on Bull Market
Equity valuations still stretched Stocks still look expensive relative to bonds despite recent PE de-rating Valuations sustained by blockbuster trailing eps pushed way into the future What could pop the ‘bubble’= The Fed A tightening cycle has started and 11/14 times ends in a recession Biggest risk is that Fed discovers (or thinks) it is behind the curve Is Greedflation (aka profits-led inflation) a problem (again)? Despite soaring energy costs, total unit costs look moderate But like in 2022, companies are ‘taking advantage’ to boost profits via prices Watch the technicals for a sign of breakdown Breadth is very poor - “Never have stocks owed so much to so few” Technical measures of breadth are deteriorating rapidly
Equity valuations still stretched Stocks still look expensive relative to bonds despite recent PE de-rating Valuations sustained by blockbuster trailing eps pushed way into the future What could pop the ‘bubble’= The Fed A tightening cycle has started and 11/14 times ends in a recession Biggest risk is that Fed discovers (or thinks) it is behind the curve Is Greedflation (aka profits-led inflation) a problem (again)?
Despite soaring energy costs, total unit costs look moderate But like in 2022, companies are ‘taking advantage’ to boost profits via prices Watch the technicals for a sign of breakdown Breadth is very poor - “Never have stocks owed so much to so few” Technical measures of breadth are deteriorating rapidly