Stocks continue to trade at nosebleed valuations.
According
to Fact Set, the S&P 500 is currently trading at a P/E of 21. This
is well above its 10-year average of 16.7. And bear in mind, eight of
those ten years (from 2010-2017) were when stocks were already
overvalued.
Source: Fact Set.
So the market is extremely overvalued today, even compared to a period in which it has been overvalued.
This begs the question… just what justifies these valuation?
It
isn’t the US economy. GDP growth has been anemic for eight years and
the current spate of data indicates the US economy is rolling over: the NY Fed forecasts 2017 GDP growth to be a measly 1.9%.
So the economy isn’t justifying the stock market trading at these levels.
But
what about the Fed? If the Fed is juicing the markets, then stocks
should be trading in the stratosphere due to the excess liquidity.
Well, the Fed isn’t providing liquidity right now. In fact, the Fed is both RAISING rates (making the cost of money more expensive in the system) AND withdrawing $10 billion in liquidity per month from the financial system (soon to be $20 billion per month in 4Q17).
So
the economy doesn’t justify the stock market trading where it is… and
the Fed is actively pulling liquidity from the system to stop
risk-taking.
Is the Fed about to burst its third bubble?
A Crash is coming.
And smart investors will use it to make literal fortunes from it.
We
offer a FREE investment report outlining when the market will collapse
as well as what investments will pay out massive returns to investors
when this happens. It’s called Stock Market Crash Survival Guide.
We made 1,000 copies to the general public.
As I write this, only 79 are left.
To pick up one of the last remaining copies…
Best Regards
Graham Summers
Chief Market Strategist
Phoenix Capital Research
via http://ift.tt/2swecVt Phoenix Capital Research