P/E Ratios Reach New Highs and Emerging Markets May Present Opportunities
May 20, 2020 | FIRESIDE CHARTS
While we’ve seen a partial recovery in the equity markets, volatility remains with over a quarter of the trading days so far in 2020 swinging 3% or more. That is well above levels we saw even in the early 2000’s or during the Great Recession. Meanwhile, forward P/E ratios for the S&P 500® Index, S&P 600 and S&P 400 have all surged to hit new all time highs and gold has climbed its way back from its March lows. Gold has historically been viewed as a “safer” asset class and the “competition” to bonds. Is this recent ascent due to overall economic uncertainty and inflation fears, or historically low interest rates… or maybe a combination of all three? Emerging market currencies seem to be stabilizing and according to historical trends, EM is ripe for opportunity. Finally, new Covid data is showing discouraging trends out of states that were among the earliest to lift lockdown restrictions, or never issued a formal “stay at home” order to begin with.
Also, this is a reminder we will not be publishing Fireside Charts on Friday or Monday in observance of Memorial Day. Our deepest gratitude goes out to the men and women who have bravely served and died for our country.
1. Viral volatility has dwarfed the previous two bears…
Source: WSJ Daily Shot, from 5/19/20
2. An update on forward P/E ratios by market cap:
Source: WSJ Daily Shot, from 5/20/20
3. Is gold reacting to current fears about the economy, low interest rates (bonds are often viewed as the competition yet yields are so low) or inflation fears (due to the trillions of new debt and bond issuance)? Perhaps a little of each…
Source: WSJ Daily Shot, from 5/20/20
4. EM currencies appear to have stabilized and even have a modest up trend.
Source: WSJ Daily Shot, from 5/19/20
5. There will be select opportunities in EM!
Source: WSJ Daily Shot, from 5/19/20
6. According to the CDC, “normal” flu kills about 20 people per million of population each year, and that is with about 40-45% of citizens receiving a vaccine. This is not “just like the flu”…
Source: WSJ Daily Shot, from 5/19/20
7. This is terrifying if the trends continue…
Source: WSJ Daily Shot, from 5/20/20
8. Will city living expectations and desire change under Covid? Perhaps new housing will get a boost from those who now want their own home…
Source: WSJ Daily Shot, from 5/18/20
Disclosure: The charts and info-graphics contained in this blog are typically based on data obtained from 3rd parties and are believed to be accurate. The commentary included is the opinion of the author and subject to change at any time. Any reference to specific securities or investments are for illustrative purposes only and are not intended as investment advice nor are they a recommendation to take any action. Individual securities mentioned may be helf in client accounts.