You might have seen those charts of US vs global relative price performance (i.e. the black line in the chart below), showing how extreme it has become. But the red line shows that there is a fundamental reason for the direction of travel in the black line.Yes US stock prices have significantly outperformed vs global stocks, but US earnings have also significantly outperformed vs global (the red line).There are 2 key takeaways in this chart: first, the black line while correct in direction of travel given fundamentals, has substantially overshot (this is why when you look at just about every measure of valuations, it’s clear that US stocks trade at a major premium vs global stocks).Second, for global stocks to turn the corner and start outperforming vs US, you need more than just cheap rel

Deep Trouble, (but) Deep Value: despite [or perhaps because of!] all the bad news, challenges, threats -- a big shift has happened in European equities... (1/x)The combined PE ratio (average of the forward PE, trailing PE, and PE10 ratios) has dropped to extreme cheap levels. It is more or less on par with levels seen:-at the bottom of the dot-com bubble burst bear-and the 2020 pandemic panicThat said, it has yet to plumb the absolute lows seen during the global financial crisis and subsequent European sovereign debt "echo-crisis"Two cautionaries: 1. Although cheap, it could get cheaper.2. The “E” side of of the PE ratio is a moving targete.g. if earnings were to fall fast it could make valuations seem a little bit less cheap than what they appear now...But practically speaking, rather tha

Using the popular media definition of a bear market as the stockmarket being down more than 20% — at this point 40% of the world’s stockmarkets are in an “official bearmarket“.As regular readers will know I don’t really like that arbitrary percent change definition, I thinkbear marketsare more of a process than a percent change …and depend on shifts in underlying business and financial cycles.But it is still an interesting breadth indicator, which can be useful in generating technical analysis insights (e.g. if indicator is rising/falling, reaching extremes).But as for real bear markets, in the context of slowing global growth, global monetary policy tightening, and correcting of previous extremes in valuations, sentiment and positioning, the current backdrop is very much consistent with w

$S&P 500(.SPX)$ $Gold - main 2306(GCmain)$ $WTI Crude Oil - main 2306(CLmain)$ $Micro WTI Crude Oil - main 2306(MCLmain)$ $E-mini Crude Oil - main 2306(QMmain)$ The crude oil vs gold ratio has peaked at a key level and turned down – threatening to break further lower...ImageAside from being interesting with respect to the relative attractiveness of gold miners vs energy stocks and relative trades within commodities, this chart is also interesting as a macro indicator…If the global economy does rollover into recession, that’s going to be negative for energy d