Nope, No Bubble Here...
Sentiment, according to Citi's proprietary model, has now reached levels of euphoria not seen since the peak of the bubble in 2007/8, macro-economic data is deteriorating rapidly, and as Tobias Levkovich notes, intra-stock correlation is also posting a worrisome sign.
But perhaps, more than any other indication of just how far ahead of itself the US equity market has gone is thetotal and utter disconnect the following 8 charts show between aggregate and sector micro-fundamentals and the share price which is supposed to represent their expectations. With net profits being helped by a meaningfully lower effective tax rate and sharply lower interest expense, primarily assisting the Financials sector, expecting these two crucial pillars of support to be sustained is simply folly.
In the interests of plausible deniability, look away... we highly suggest Bullard, the QEeen,
the bulk of the mainstream financial press, look away...
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