Societe Generale on Bull Market - FJElite
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