The Federal Reserve published its latest update for Z1, the Financial Accounts of the United States (formerly Flow of Funds). That means we can update our valuation metrics for a good piece of the US stock market. Tobin’s Q starts with the premise that the value of any company is in many ways dictated by its accounting net worth. We [...]
Part of the rewriting of GDP in the middle of last year involved adding more components that are not directly observable, leaving them susceptible to more imputations and adjustment processes than GDP normally counts. Changing “fixed investment” to include less well-defined concepts like R&D, “intellectual property” and “entertainment” makes sense intuitively until you actually try to piece together how they [...]
The quarterly update of the Flow of Funds Report (now called the Financial Accounts of the United States, but still Z1) means we can update a couple measures of stock market exuberance – Tobins Q and Market Value of Equities compared to GDP. The delay in preparing and releasing the data, however, means staleness since the latest estimates are for [...]
Margin Debt New Record (FINRA) Stock Margin Accounts Net Worth (total margin debt minus free cash balances and credit) Finally Surpasses Dot-com Peak Rate of Change In Net Worth Total Margin Debt Scaled to Nominal GDP Shiller CAPE Tobins Q (market value of corporate equities divided by corporate net worth) Corporate Equities Scaled to GDP Does any of this scream [...]
Despite the title of this post, I won’t presume to call a market top for anything, particularly in an environment rife with artificiality. Asset bubbles include a regular feature of going a long way past any even semi-rational level of departure, before turning on some wholly unexpected event or parameter. However, if you were brave/foolish enough to look for one [...]
When I mentioned that Greenspan’s market has persisted long after his words fell from memory, that extended to overextended stock investors as well. By almost any measure, Ben Bernanke has outdone the “record” of his predecessor, yet he has so few quotable lines outside of those really bad predictions during the runup to the 2008 panic. Greenspan will be forever [...]
I wanted to concur but take Joe's weekend proposition in a slightly different direction. I think it is relatively clear that the Federal Reserve and Chairman Bernanke are intentionally hinting at “tapering” QE purchases in order to “talk the market down”. There are a lot of similarities between the monetary communications right now and 1996 when Alan Greenspan famously appealed [...]
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