FNArena’s Weekly Insights – September 26 2022
In this week’s Weekly Insights:
-Good News
-PEs – The Tool That Both Enlightens And Confuses
-Conviction Calls
-Research To Download
-FNArena Talks (3x)
By Rudi Filapek-Vandyck, Editor
Good News
A brutal September has pushed the market indicator that used to be known as Citi’s Panic/Euphoria Index into Panic mode territory.
The good news is history suggests every time this happens equities are offering attractive entry points for investors who have the stomach to look beyond the short-term.
On Citi’s own data assessment, US equities now offer a 91% probability of a positive outcome over the next twelve months.
The rebranded Levkovich Index, in honour of the late last year deceased market strategist, thus falls in line with readings elsewhere of equity markets being over-sold.
The not so great news is that analysis by Macquarie suggests any recovery swing upwards from here is unlikely to prove anything but the next bear market rally.
Having analysed 23 bear markets since 1901, Macquarie analysts believe all rallies will prove nothing but bear market rallies until central banks shift their policies from tightening to loosening, i.e. no more rate hikes and rate cuts instead.
Before that happens, equity markets are likely to see fresh lows with Macquarie retaining the view earnings forecasts are still too high for the recessions that are forthcoming next year.
