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re: There are some major issues lurking in the US financial markets
Posted on 11/20/18 at 8:37 pm to Shepherd88
Posted on 11/20/18 at 8:37 pm to Shepherd88
The SP500 Price Earnings Ratio is 30.8% higher than its historical median.
Household debt to GDP is 0.773, which is 25% higher than the historical median.
There is a lot of other stuff at play, but basically we have moderately high P/E and high household debt at the same time.
A lot of companies also have floating interest rates, which make already high debt levels even tougher to pay off.
Household debt to GDP is 0.773, which is 25% higher than the historical median.
There is a lot of other stuff at play, but basically we have moderately high P/E and high household debt at the same time.
A lot of companies also have floating interest rates, which make already high debt levels even tougher to pay off.
1
Posted on 11/20/18 at 8:42 pm to LSUtoOmaha
quote:
A lot of companies also have floating interest rates, which make already high debt levels even tougher to pay off.
No, a lot of small cap companies have floating interest rates.
CAPM models (which show valuations compared to 10 yr treasury rates) show were at least 20% undervalued still.
Also, yes household debt is at record levels, but so is household net worth. And debt to net worth is at the lowest levels it’s ever been.
This post was edited on 11/20/18 at 8:44 pm
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