Markets look buoyant this morning around the world. An absence of negative economic developments combined with the historic images of Libya’s revolution on every TV screen may give us a lull in the selling and even a bounce. Here’s a look at how bad the damage has been to put today’s potential rally into context…
Aug. 22 (Bloomberg) — U.S. stock futures rose, signaling the Standard & Poor’s 500 Index may rebound from its biggest four-week drop since 2009, amid speculation the U.S. Federal Reserve will unveil further measures to support the economy…The S&P 500 has fallen 18 percent from an almost three-year high on April 29 amid concern about Europe’s government debt burden and a global economic slowdown. The decline through Aug. 8 drove the index to a valuation of 12.2 times reported earnings, the lowest level since March 2009. Its price-earnings ratio is now 12.3, compared with the average of 16.4 since 1954, according to data compiled by Bloomberg.
Once again we return to my dichotomy thesis (The Only Thing Worth Knowing Right Now) of stocks being cheap but the economy worsening. Tough times.