Even Eeyore would join this stockmarket party

US investors are the most bullish than they have been in two decades, report Rita Nazareth and Claire Ballentine for Bloomberg. The CBOE Equity Put/Call Ratio, which measures trading volume in put and call options (bearish and bullish bets respectively) recently hit its lowest level since July 2000. America’s S&P 500 reached a new-all time high last Friday, while early this week US markets were cheered by signs that congress could be set to approve a $908bn stimulus package. 

The S&P 500’s recent high came on the back of employment data showing that America’s rapid jobs recovery slowed last month. Still, US unemployment hit nearly 15% earlier this year, but is now down to 6.7%. 

Analysts forecast that S&P 500 earnings per share will rebound by 22% next year, following this year’s 15% fall, says Jon Sindreu in The Wall Street Journal. That looks “reasonable”; the year after the 2009 crash saw profit growth of 40%. The worry is for subsequent years. About 48% of S&P Composite 1500 companies are trading on a higher valuation than they did at the end of 2019. A V-shaped recovery next year is one thing; the idea that America Inc. will be more dynamic in 2022 than it was in 2019 looks much less sure. 

November’s euphoria reminded me of the dotcom boom, says Tom Stevenson in the Daily Telegraph. Europe’s markets gained 15% last month, giving a younger generation the closest thing to a “full-blooded melt-up” they have ever seen. Shares are high on a “cocktail of stimulants” from massive fiscal and monetary support to vaccine news. “It’s never a good sign” when there is almost no one questioning the bull story, but so contagious has the optimism become that even “Eeyore would be tempted to join in the fun”.