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.
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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”.
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