Despite the last week of November offering the best week for stocks for about 75 years, the bear market rally has struggled to gain traction.
"Sure equities are cheap compared with where they were a year ago when people were already saying that they were cheap enough to withstand a recession but equities are a lot cheaper now," says Albert Edwards, chief investment strategist at SG CIB. "The problem, however, especially for the US, is that we had a valuation bubble that peaked in 2000 and which has been structurally de-rating since. Cyclically adjusted P/E ratios in the US are still 40% too expensive in our view."
"The rally between 1982 and 2000 was P/E-driven rather than earnings or dividends-driven. Lower inflation led to lower bond yields,...
