Price-to-Earnings multiples have been crunched in the calendar year to-date, as FactSet and strategist Christophe Barraud chart - but that begs the question posed by Sanford Bernstein - does this imply earnings expectations will be cut? Global equity capital markets volumes have dropped more than market indices, Equitable Investors highlights, while there are plenty of companies in need of fresh cash. Below-trend economic growth and above-trend inflation is the widely held consensus view of the economic backdrop from the Bank of America global fund manager survey. Off the back of that, the market is expecting the Fed cash rate to settle at ~3%, Wilsons calculates. Back in Australia, ANZ-Roy Morgan Consumer Confidence is strikingly low amid all the talk of inflation and interest rates - search terms that have surged on Google Trends. IFM highlights that Australian mining profits have for the first time exceeded profits in all other non-finance sectors combined.
S&P 500 Forward PE over 10 years
S&P 500 trailing PE since 1955
Source: Bloomberg, @C_Barraud
Are earnings forecasts about to be downgraded?
Source: Sanford Bernstein
Global Equity Capital Markets ($US)
No, ASX-listed cash burners with 12m or less cash at last reported burn-rate
Source: Equitable Investors
"Stagflation" is the most popular economic backdrop expectation
Source: BofA Global Fund Manager Survey (June 2022)
Expected path of Federal Reserve cash rate
Source: Refinitiv, Wilsons
ANZ-Roy Morgan Consumer Confidence
Australian web searches for "inflation" (blue line) and "interest rates" (red line)
Source: Google Trends, Equitable Investors
Australian Gross Operating Profits
Source: ABS, IFM
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