Is it going to be back to business as usual? Some experts are already seeing a V-shaped recovery. Indeed, the rally in the markets has led to a scramble among analysts to revise their earnings estimates upwards. But as Citigroup equity strategist for the Asia-Pacific region Markus Rosgen put it, “Equity markets went from a low of 1.1 times Price/Book Value and are now trading at 1.8x P/BV. A P/BV of 1.8 times is by coincidence also the 10-year and 30-year average valuations for Asia ex-Japan. It requires some convincing that the world economy has reached ‘normality’ as witnessed over the last 10 or 30 years a mere 14 weeks post the March lows seen in equity markets.”
Plenty of people will dismiss the recent stock-price recovery as a dead-cat bounce. Even more will call it a bear-market rally.
Yet as equity prices creep higher, the bears may soon have to concede defeat. The Standard & Poor’s 500 Index has gained about 15 percent since early December and most other major benchmarks have made solid gains in the same period. At some point, it will become known as the 2009-2013 bull market.
…Now all we need is for Goldman Sachs Group Inc. to pick one of those stories, put it into every research note, and this bull market can get some real momentum.
Who knows, investment bankers may be out buying Bentleys again this year if this rally has legs.