Salient to Investors:

David Stockman said:

  • QE is brewing asset bubbles around the world, exporting its lunatic policy worldwide
  • Central banks all over the world have been massively expanding their balance sheets, and as a result of that there are bubbles in everything in the world, asset values are exaggerated everywhere.
  • It is only a matter of time before the central banks lose control, and a panic sets in when people realize that these values are massively overstated.
  • Foreign central banks are easing for either good reasons of defending their own trade and their exchange rate, or because they’re replicating the Fed’s erroneous policies.
  • The Russell 2000 small-stock index is trading at 75 times reported trailing earnings, which makes no sense.

Mark Hulbert at Hulbert Financial Digest said the P/E based on 12-month trailing earnings of the S&P 500 is 19.1 is not indicative of a bubble, at least not one like 1999 which had a P/E of 29.7 in December 1999.

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