The pushback to yesterday’s chart (Sell Side Indicator: Wall St’s Improving Optimism) was rather fierce. Whether that reflects confirmation bias on the part of under-invested readers is unknown.
But to provide equal time and to make sure that I am not engaging in my own confirmation bias, consider the chart above. It comes from the other Bianco — David Bianco of Deutsche Bank. It “compares the price-earnings ratio for the Standard & Poor’s 500 Index with this quarter’s average close for the Chicago Board Options Exchange Volatility Index. (The VIX is based on S&P 500 options).
Bianco’s P/E-VIX shows a lack of concern as of August 9th. He noted that “while stocks have room to extend their advance since March 2009, increased volatility is likely to accompany any further gains.”
There you have it: Stocks may rise relative to earnings but we should be prepared for more price swings.
Bloomberg, August 14, 2013
Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.