Bonds & Interest Rates
The US printed a stronger than expected GDP number at 2.5%. Canadian GDP is due tomorrow morning. However the market seems to be sitting on its hands waiting for the non-farm payrolls next Friday.
Drew Zimmerman
Investment & Commodities/Futures Advisor
604-664-2842 – Direct
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Since 2011 there has been many persistent investment themes that have more or less been related to currency movements. However, we appear to be at yet another inflection point in which the trends that have been in place for more than two years will either continue or possibly reverse.
Perhaps the biggest investment trend since 2011 has been the strength in the USD Index, which can be seen in the chart below with a clear bullish trend for two years now.
The chart below shows several things of importance relating to the current valuation of the financial markets. The only valid measure of market valuation that is historically consistent is trailing twelve month REPORTED earnings per share. Using other measures such as operating, or pro-forma, earnings to try and justify current market levels is both inconsistent and inaccurate when performing valuation analysis. I have also included price to corporate profits (NIPA) per share for a comparative measure.
The six biggest U.S. banks, led by JPMorgan Chase & Co. (JPM) and Bank of America Corp., have piled up $103 billion in legal costs since the financial crisis, more than all dividends paid to shareholders in the past five years.
That’s the amount allotted to lawyers and litigation, as well as for settling claims about shoddy mortgages and foreclosures, according to data compiled by Bloomberg. The sum, equivalent to spending $51 million a day, is enough to erase everything the banks earned for 2012.
Projected US debt per taxpayer
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