15 Signs It's "Getting Very Late", From Bank of America

June 12, 2018

by Tyler Durden at ZeroHedge

In parallel to the now standard question of "how high can rates go before it all comes crashing down", the one other thing the investing community desperately wants answered (as this Bloomberg piece notes), is where are we in the business cycle? According to the latest report by BofA's Michael Hartnett, we are now so "long in the vermouth", the late-cycle is starting to get "tipsy." Consider the following points:

  • 2017: Bitcoin’s rip from $300 to $19,600 in 3 years made it the biggest bubble ever
  • 2017: Da Vinci’s Salvator Mundi sold for $450mn (would take average American 7,500 years to earn)
  • 2017: Argentina (8 defaults in 202 years) issued a (oversubscribed) 100-year sovereign bond
  • 2017: European high yield bonds were priced as less risky than US Treasuries
  • 2017: the market cap of Facebook (25k employees) exceeded that of India (1.3bn people)
  • 2018: US, UK, German, Japanese unemployment rates are at multi-decade lows
  • 2018: the global stock of negatively-yielding global debt remains >$10tn
  • 2018: S&P 500 trailing price-to-earnings ratio >20X…a level exceeded in just 12 of past 120 years
  • 2018: S&P 500 price-to-book ratio >3X…a level exceeded in just 5 of past 70 years
  • 2018: US tax cuts of $1.5tn will coincide with US corporate bond issuance of $1.5tn and US equity buybacks of $0.9tn
  • 2018: QE “winners” (REITs, credit, EM assets) have started to underperform QE “losers” (volatility, US$, commodities, cash)
  • Aug 22nd, 2018: S&P500 bull market becomes longest of all-time
  • Dec 2018: Fed will be 9 hikes into tightening cycle & G4 central bank liquidity will be contracting
  • May 2019: global profits are forecast to be 1/3 higher than their prior 2008 peak (IBES $3.3tn vs $2.4tn)
  • July 2019: the US economic expansion will become the longest since the Civil War

And a few bonus charts, first looking at the 3 Deflationary Ds  of Disruption, Debt and Demographics which continue to cap interest rates...

Click here to read the full article at ZeroHedge

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