Friday, August 28, 2009
The market cap of global equities is up over $16 trillion since the March lows, according to Bloomberg's index shown in this chart. That's up 63% versus the S&P 500's gain of 52%. But if you consider that major foreign currencies have risen about 14% versus the dollar since the March 9th equity market low, that means that foreign equity markets have actually underperformed the U.S. market. Regardless, this has been a monster rally.
The magnitude of the global equity market collapse, and the strong recovery mounted so far in the past 5 months, are mind-boggling. Unimaginable amounts of money have been lost by investors who capitulated to panic-driven fears. Those who sold keep fearing that another decline is imminent. Their comfort level is not helped by the likes of the Economic Cycle Research Institute's Weekly Leading Index, which points to a strong economic recovery. "With WLI growth continuing to surge through late summer, a double dip back into recession in the fourth quarter is simply out of the question," said ECRI Managing Director Lakshman Achuthan, reinstating the group's recent warning to ignore negative analyst projections."
Posted by Scott Grannis at 10:59 AM