European markets are now fully pricing in an economic recession, analysts are expecting a recession but believing stocks can go higher.
Main takeaways on European Equities:
Einhorn’s FOF Re-positions Portfolio, Makes New Seed Investment In Year Marked By “Speculative Exuberance”
It has not just been rough year for David Einhorn's own fund. Einhorn's Greenlight Masters fund of hedge funds was down 3% net for the first half of 2020, matching the S&P 500's return for those six months. In his August letter to investors, which was reviewed by ValueWalk, the Greenlight Masters team noted that Read More
- Expect a recession to have begun in the fourth quarter of 2011
- Expect earnings estimates to be lowered about 5%
- …BUT expect stocks to go higher about 10-15% given that equity risk premium priced into market is near 2009 peak and P/E valuatoins near their lowest levels since the 1980?s.
Barclays is out with a really interesting graph of European Cyclically Adjusted P/E (CAPE) Multiples, graph points to multiples lowest since the 1980?s: