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Stock markets around the world have been on an extended bull run for a long time now and 2 new charts, from Deutsche Bank and Bank of America Merrill Lynch, show that shares are in too-good-to-be-true territory and that, if history is anything to go by, they’re due for a sharp correction.
The above edited excerpts (and the paraphrased comments below) are taken from an article by Oscar Williams-Grut as posted on businessinsider.com recently.
A look at the first chart from BAML shows how the current stock run — driven by U.S. consumer discretionary-spending in retail, media, and leisure — compares with other historic rallies and illustrates that only five bull runs have lasted longer. That suggests we’re approaching the end of the natural life of the current bull run.
The second chart, from Deutsche Bank, shows that the S&P 500 rally, at 917 days, is far above the average of 357. Deutsche Bank also warns that, as with the consumer discretionary rally, the fundamentals don’t support the run. Companies are surging despite soft macroeconomic data and lukewarm signals from the US Federal Reserve.
In short, the signs aren’t great for the U.S. stock markets right now, and if the U.S. bubble bursts, the rest of the world will feel it in a big way.
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