Perspective on the stock market
Are the recent gyrations in the US stock market the result of bad news from Asian and European stock markets catching up with the US? No, argues James Hamilton, because the backward-looking P/E currently stands at 30.6, well above its average value of 16.9 in data going back to 1880. If we return anywhere near historical averages, it would mean a huge drop in stock prices.
Perspective on the stock market
By: James Hamilton – University of California, San Diego
What is the US yield curve signalling?
I also think that the stalling of the US 10-year treasury bond rate at 3% or less is sobering, a warning that investors are scaling back growth expectations for both the global and US economies, going into 2019.
Is there a signal in the noise? Yield Curves, Economic Growth and Stock Prices!
By: Aswath Damodaran – New York University
Rising global uncertainty
Ahir and al. have constructed a world uncertainty index (WUI) for 143 individual countries from 1996 onwards. Innovations in this index foreshadow significant output declines. They find that cross-country correlation between the WUI and the measures of volatility is positive, statistically significant and sizeable — 0.430 for stock market rate price volatility and 0.531 for bond yield volatility.
The World Uncertainty Index
Authors: Hites Ahir, Nicholas Bloom,Davide Furceri
From: IMF, Stanford University
