Bloomberg (January 18)
“The new year was supposed to bring opportunities for beaten-down software stocks. Instead, the group is off to its worst start in years.” Amid fears that AI will undercut the benefits of software, “valuations for software companies keep getting cheaper. The Morgan Stanley basket is priced at 18 times earnings projected over the next 12 months, its cheapest on record, and well below an average of more than 55 times over the past decade.”
Tags: AI, Beaten-down, Benefits, Cheaper, Fears, Morgan Stanley, Opportunities, Software, Software stocks, Undercut, Valuations, Worst start
Wall Street Journal (January 14)
“Trump wants to run the economy hot. There’s a good chance he’ll succeed,” but most presidents and Congresses avoid “juicing the economy” for good reason. The short-term results might be appealing, but “the long-term consequences” are real. “Ever-rising debt leaves future generations poorer and risks a debt crisis. Loosening credit and dialing back regulations, when valuations are already stretched, could end in market bust.”
Tags: Congresses, Consequences, Credit, Debt, Debt crisis, Economy, Future generations, Juicing, Presidents, Regulations, Risks, Trump, Valuations
Reuters (November 4)
“Fears of a market bubble come as the benchmark S&P 500 continues its meteoric climb, repeatedly hitting record highs and evoking memories of the dot-com boom.” And on Tuesday, the chief executives of Morgan Stanley and Goldman Sachs warned that “global equity markets could be heading towards a correction, underscoring a growing concern that investor optimism has driven valuations to sky-high levels.”
Tags: Boom, Concern, Correction, Dot-com, Equity markets, Executives, Fears, Goldman Sachs, Investor optimism, Market bubble, Meteoric, Morgan Stanley, Record highs, S&P 500, Valuations
Market Watch (July 1)
“So far, high valuations haven’t dimmed investors’ enthusiasm for stocks,” but there are concerns. The forward price-to-earnings ratio of the S&P500 “currently stands at 21.1, above the 90th percentile from the past 40 years. The S&P 500 is even more richly valued on a trailing 12-month basis. In the past, when valuations have been this stretched, the median one-year forward return for the index has been -4%.”
Tags: 4%, Concerns, Dimmed, Enthusiasm, Forward P/E, Forward return, High, Investors, Rich, S&P 500, Stocks, Stretched, Valuations
Wall Street Journal (January 30)
“Logistics technology companies are cutting costs and slashing staff as a prolonged slump in freight stretches into 2024.” After soaring to “huge valuations during the Covid pandemic when a wave of consumer spending pushed freight volumes and shipping rates to record levels,” high interest rates and weak freight volumes are now “stretching some companies to their limit.”
Tags: Companies, Consumer spending, Costs, Covid, Freight volumes, Logistics, Pandemic, Prolonged, Shipping rates, Slashing, Slump, Staff, Technology, Valuations
Investment Week (November 6)
“Fixed income markets are currently experiencing a rare irregularity. Short-dated bonds are trading at a higher yield than long-dated bonds, in other words, the yield curve is “inverted”. For investors in short-dated corporate bonds, this provides a unique opportunity to benefit from some of the most favourable forward looking relative return prospects and attractive valuations in recent history.”
Tags: Bonds, Fixed income, Inverted, Investors, Irregularity, Long-dated, Markets, Rare, Relative return, Short-dated, Valuations, Yield curve
Financial Times (September 15)
Internal combustion engines “are on their way out,” while sales of EVs “are set to increase worldwide from about 10mn in 2022 to about 14mn in 2023, or 18 per cent of all cars sold.” This partly explains legacy carmakers low valuations, but the switch also lowers barriers to entry. “Chinese imports already account for about 15 per cent of EVs sold on the continent,” with Chinese automakers hoping to seize more of “a $130bn revenue opportunity by 2030.”
Tags: $130bn, Barriers to entry, China, EVs, Ice, Imports, Legacy carmakers, Opportunity, Revenue, Sales, Valuations
Reuters (August 23)
“Office owners’ valuations are in the basement. U.S.-listed landlords like $20 billion Alexandria Real Estate Equities (ARE.N), $10 billion Boston Properties as well as France’s 7 billion euro Gecina recently traded at half the forward earnings multiples they enjoyed before the virus emptied offices.” If, however, corporate leaders “are successful in driving the white-collar herds back to the office,” then those “office stocks may come back from the dead.”
Tags: Alexandria, Boston Properties, Come back, Dead, Forward earnings multiples, France, Gecina, Landlords, Office, U.S., Valuations, White collar
Institutional Investor (August 14)
“A public market downturn and an abundant supply of private equity stakes have culminated in an unmissable opportunity for secondaries investors.” Favorable “supply/demand imbalances and market dynamics” have arisen due to “the dramatic outperformance of private equity thanks to lagged marks and flat or marginally down valuations in 2022,” causing “asset owners to become overweight PE as public equity markets declined materially.” Pensions, endowments, foundations and other asset owners have become “forced sellers of private equity stakes to return to their strategic weights,” and “because of illiquidity, overhang, supply/demand imbalance, and forced selling, buyers require a material discount to transact.”
Tags: Asset owners, Discount, Downturn, Endowments, Forced selling, Foundations, Illiquidity, Imbalances, Market dynamics, Opportunity, Outperformance, Overhang, Overweight, Pensions, Private equity, Secondaries investors, Supply, Valuations
Bloomberg (April 8)
“Almost $1.5 trillion of US commercial real estate debt comes due for repayment before the end of 2025. The big question facing those borrowers is who’s going to lend to them?” Morgan Stanley has estimated “office and retail property valuations could fall as much as 40% from peak to trough, increasing the risk of defaults.” Regional banks are now skittish about lending and “the wall of debt is set to get worse before it gets better.”
Tags: $1.5 trillion, 2025, Borrowers, Commercial real estate, Debt, Defaults, Morgan Stanley, Office, Peak, Regional banks, Repayment, Risk, Skittish, Trough, U.S., Valuations
