AI
Tuesday, April 14, 2020 10:14:40 PM
Well this is about as BULLISH a REPORT for GOLD and Silver that could be Written courtesy of JP Morgan..............BUY GOLD because the next 2 YEARS the Metal Price is going to defy GRAVITY!!!!!!!!!!!!!
JPM Sees Global Profits "Cratering" 70% In Q2, No Recovery Until 2023
JPM Sees Global Profits "Cratering" 70% In Q2, No Recovery Until 2023
by Tyler Durden ZeroHedge
Late last week, we showed a chart from Credit Suisse which we described simply as "insanity" because it demonstrated that as the US careened into a depression, with GDP crashing and the unemployment rate soaring, between the latest Fed-driven surge in stocks and the collapse in earnings estimates, the PE multiple on the broader market had eclipsed the previous record of 19.0x set during the market's February all time high, and had now hit a new all-time high of 19.4x. In other words, the market has never been more overvalued than it is right now.
Following today's market surge, this disconnect got even greater because as earnings estimates fell further...
... stocks rose, and the latest PE multiple (on 2021 earnings mind you) is now a dot com bubble-eseque 24x.
That this it taking place as the global economy careens into the biggest contraction in generations is patently absurd, or would be if the Fed had not directly taken over markets to lift risk prices in a move that has gotten even the world's largest asset manager openly admitting the only strategy left is to buy what the Fed is buying.
Meanwhile, with asset prices now completely disconnected from underlying earnings, the global economy can go to hell in a hand basket and none of the billionaires in control will mind - after all the value of their stock holdings is once again fast approaching all time high.
And speaking of hell in a hand basket, that's precisely where the global economy is headed despite what the market may be signaling, because while global GDP is now expected to slump 14% in the first half of 2020 according to JPM, resulting in the US losing a "stunning and unprecedented 25 million workers and pushing the unemployment rate to a level last seen in the Great Depression", a more important question is what happens to corporate profits, and it is here that the real pain - at least for those tasked to find a connection between profits and stock prices - comes because according to JPM, since global profits are levered to GDP and not to the Fed's balance sheet, the largest US commercial bank (which itself reported the biggest plunge in its profits since the financial crisis) expects global profits to plunge by 70% in Q2 2020.
How does JPM get this number? As the bank's economist Joseph Lipton explains, in the 2001 recession, global GDP growth slowed by 3.7%-pts. Over this same period, global corporate profit growth slumped roughly 62%-pts—a huge decline driven in part by the crash of the tech bubble. Next, in the global financial crisis, global GDP growth slumped 9.8%, while corporate profit growth tumbled nearly 68.5%-pts—a profit to GDP “beta” of seven.
In the current recession, JPM expects global GDP growth to collapse by the same 9.8%-points in the year through Q2 202 relative to the prior year. Despite the differing nature of the shocks and additional significant hit to the service sector now,
JPM still assumes a beta of seven—on par with the global financial crisis. This implies a plunge in corporate profits of roughly 70% in the year through 2Q20.
cont.....................
JPM Sees Global Profits "Cratering" 70% In Q2, No Recovery Until 2023
JPM Sees Global Profits "Cratering" 70% In Q2, No Recovery Until 2023
by Tyler Durden ZeroHedge
Late last week, we showed a chart from Credit Suisse which we described simply as "insanity" because it demonstrated that as the US careened into a depression, with GDP crashing and the unemployment rate soaring, between the latest Fed-driven surge in stocks and the collapse in earnings estimates, the PE multiple on the broader market had eclipsed the previous record of 19.0x set during the market's February all time high, and had now hit a new all-time high of 19.4x. In other words, the market has never been more overvalued than it is right now.
Following today's market surge, this disconnect got even greater because as earnings estimates fell further...
... stocks rose, and the latest PE multiple (on 2021 earnings mind you) is now a dot com bubble-eseque 24x.
That this it taking place as the global economy careens into the biggest contraction in generations is patently absurd, or would be if the Fed had not directly taken over markets to lift risk prices in a move that has gotten even the world's largest asset manager openly admitting the only strategy left is to buy what the Fed is buying.
Meanwhile, with asset prices now completely disconnected from underlying earnings, the global economy can go to hell in a hand basket and none of the billionaires in control will mind - after all the value of their stock holdings is once again fast approaching all time high.
And speaking of hell in a hand basket, that's precisely where the global economy is headed despite what the market may be signaling, because while global GDP is now expected to slump 14% in the first half of 2020 according to JPM, resulting in the US losing a "stunning and unprecedented 25 million workers and pushing the unemployment rate to a level last seen in the Great Depression", a more important question is what happens to corporate profits, and it is here that the real pain - at least for those tasked to find a connection between profits and stock prices - comes because according to JPM, since global profits are levered to GDP and not to the Fed's balance sheet, the largest US commercial bank (which itself reported the biggest plunge in its profits since the financial crisis) expects global profits to plunge by 70% in Q2 2020.
How does JPM get this number? As the bank's economist Joseph Lipton explains, in the 2001 recession, global GDP growth slowed by 3.7%-pts. Over this same period, global corporate profit growth slumped roughly 62%-pts—a huge decline driven in part by the crash of the tech bubble. Next, in the global financial crisis, global GDP growth slumped 9.8%, while corporate profit growth tumbled nearly 68.5%-pts—a profit to GDP “beta” of seven.
In the current recession, JPM expects global GDP growth to collapse by the same 9.8%-points in the year through Q2 202 relative to the prior year. Despite the differing nature of the shocks and additional significant hit to the service sector now,
JPM still assumes a beta of seven—on par with the global financial crisis. This implies a plunge in corporate profits of roughly 70% in the year through 2Q20.
cont.....................
