A Permabull Throws In The Towel: “Stocks Are Massively Overvalued”, Key Multiples Are Post-War Records

Back in January 2012, all was well with the centrally-planned world: Gluskin Sheff’s David Rosenberg was staunchly bearish, while his arch-nemesis, Wells Capital’s Jim Paulsen, was the opposite. This rivalry culminated with Rosenberg writing an extensive breakdown of his showdown with “bullish strategist” Paulsen at a CFA event (see “David Rosenberg Explains What (If Anything) The Bulls Are Seeing”) in which he said that the one thing that he could “identify as market positive” was valuations, to wit: “we do understand that P/E ratios at current low levels do serve up a certain degree of confidence that there is some downside protection to the overall market here.”

Fast forward three years, and the world, while still centrally-planned more so than ever now that the BOJ has and the ECB is about to join the massive monetization fray, has been thrown into conventional wisdom turmoil. The reason is that while David Rosenberg infamously flip-flopped from bear to bull (because somehow, somewhere he foresaw rising wages) in the early summer of 2013, none other than Jim Paulsen has just thrown in the permabull towel and in a letter to Wells Capital clients titled “Median NYSE Price/Earnings Multiple at Post-War RECORD”, admits that the market is about as overvalued as ever, based on numerous criteria but mostly due to the median (not average) P/E multiple surging to fresh all time highs!

Incidentally this is not new to regular readers: it was almost exactly one year ago, on January 11, 2014, when we wrote that as Goldman then stunned its bullish fans that “The S&P500 Is Now Overvalued By Almost Any Measure” adding that “the current valuation of the S&P 500 is lofty by almost any measure, both for the aggregate market as well as the median stock.” Incidentally Goldman stuck with its call for about 6 months, until July, when Goldman on one hand admitted that the market was still about 40% overvalued, but because it had to goal seek what now appears relentless central bank multiple expansion at all costs, it raised its S&P500 year end target from 1900 to 2050 despite numerous repeated warnings that there is now far too much downside risk in equity valuations.

In any event, it is now Wells Capital’s turn to point out what many have known for about a year, and while for the major part Paulsen’s take can be summarized as: stocks are massively overvalued but in this fake, centrally-planned world this is not a sell signal but merely “indicates vulnerability.” Because nobody, and we mean nobody is willing to put their neck, or year end bonus, on the line and comment that screaming overvalued fundamentals are a sufficient and necessary case to sell risk in a world in which any time there is a 10% 5% correction, some central banker makes “soothing noises” and we have a instantaneous V-shaped recovery.

With that caveat in place, here is what Paulsen sees as a screaming case of if not selling everything with both hands and feet, then at least politically correct, central-planner “vulnerability.”

The S&P 500 begins the new year with a price/earnings (P/E) multiple of about 18 times trailing 12-month earnings per share. This represents a valuation higher than about 74% of the time since 1945. While a relatively high valuation, it remains far below its post-war record of more than 30 times earnings in early 2000, and as recently as the 1990s, the stock market delivered nice returns from valuation levels at or above today’s P/E multiple.

The ‘Real’ Threat to Our Liberty Is The Repressive Machinery Of Empire

Submitted by Bill Bonner via Acting Man blog,

Equal Opportunity Mocking

Practically every day in these Diary entries we mock investors, Democrats, Republicans, teetotalers, terrorists, anti-terrorists, economists… and almost everyone else. We are equal opportunity mockers – insensitive to race, color, creed or body-fat ratio.

The mocked have only menaced us twice. Once, a journalist went off his head and sent a letter threatening to murder one of our children. We knew the sender personally; we judged him incapable of the act and recommended medical treatment.

The second time was in 2003. When we mocked President G.W. Bush’s attack on Iraq, a dear reader held his own tribunal and found us guilty of treason – a crime, he said, that should be punished by death.

Again, we brushed it off and continued making fun of the warmongers. We mock people. But we do not mock their gods. Who knows? Why take the chance?

France Warns ‘Terror Cells’ Have Been Activated, US Issues Worldwide Travel Alert

Be afraid, be very afraid. While French Interior Minister Bernard Cazeneuve said Friday “The nation is relieved tonight,” after the two standoffs concluded, as CNN reports, the French government's work is not over. French law enforcement officers have been told to erase their social media presence and to carry their weapons at all times because terror sleeper cells have been activated over the last 24 hours in the country, according to a French police source. Investigations continue into which terrorist group was ultimately responsible and, not be outdone in the fearmongery, The US State Department has issued a Worldwide Caution warning travelers, of the “continuing threat of terrorist actions and violence against U.S. citizens and interests throughout the world.” Thank goodness we have the governments to protect us.

Princes Of The Yen – How Central Banks ‘Transformed’ Japan’s Economy

“Princes of the Yen” reveals how Japanese society was transformed to suit the agenda and desire of powerful interest groups, and how citizens were kept entirely in the dark about this.

Based on a book by Professor Richard Werner, a visiting researcher at the Bank of Japan during the 90s crash, during which the stock market dropped by 80% and house prices by up to 84%. The film uncovers the real cause of this extraordinary period in recent Japanese history.

Making extensive use of archival footage and TV appearances of Richard Werner from the time, the viewer is guided to a new understanding of what makes the world tick. And discovers that what happened in Japan almost 25 years ago is again repeating itself in Europe. To understand how, why and by whom, watch this film.

“Princes of the Yen” is an unprecedented challenge to today’s dominant ideological belief system, and the control levers that underpin it. Piece by piece, reality is deconstructed to reveal the world as it is, not as those in power would like us to believe that it is.

“Because only power that is hidden is power that endures.”