I’m looking at valuations, All Europe ( 14x forward PE) and all EM ( 10x forward PE) are cheaper than all USA (15x forward PE), below chart is plot of CAPE ratios, showing European stocks are about as depressed EM.

 

One has temcycleso keep in mind that European banks are still taking deep losses from legal costs and write downs from both US and EU regulators, and banks are 20-30%  of the stock markets in most EU countries.

DB just took a massive $7.4B loss in Q4 a big part is litigation cost from legacy subprime crisis misconduct and currency manipulation.

This is the reason CAPE is more reliable indicator than Forward PE.

Global Equities Rise on Chinese Assurances, European Stimulus — Part 5: European Equities Are Still Undervalued Compared to US Equities

Global Equities Rise on Chinese Assurances, European Stimulus — Part 8: Emerging Market Equities’ Valuations Offer Buying Opportunities

and looks to me like some braver value investors are moving back in, while masses panicked, capitulatied, puked  in last 3 months and in early january.

some analysts predicted 2015-16 could be rough a year ago, they were correct!

for all 3 secular bear markets in the SP500 in the USA, the following 20 years had incredible secular bull markets mainly from stable, low, or falling commodity( oil and food) prices. Even though US is the most expensive global index, it’s the leader. and the world needs it to be in a bull market

secular