There isn't much to say except that the expected massive rally in the $ and the markets happened, and led to a massive overvaluation of the US markets in both absolute terms (in $ terms and PER terms) as in relative terms, compared to the European shares and Gold:
- The Dow still has a negative EPS which means that the basket of shares composing the index are losing money on the calendar year (and it doesn't have a PER).
- The S&P 500, after a big decline since the all time highs of last year still sports a massive a PER of 21, meaning that it can easily decline by another 50 to 75% (!!!) and that the current prices show either a massive bullishness and expect the end of the crisis as early as maybe next quarter? or a massive inflation in $ terms (quite likely given the reckless behaviour of the US gov and the Fed).
- The Dow is up almost 10% in Gold terms since the lows in July (which crisis? which crash?) and up 4% in Euro terms where the CAC is down 14%, meaning that it is over-performing the French index by a massive 18%!
- The S&P 500 shows the same trend, but with a lower over-valuation.
- The short US equities - long European ones trade seems more and more appealing. I am still waiting for the Dow to reach 10,000 to short it.
Dow Jones in various currencies (click for bigger image)