Valuations at levels comparable to those of the early 80s when the bull market kicked off

·         Spring is in the air: DJ +0.8%, S&P500 +0.8%, NASDAQ +0.4%, NIKKEI +1.8% and EUROSTOXX -0.4%  and up by 2.6% right now.

·         Bourses are keeping pace despite a VIX still above “40”. Valuations are very conservative : in terms of normalised PE, markets are at levels comparable to those of the early 80ies when the bull market kicked off. This is a necessary condition but not sufficient one. There are still a lot of uncertainties out there and the economic prospects are still worsening.

·         The bill linked to CDS is extremely high for the AIG of this world. The American insurance company had to pay bns of USD to counterparts, mainly in Europe and such a news is not welcome in the States. Are we now in a system where some are better off with a swift compensation in cash via the execution of a CDS than a long and uncertain debt restructuring process.

·         DEXIA bounced back significantly last week and no one knows exactly why, despite the fact that all financials were in a very good shape. The company is still considered as expensive in terms of net tangible assets value : 2x against 0.8x for the sector.

·         VIX is bouncing back at 42.4. Gold is up at 928.7 USD per oz and the oil price (BRENT CRUDE SPOT) is retreating somewhat at 42.7 USD. The USD is somewhat weaker against the EUR at 1.297. CMS 10-2 years spread is expanding at 1.49. The 5y CMS stands at 2.817 and the 3y at 2.32.

 

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