Small potatoes

The Week Ending Friday February 9th 2018 Wild, but not so wild. The 5% sell off in equities over the week added to the 3% fall the week before has certainly blown the froth off the stock market. Much better than expected sales and earnings figures had led to an excessively positive reaction in stocks (firstchart) – that has now been partly reversed. The long term forward Price/Earnings ratio (second chart) now looks more normal. And perhaps that is all there is. The news about the spending deal, about wage growth, about rates is all just noise. Stocks had gotten…

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