Stocks hit all-time highs in the first quarter. But many have argued that this has just been driven by central bank easing.
In a new report, David Rosenberg quotes Kyle Bass (via Fred Hickey) as saying that stock market gains in real terms are weaker than those in nominal terms.
In fact, Bass is quoted saying, “one of the best performing equity markets in the last decades has been Zimbabwe. But now your entire equity portfolio (in Zimbabwe) only buys you three eggs.”
Rosenberg says that this made him think about the S&P 500 in egg terms:
“While there has been a market recovery, it is far more subdued on this basis … in egg-adjusted terms, the S&P 500 is more than 20 per cent below its pre-recession highs and about half what it was at the all-time highs 16 years ago. In milk terms, the S&P 500 is actually 15 per cent below its its pre-recession highs, and in bread terms, the index is 10 per cent lower. Just in case you thought I was cherry picking what’s on the breakfast table.”
To really drive home his point, Rosenberg included a chart that shows the NYSE market capitalisation when adjusted for the Fed’ balance sheet is still at 2009 lows: