Last March we all thought the world economy—not to mention our cherished lifestyle —was headed for the trash basket. The stock market had plunged, retirement plans were ruined, and few people cared that equities looked dirt cheap. But here we are one year later and the stock market is up 68%, rampant fear has morphed into uneasy optimism, and healthcare reform has replaced financial reform as the top newsmaker. A few other things have changed, as chief economist/strategist David Rosenberg at Gluskin Sheff notes in his report today. Here are some of Rosenberg’s astute observations, comparing last March to the present:
- The VIX was 50, not 17
- The yield on 10-year Treasury notes was 2.9%, not 3.7%
- The budget deficit was $900 billion, not $1.5 trillion
- Baa spreads were 540bps and tightening, not 260bps and widening
- The market was 20% ‘cheap’ as per Shiller P/E ratio, not 25% overvalued
- The DXY (U.S. Dollar futures) was at 90 and depreciating, not 80 and appreciating
- Oil was at $47/bbl, not $82
- Equity PM cash ratios were at 5.5%, not 3.6%
- Market Vane bullish sentiment was at 32%, not 53%
- Real GDP was -6.4%, not +5.9%; and the ISM was 36, not 57