And finally, here's what Cormac Mullen is interested in this morning
Before one of the foggiest earnings seasons in history, the word coming back from Wall Street is that equity bulls are writing off this year and looking instead to 2021 as an anchor to base their investment decisions on. That makes sense, so lets take a look at where 2021 valuations are now compared to where they were before the coronavirus hit. With the usual caveat on estimates constantly being revised, U.S. stocks are trading on 16.1 times forecast 2021 earnings compared to 18 times at the beginning of the year, according to data compiled by Bloomberg. European shares are on 13 times versus 14.9. Asian shares show the biggest discount from the coronavirus impact, trading on 11.7 times 2021 earnings versus 13.4 times at the start of this year. Leaving aside the differences between the three regions, there has been just a modest drop in valuations from the greatest global pandemic in over 100 years. If you think the corporate world will bounce back to the same place it was in December 2019 quickly, then you likely still see an attractive opportunity in stocks, especially in Asia. But if you believe there is a risk of a long-term hit to corporate margins as the impact of the pandemic becomes clearer, the valuation discount may not be great enough given the increased uncertainty and risk of further estimate cuts.
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