By StreetofWalls
European markets are now fully pricing in an economic recession, analysts are expecting a recession but believing stocks can go higher.
Main takeaways on European Equities:
- Expect a recession to have begun in the fourth quarter of 2011
- Expect earnings estimates to be lowered about 5%
- …BUT expect stocks to go higher about 10-15% given that equity risk premium priced into market is near 2009 peak and P/E valuatoins near their lowest levels since the 1980?s.
Barclays is out with a really interesting graph of European Cyclically Adjusted P/E (CAPE) Multiples, graph points to multiples lowest since the 1980?s:
Disclosure: I do not have a position in any stocks mentioned in this article, do not have a plan to initiate a position within the next 72 hours.
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