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People
6
Organizations
2
Locations
1
Events
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Relationships
3
Quotes
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Financial research report
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Summary
This document is page 3 of a Bank of America Merrill Lynch 'European Equity Strategy' report dated December 1, 2016. It contains six financial charts analyzing market trends, including cyclical vs defensive stocks, bond yields, and valuation metrics for financials and staples. The document bears the Bates stamp 'HOUSE_OVERSIGHT_014462', indicating it is part of a production of documents for the House Oversight Committee, likely related to investigations into financial institutions connected to Jeffrey Epstein, though no individuals are named on this specific page.
Organizations (6)
Timeline (1 events)
Key Quotes (3)
"Synchronised rise in leading indicators globally augurs well for earnings recovery"Source
HOUSE_OVERSIGHT_014462.jpg
Quote #1
"Cyclicals vs Defensives trade now looks very stretched"Source
HOUSE_OVERSIGHT_014462.jpg
Quote #2
"Financials valuations have recovered significantly relative to the move in bond yields"Source
HOUSE_OVERSIGHT_014462.jpg
Quote #3
Full Extracted Text
Complete text extracted from the document (2,305 characters)
Key charts
Chart 1: Synchronised rise in leading indicators globally augurs well for earnings recovery – especially if PMIs kick on to or above mid-50s
[Y-Axis Left: 30, 35, 40, 45, 50, 55, 60, 65]
[Y-Axis Right: -60, -40, -20, 0, 20, 40, 60]
[X-Axis: 01/98, 01/01, 01/04, 01/07, 01/10, 01/13, 01/16]
Legend: — ISM / Euro PMI manuf avg (advanced 9m) — MSCI Europe EPS € (trailing yoy, RHS)
Source: BofA Merrill Lynch Global Research, Datastream, IBES
[Y-Axis Left: 30, 35, 40, 45, 50, 55, 60, 65]
[Y-Axis Right: -60, -40, -20, 0, 20, 40, 60]
[X-Axis: 01/98, 01/01, 01/04, 01/07, 01/10, 01/13, 01/16]
Legend: — ISM / Euro PMI manuf avg (advanced 9m) — MSCI Europe EPS € (trailing yoy, RHS)
Source: BofA Merrill Lynch Global Research, Datastream, IBES
Chart 2: Modestly higher yields and higher equities compatible – Rising inflation breakevens the key for equities
Stoxx 600 4-week returns vs 4-week change in real yields / inflation breakevens (since 2009)
[Y-Axis: -1.0, -0.5, 0.0, 0.5, 1.0, 1.5, 2.0]
Columns: Bund real >+0, b/even +ve; Bund real >+0, b/even -ve
Source: BofA Merrill Lynch Global Research, Bloomberg
Stoxx 600 4-week returns vs 4-week change in real yields / inflation breakevens (since 2009)
[Y-Axis: -1.0, -0.5, 0.0, 0.5, 1.0, 1.5, 2.0]
Columns: Bund real >+0, b/even +ve; Bund real >+0, b/even -ve
Source: BofA Merrill Lynch Global Research, Bloomberg
Chart 3: Cyclicals vs Defensives trade now looks very stretched
[Y-Axis: -4, -3, -2, -1, 0, 1, 2, 3, 4]
[X-Axis: Dec-97, Dec-01, Dec-05, Dec-09, Dec-13]
Legend: — Cyclicals vs Defensives - relative price vs 52wk average (SD)
Source: BofA Merrill Lynch Global Research, Bloomberg
[Y-Axis: -4, -3, -2, -1, 0, 1, 2, 3, 4]
[X-Axis: Dec-97, Dec-01, Dec-05, Dec-09, Dec-13]
Legend: — Cyclicals vs Defensives - relative price vs 52wk average (SD)
Source: BofA Merrill Lynch Global Research, Bloomberg
Chart 4: Likewise Financials vs Defensives: -2.5SD to +2.5SD post-Brexit
[Y-Axis: -4, -2, 0, 2, 4]
[X-Axis: Dec-97, Dec-01, Dec-05, Dec-09, Dec-13]
Legend: — Financials vs Defensives - relative price vs 52wk average (SD)
Source: Re BofA Merrill Lynch Global Research, Bloomberg place this text
[Y-Axis: -4, -2, 0, 2, 4]
[X-Axis: Dec-97, Dec-01, Dec-05, Dec-09, Dec-13]
Legend: — Financials vs Defensives - relative price vs 52wk average (SD)
Source: Re BofA Merrill Lynch Global Research, Bloomberg place this text
Chart 5: Financials valuations have recovered significantly relative to the move in bond yields – relative PE back around average levels
[Y-Axis Left: 0.60, 0.65, 0.70, 0.75, 0.80, 0.85, 0.90]
[Y-Axis Right: -0.5, 0, 0.5, 1, 1.5, 2, 2.5, 3, 3.5]
[X-Axis: 01/10, 01/11, 01/12, 01/13, 01/14, 01/15, 01/16]
Legend: — Banks / Insurance PE-rel — German 10y (RHS)
Source: BofA Merrill Lynch Global Research, Datastream, IBES
[Y-Axis Left: 0.60, 0.65, 0.70, 0.75, 0.80, 0.85, 0.90]
[Y-Axis Right: -0.5, 0, 0.5, 1, 1.5, 2, 2.5, 3, 3.5]
[X-Axis: 01/10, 01/11, 01/12, 01/13, 01/14, 01/15, 01/16]
Legend: — Banks / Insurance PE-rel — German 10y (RHS)
Source: BofA Merrill Lynch Global Research, Datastream, IBES
Chart 6: Rapid relative de-rating for Staples – relative PE for Food & Beverage still 6-10% above 2010 / 2014 levels
[Y-Axis Left: 1.10, 1.20, 1.30, 1.40, 1.50, 1.60, 1.70]
[Y-Axis Right: 4, 3, 2, 1, 0, -1]
[X-Axis: 01/10, 01/11, 01/12, 01/13, 01/14, 01/15, 01/16]
Legend: — PE-relative FOOD & BEV — German 10y (RHS, inverted)
Source: BofA Merrill Lynch Global Research, Datastream, IBES
[Y-Axis Left: 1.10, 1.20, 1.30, 1.40, 1.50, 1.60, 1.70]
[Y-Axis Right: 4, 3, 2, 1, 0, -1]
[X-Axis: 01/10, 01/11, 01/12, 01/13, 01/14, 01/15, 01/16]
Legend: — PE-relative FOOD & BEV — German 10y (RHS, inverted)
Source: BofA Merrill Lynch Global Research, Datastream, IBES
Bank of America Merrill Lynch
European Equity Strategy | 01 December 2016
3
HOUSE_OVERSIGHT_014462
European Equity Strategy | 01 December 2016
3
HOUSE_OVERSIGHT_014462
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