Jurrien Timmer, Fidelity’s Director of Global Macro, joins us again to provide his weekly market outlook and global macro update. P/E ratios have almost doubled since the crash. Skeptics would say this isn’t justified, but at the bottom, price typically bottoms before earnings because markets discount the future. Jurrien believes that as we progress through a recovery, earnings will follow prices, and P/E ratios will go down once earnings catch up. He also notes we are on track to a recovery like the one in 2009. Regarding the US election, Jurrien notes that markets typically start paying attention to elections after Labour Day. With Joe Biden now confirmed as the Democratic presidential nominee, the market is probably taking some comfort regarding regulatory and taxation risks, because Biden can be considered a mainstream ticket.
Recorded on August 17, 2020.