Another Bank Comments On Multiples Driving Returns

Since reporting a revised Q1 GDP estimate downward to negative 2.9 percent, US equity markets have been marching onward toward new highs.  While most economic indicators look better than they did a few years ago, the outlook for the viability of this so-called recovery remains open for debate.  Goldman Sachs GS wrote just last week about the appreciation we've seen post-recession.  This week JP Morgan JPM highlighted the same problem but in a different format:

On June 18th, Citi Group C said the same thing about equity prices and the driver being Multiples, not Earnings:

Returns on equities continue to be based upon valuations relative to others.  Intrinsic value and earnings power are not driving asset prices.  Benzinga previously covered the changes in the June 27, 2012 and June 27, 2014 EUR/USD Volatility Smiles with Delta on the Y-Axis and concluded that there is a strong level of bullish complacency among the bigger FX players in one of the most important FX pairs.  As for one of the structured markets, high yield and leveraged loan loans have seen dramatically higher inflows in the recent past:

There is a reason Merger & Acquisition activity has been so remarkable and furious in the fews couple quarters: