GRAPHIC-Talk of asset bubbles is hot air ... mostly

Jamie McGeever
Friday, 13 Dec 2013 | 7:11 AM ET

LONDON, Dec 13 (Reuters) - With many markets scaling record highs thanks to the largesse of the world's major central banks, talk of asset bubbles is rife.

But by many measures, such talk appears unjustified.

Comparing recent moves with those before the previous two global crashes in 2007 and 1999 via the prism of relative valuations, investing trends and volume flow suggest we're still not in bubble territory.

A confluence of factors has brought talk of bubbles into sharper focus lately - rapidly rising markets, growing unease about the effectiveness of central banks' ultra-loose policy and the likelihood the Federal Reserve will soon start scaling back that stimulus.

If the consensus from last month's Reuters Investment Summit - which drew in fund managers who control over $4 trillion of investments - is any guide, there are no bubbles in equities, commodities, property or corporate debt markets.

Markets like U.S. Treasuries, which many analysts argue are at the end of a 30-year bull run, and high-yield credit, where issuance has soared to new records, may represent bubble-like tendencies.

But most observers say they're not about to burst. Put simply, after the chastening experience of the 2008 crash, the world's major central banks won't allow it to happen.

Here is a collection of Reuters graphics which show that high nominal values may not be cause for alarm:



Valuation by country: http://link.reuters.com/gut35v

S&P 500 forward P/E: http://link.reuters.com/nug65s

UK FTSE forward P/E: http://link.reuters.com/pyw66s

Euro Stoxx 600 forward P/E: http://link.reuters.com/ras26s

Shiller P/E and earnings: http://link.reuters.com/kes67s

Equity risk premium (ERP): http://link.reuters.com/mum95s

ERP by country: http://link.reuters.com/zaq45v


High Yield and Investment Grade issuance: http://link.reuters.com/byj45v

High Yield bond yields: http://link.reuters.com/zaq33t

Returns since 2008: http://link.reuters.com/ruh82t


Global real yields: http://link.reuters.com/byn65s


Global CDO, RMBS, CMBS: http://link.reuters.com/zeh45v


Inflows and outflows as percentage of assets under management: http://link.reuters.com/caq45v


Bond yield spreads: http://link.reuters.com/maj45v


OECD house price valuations: http://link.reuters.com/kaj34v

OECD house price valuations (time series): http://link.reuters.com/qaj34v

OECD house price/rent ratio and house price/income ratio: http://link.reuters.com/syx36t


(Created by Jamie McGeever and Vincent Flasseur; Editing by Catherine Evans)