Sector Valuations: One Buy, One Bubble?

We updated all of our CAPE series at quarter end on Mebane Faber Research.  There are no downloads in this piece as I included all of the charts in the body of the email.

First up is the CAPE values for countries around the world:

The difficulty I have with a lot of indicators is just that, they are difficult.  If I can’t understand what the chart is saying within a few seconds it is usually too confusing and often makes me think you’re trying to smash a square peg in a round hole.

I’m not sure why I didn’t think of this before, but below is simply the average CAPE value across all countries since 1979.  As you can see, it does a great job of setting up secular and cyclical lows in the markets…

And one of the more interesting takeaways to me is that the current CAPE value correlates much better with drawdown than does the TTM E figure.

Lastly, here are the sector values.  Financials still pretty cheap relative to the consumer sectors…