Five reasons AMP is wrong on the bear market

From Fairfax:

AMP has five reasons why we’re not in a global bear market:

1. China is not collapsing: company earnings show little sign of a ‘hard landing’, continuing to grow at a healthy pace
2. Shares aren’t too expensive: global valuations do not point to excessive optimism in shares
3. US interest rates won’t rise much: the Fed is only expected to tap the monetary breaks over the next few years. European and Japan central banks may even step up unconventional easing
4. Banks are better capitalised: banks have increased equity by over two trillion US dollars since the financial crisis. Confidence in the banking system to absorb shocks is just as important as the ability to absorb them
5. House price overvaluation relatively concentrated: house prices look overvalued in New Zealand, Canada, Australia and Belgium. A rapid adjustment in any of these markets would hurt the respective local economies but would not undermine the global economy or banking system.

1. China was never collapsing. This is a bull’s straw man. It is, rather, in structural adjustment to lower and less commodity-intensive growth. This is what I describe as a “glide slope” that is destroying global commodity prices and commodity-dependent emerging market economies.
2. Which shares are not expensive? Australian, no, for good reason, we’ve got no earnings growth. But everywhere else is bloody expensive.
3. The reason US rates won’t rise much is because growth sucks hitting earnings. If the ECB and BOJ ease then the US dollar will remain strong making point one worse.
4. Banks are not much better capitalised.
5. Try looking at house prices in emerging markets like China, Brazil and India and tell me they’re not overvalued.