End of QE2 could spark flight back to China

ON NORTH AMERICA

Janus' John Eisinger explains why the end of quantitative easing could lead to declining inflation around the world.

Valuations in the US market are undemanding by historical standards. A decade ago, valuation multiples were much higher than they are today and the S&P 500 has returned very little over the 10-year period. At the same time, US companies have grown their earnings significantly as these multiples have compressed. So the starting point today is attractive. Moreover, most large US companies have rock-solid balance sheets - in stark contrast to some governments. Companies in the S&P 500 have around $1.2trn in cash on hand. This has important implications for valuations as some US companies ha...