Yet another distortion in US stock market valuation

This Thursday, the Federal Reserve will publish its latest Financial Accounts of the United States for Q2. These are likely to show that the market value of equities issued by US non-financial companies at the end of June was considerably more than those companies’ net worth. Although this would add some weight to the argument that the stock market is overvalued, the ratio of these two numbers – commonly referred to as Equity Q – has nonetheless been biased upwards by the internationalisation of Corporate America.