Step aside, gents. Lagarde and Merkel take the lead in rebuilding Europe’s economy

Europe’s monetary and fiscal titans are finally moving in lockstep as a wave of German stimulus buttressing additional central-bank easing heralds the prospect of a new era of policy coordination in the region.

Those measures to aid the economic pickup from the coronavirus crisis, announced within half a day of each other in Berlin and Frankfurt, followed a groundbreaking shift toward creating a European recovery fund in Brussels supported by joint borrowing.

Germany needed to act “courageously and decisively,” Chancellor Angela Merkel told German broadcaster ARD in an interview late Thursday as she defended the government’s unprecedented spending spree. “Luckily in the good times we have acted in a way that enables us to do this now.”

Each initiative is already substantial, but combined they’re quite the show of force. They also suggest that Europe, which has long struggled to find common ground over economic policy, is more than ever exhibiting a sense of collective purpose.

“The shift in policy making at the European level has been tremendously significant,” said Neville Hill, chief European economist at Credit Suisse in London. “It’s not only capable of allowing the euro-area economy to recover well from the near-term crisis, but it does raise the prospect of a better, and a better-balanced, policy framework in the European Union once it’s recovered.”

At the center are two women who can draw on unique experience of prior financial market turmoil. Germany’s long-serving chancellor oversaw two days of tense negotiations to clinch a 130 billion-euro ($147 billion) stimulus push, after Merkel brought her government round to sharing its fiscal might to back the EU’s new borrowing tool.

Meanwhile, European Central Bank President Christine Lagarde, a former French finance minister and International Monetary Fund chief, has kept her institution at the forefront of crisis firefighting, while bluntly telling governments that it can’t do the job alone. Policy makers expanded bond purchases by 600 billion euros on Thursday, and could still add to that in future.

“The ECB is acting much more aggressively than it has ever done before, and so is the German government,” said Nick Kounis, an economist at ABN Amro in Amsterdam. “The policy response has been much more rapid and coordinated and focused compared to the global financial crisis.”

Stimulus SalvoECB unveiled more easing action on T

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Has the market lost its mind? Probably. But there’s a slim chance that equities are entering a new era of high valuations

If you’re one of those calm, rational investors who believes that earnings, not wild shifts in momentum, drive stock prices, you’ll probably draw the logical conclusion from the phenomenal rally in stocks: The markets are unhinged from reality.

Indeed, the view that stocks are defying gravity and will fall to earth is probably the right one. But a slim chance exists that equities are entering a new era of super-high valuations, and not just for a couple of years—a trademark of past bubbles—but as an enduring new normal. The reason: Interest rates on risk-free Treasuries that compete with stocks for investors’ dollars will remain far below historic norms for many years to come.

On June 5, the S&P 500 closed at 3194, a 43% jump since the March lows that marks the biggest short-term rally ever. The index now sits just 1% below its near-record close last year. The reason for the jump looks crazy: It’s hard to envisage a scenario in which profits rebound fast enough to remotely support prices that since February have careened from rich to reasonable to rich again.

To be sure, the surprise surge in new jobs that ignited June 5’s 2.7% breakout was great news. But what matters most is where profits are headed, and on that front the news remains dismal even as the market parties on. At the close of 2019, the S&P posted net earnings, based on the trailing four quarters, of $139.47, an all-time high. Where would those profits need to settle once we get past the shutdown and tumult from the coronavirus pandemic for shareholders to make a decent return from here?

The intrepid folks buying stocks at these heights are taking big risks, so they’ll want a pretty good return. Let’s be conservative and say they’re looking for 5% capital gains (that’s a modest total return of 6.8% including the dividend yield). In that case, the S&P would need to hit 3522 by early June 2022, when it’s safe to predict the hurricane has passed. Now, we need to choose a reasonable price/earnings ratio, what investors are willing to pay for each dollar of profits, two years hence. That’s a tricky job, since multiples have varied widely in past decades. For example, the median P/E since 1990 was 21.8, far higher than the 60-year benchmark of 17.4.

I choose a P/E of 20 because it’s around halfway between the two readings—higher than the long-term number but below the extremely elevated levels of recent years. Dividing the current S&P index by

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8 athletes who own stakes in MLS teams

Step aside, tech startups. The newest enterprise where athletes are investing their money? Major League Soccer teams.

Kevin Durant of the Brooklyn Nets became the latest to join the trend with the purchase of a minority stake in the Philadelphia Union, Sports Business Daily reported Thursday. According to the outlet, the stake runs somewhere between 1% and 5%, and it’s not yet clear if the investment is a personal one or through Thirty Five Ventures, the business Durant cofounded with his manager, Rich Kleiman. The firm declined Fortune’s request for comment.

But K.D. isn’t alone: A number of world soccer stars and NBA players have a mutual fandom in each other’s respective sports. Los Angeles Lakers star LeBron James is a notable fan of Liverpool Football Club, a team that plays in England’s Premier League, and went so far as to purchase a 2% stake in the team in 2011, which was reportedly worth more than $32 million as of 2018. The late Lakers star Kobe Bryant was a passionate supporter of FC Barcelona. And speaking of Barcelona, one of the team’s stars, Antoine Griezmann, is ardent fan of the NBA, going so far as to say he’d prefer watching an NBA game over a match in his own sport.

In the U.S., soccer is growing in popularity as the MLS continues its expansion from 10 teams in 1996 to 26 today—with four more teams set to round out the league by 2022. With an average attendance of more than 21,000, the MLS has the third highest attendance of the five major U.S. sports leagues—beating out the NBA and NHL.

Athletes in the U.S. appear to have taken notice of soccer’s growing appeal in the country, and are in turn buying stakes in MLS teams. Here are the others investing in the MLS:

James Harden and Oscar De La Hoya James Harden cheers for the Houston Dynamo during the Leagues Cup in Houston in July 2019.Omar Vega/Getty Images

In 2019, the Houston Rockets star and 2018 NBA MVP purchased a 5% stake in the Houston Dynamo as well as the Houston Dash, the National Women’s Soccer League team (the Dynamo and Dash are part of the same ownership group). According to Front Office Sports, Harden’s investment put the organization’s value at $475 million.

“Houston is my home now, and I saw this as a way to invest in my city and expand my business interests at the same t

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