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Despite the market gyrations of the past six months, the real economy appears to be steady, the Fed patient, and inflation tame. Where does all this leave investors?
While longer-term valuation measures show historically elevated valuations and thus imply lower future returns, lower real discount rates means equilibrium equity valuations are higher than in the past.
Given dramatic moves in risk markets, we provide a brief update of what we think markets are currently pricing in along with implications for investing.