S&P 500 Valuations
Despite this year’s massive underperformance by the Equal Weighted S&P 500, the median stock doesn’t appear substantially more attractive than the cap-weighted index. Three of five valuation measures are now back in the top decile of readings, which we’d consider pricey in any monetary or economic backdrop.
Stocks could trade higher in the next few months as CPI numbers enjoy easy year-to-year comparisons, prompting a more soothing tone in daily Fed-speak. Then again, the lagged impact of the last year’s rate hikes and balance-sheet shrinkage has yet to materialize, meaning we’re likely in the eye of the storm.