By three classic measures of value equity markets do not offer investors much opportunity for upside especially given the terminal interest rate from the Fed will be higher than current levels and will likely be at higher rates for longer.
1. The dividend yield is low especially given that rates are rising. The market is close to one standard deviation below the long-term average. The yield is low even for the last ten years.
2. Earnings yield tells a similar story with values below the long-term average. The CAPE is a long-term measure but does suggest that the yield is low versus current rates.
3. The classic Buffet measure of equity to GDP shows that the market has come off the extremes, but the value is still above one standard deviation from the norm.
There can be improvement in equities during 2023 but it is not happening if the current environment and policies are maintained.
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