This month Jason Weaver discusses S&P 500 inflection points, interest rate environmental performance and international stock P/Es.
S&P 500 Inflection Points
Valuation matters.
The last time that the market P/E ratio was above 20 and 10-yr treasury was above 4% was right before the tech bubble burst in 2000.
At market troughs in 2002 & 2009, Forward P/Es were well below long term averages even though earnings were depressed
Interest Rate Environmental Performance
During lower rate environments, growth tends to outperform value.
As interest rates rise, this outperformance narrows, with value outperforming growth in a >5% interest rate environment.
International Stocks P/Es
International stock have historically always traded at a discount relative to the US
- 20 Yr SPX Avg P/E:15.6
- 20 Yr International Avg P/E: 13.1
International equities are trading at a significant discount right now
- Current SPX P/E: 20.5
- Current International P/E: 13.4
