Equity Boost
Macro Perspectives
We've talked about the very positive development for stocks over the past eight trading days.
It started with the game changing declaration from Nvidia, about the beginning of a "new era in technology." We've since had the overhang of the debt ceiling drama removed, followed by the Fed telegraphing a pause on the rate cycle.
With that, we finally get a breakout of the 4200 area in the S&P - the move in stocks is now (just in the past two days) becoming more broad based.
As we head into the weekend, the S&P trades at a forward P/E of 18 - the average P/E in the post-GFC era (Global Financial Crisis) is 21.6.
In the late 90s, the Fed Funds rate averaged 5.2% (between '95 and '99). That's about where the Fed Funds rate stands now. During that time (late 90s), the P/E averaged 25x. Economic growth grew at a better than 4% annualized rate for the period and stocks averaged 28% a year.
