On some indicators equities look expensive – the CAPE ratio is the highest since the dot.com boom. But with interest rates at multi-decade lows, shouldn't equity earnings yields be low too? Rising interest rates pose a threat to valuations, but models suggest this could be offset as long as recession fears remain low.
Many 2017 outlooks included the sentence "in a strong US dollar environment..." Expectations for the US dollar immediately after the election of President Donald Trump were elevated, while the euro continued to face headwinds. As often happens with forecasts, it couldn't have been more wrong. So what's next?