Generally speaking, equity risk premia for the US aren’t any worse than usual, for all the worries about overvalued markets given rates.

Granted, it depends on the outlook for earnings, but “rates adjusted”, it’s not too bad.

The market has only tended to get itchy when the aggregate measures of ERP start to push below 4.5%. Again, if earnings dropped 20-odd percent, that would get you there. But the economy is strong, and I can’t see margins collapsing just yet.

Markets outside the US are even more attractive, given the lower starting valuations, although it is fair to say the earnings outlook is much less certain too.

Few free lunches to be had, I suppose.

No call to action, except that implementing broadly inline with one’s SAA seems reasonable, given that there’s good reasons to be bullish, and good reasons to be bearish.

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