Commentary
The “Rule Of 20” says the “bear market” may just be resting despite much commentary to the contrary. In a recent Investing.com article, Bank of America strategist Savita Subramanian warned clients that stocks are still expensive despite this year’s drawdown.
“Our analysis of the ERP indicates a 20% likelihood of a recession is now priced in vs. 36% in June. In March, stocks priced in a 75% probability of recession. Even on Enterprise Value to Sales, where sales should be elevated by the tailwind of 9% CPI, the market multiple is excessively elevated (+40%) relative to history – possibly because real sales growth ex-Energy is essentially flat.”…
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