And therefore, on a relative basis, overall equities don't look that expensive. And even as interest rate expectations have increased over the course of the next year or so, in real terms, interest rates are still going to be very low. PETER OPPENHEIMER: Well, bear in mind, though, we still have negative real interest rates. I guess, where is fair value for stocks right now in the United States, given this scenario that you're outlining, where the economy is relatively strong and the Fed is raising rates? It's up about 5% from its low on January 27, where it closed. I was just looking at the numbers for the S&P 500, for example. We have had a little bit of a bounce off the lows. And although we've seen a D rating in the equity market as interest rates have increased, we'll still get a gradual trend in equity markets higher. And as long as the economy is still growing, then profits will grow. Now the market's pricing close to 10.īut overall, the economy remains pretty robust. I mean, as recently as June of last year, the market was pricing no rate rises this year in the US and maybe one at the end of next year. It's important to emphasize that there's been a massive change in rate expectations over a very short time. And I think we would take the second interpretation more seriously.
But on the other hand, if it's being justified because the economy is strong, that's got to be good ultimately for stocks. On the one side, you've got a stronger economy and more evidence of that, which is pushing people to expect faster, more aggressive rate rises. PETER OPPENHEIMER: Well, it's an interesting question, because, obviously, there are two sides to the pressures here. BRIAN SOZZI: -report, do you think- do you think it supports a bull case in the market or a more bearish take?
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