During the past 8 years of the current bull market, major equity market indices like the S&P500 have risen by some 250%. Market valuation has risen, too. At a P/E ratio well above 20 on a trailing basis, the S&P500 is by no means cheap anymore, as our “Chart of the Week” shows. Hence, we need increasing corporate profits to support the U.S. stock market. European equities are trading at more favorable valuations, however political uncertainty is currently weighing on the market.
Source: Bloomberg Finance L.P., Deutsche Asset Management Investment GmbH; as of 03/16/17