Friday, November 22, 2019

S&P 500's valuation benefits from lack of economic misery

U.S. stocks are anything but overvalued after taking inflation and unemployment into account, according to Edward Yardeni, president and founder of Yardeni Research. He cited the signal sent by his Misery-Adjusted P/E Index, or MAPE, in a report Tuesday. The indicator is calculated by adding the misery index, the sum of the annual percentage change in consumer prices and the jobless rate, to the S&P 500 Index’s price-earnings ratio according to projected profit. Thursday’s MAPE reading was 24.2, a point below its average since 1990, according to data compiled by Bloomberg.

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