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Macro Nugget: US equity risk premium below 1%.. time to worry?

As the equity risk premium dips below 1%, nearing levels seen during the Global Financial Crisis, should we all start the fire sale?
2024-07-26

With the expected equity risk premium falling below 1%, based on calculations using forward earnings yields and OIS, we are nearing the risk premium levels observed during the Global Financial Crisis. The natural question that emerges is whether it’s time to sell, considering the market’s apparent “expensiness”. We continue to be overall bullish until we encounter macroeconomic risks that might trigger selling.

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