From Chief Investment Officer Tom Veale,
“It’s nice to see the Price/Earnings ratio contracting from recent high levels. Unfortunately it’s taken a bit of a market dip for this to occur. Is it the anticipated rise in the Fed interest rates that is causing the dip or is it the rapid increase in annualized inflation? Our Relative Valuation Index doesn’t care as it’s responsive in either case. We are seeing the index dropping in recent weeks so P/Es are dropping faster than Interest Rates/Inflation are rising.
The overall Market Risk Indicator (MRI) continued to fall this week. Downward risk pressure is improving the outlook for the markets going forward.