The key unknowns in the US equity market

Volatility created attractive entry point

How capital markets and underlying US economy respond to higher rates remains a key unknown though, says SLI's Jeff Morris.

After more than a year of the US equity market trading above long-term averages, valuation has retracted to 15x forward earnings versus the 14.5x median of the past five years. The current market P/E is somewhat distorted by the energy sector, which is trading at 28x earnings. The market is looking beyond next year's earnings valley for the energy sector which has been created by a collapse in commodity prices. Other valuation measures such as dividend yield support the notion of the market valuation in line with post-financial crisis medians. In comparison to other asset classes, the...