Economic Insights – January 2016
We will focus on the outlook for U.S. stocks and what this could mean for your personal finances.
We expect the S&P 500 to end 2016 at 2,375, 15.7 percent above current levels. This is based on our Capitalized Profits Model, which discounts corporate profits by the 10-year Treasury yield.
Given a 10-year Treasury yield that currently stands at 2.25 percent, the “raw” version of the model says the S&P 500 is “worth” 4,228. Obviously, that’s insanely high. But this number is artificially high because Fed policy is still holdi.....