S&P500 P/E Expansion May Be Difficult Over The Next Few Quarters

February 07, 2014
By Knowledge Leaders Team in Uncategorized

Over the past 10 years the S&P 500 Price to Earnings ratio and the real trade-weighted dollar index have had a nice correlation. As the dollar has strengthened P/E ratios have expanded (with a three quarter lead for the dollar). The level of the dollar has been relatively steady for the past 8 months which may mean, at best, P/Es will remain where they are today over the next few quarters.


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