FT Unhedged – Ethan Wu & Robert Armstrong highlight ASR’s long-term ERP
24th JAN. 2023
Noting ASR’s “detailed work on the ERP”, calculating nine different ERP methodologies and taking the median output… Wu and Armstrong would agree with ASR that “a decade-low ERP seems a mighty modest premium for a very precarious investing environment”
FT Unhedged notes “A falling ERP is therefore not what you’d expect in a market bracing for the most anticipated downturn ever.
The most obvious explanation, to us anyway, is that the market has not priced in much economic pain."
The chart (from ASR’s Charles Cara) demonstrates what the ERP looks like over the past 70 years.