Based on most traditional metrics and their own history, US valuations look elevated — both on their face and relative to their global peers. But there are some solid reasons why investors may be partial to US stocks now.
As shown below, current forward P/E multiples are above their 10-year averages across global markets, but particularly so for the Russell 1000 (green shade). The valuation gap between the US large-cap index and its peers is even more acute on a relative basis. The US premium versus the global index is well above its long-term norm (red shade), while the rest of the world’s markets all carry deeper discounts.
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