As investors are navigating all the buzz about this week's potential rate cut and the upcoming presidential election, JPMorgan is forecasting a serious risk to long-term stock returns. The market appears to be too expensive relative to history, according to the firm, which is projecting a 5.7% annual return from the S & P 500 over the next decade. That's barely above half of its post-World War II average, analyst Jan Loeys said in a recent note to clients.
"We have been warning over the last few years about the risk of a coming end of the Great Moderation because of more active fiscal policies and a reduced fixation with inflation control. This would raise risk premia and thus depress equity multiples," Loeys wrote in the Friday note.
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