Bloomberg Intelligence's 'Equity Market Minute' 2/26/2020

Gina Martin Adams from Bloomberg Intelligence discusses the recent market downturn, noting that valuation multiples have returned to reasonable levels, but earnings estimates remain high. She compares current interest rates to those in 2017 and suggests that equities are fairly valued. Analysts have reduced earnings growth expectations, but further reductions may be needed. A realistic earnings growth outlook is 2-3% for the year, contrasting with previous 8% expectations.

What recent change in the equity market is considered good news?

• Earnings estimates have increased.

• The market has reached an all-time high.

• Valuation multiples have returned to a reasonable range.

• Interest rates have risen significantly.

What historical period is compared to the current real interest rates?

• 2021

• 2017

• 2019

• 2015

What is the current fair valuation of equities according to the macro model?

• 19.7 times earnings

• 20.5 times earnings

• 21.0 times earnings

• 18.5 times earnings

What was the initial earnings growth expectation by analysts a few months ago?

• 7%

• 5%

• 11%

• 9%

What is the realistic earnings growth outlook for this year?

• 2-3%

• 1-2%

• 6-7%

• 4-5%