INSIGHTS

The S&P 500 trades at approximately twenty times forward earnings. Invert that and you have an earnings yield of roughly 5.0% — the profit attributable to each dollar invested in the index over the next twelve months. The ten-year Treasury yields approximately 4.74%. The difference between those two numbers is about a quarter of one percentage point, against a long-run average somewhere between three and four points. On the simplest reading, that quarter point is the compensa

Executive Summary Our January outlook argued that 2026 returns would be driven by earnings delivery rather than multiple expansion. That call was correct — but the market has arrived there by a route few could forecast, and the composition of returns has been far more important than their level. The S&P 500 closed at 7,674 on 21 August, roughly 12% higher year to date and already above the upper bound of our 7,400–7,600 year-end target. Yet the index is cheaper than when we p

Executive Summary The investment case for 2026 rests on a fundamental tension: corporate earnings remain robust and are projected to grow 12–15%, while equity valuations sit near the upper quartile of their 10-year range on a forward P/E basis. This creates an environment in which returns are more likely to be driven by earnings delivery rather than multiple expansion, representing a shift from the valuation-driven gains of recent years. Three structural forces dominate the o