Now we even have it in a back-handed way from Deutsche Bank. Its chief strategist, David Bianco, claims that the S&P 500 is now trading at 17X reported trailing earnings and that historically when the multiple has gotten into that zone after three years or more of market gains (we have had five) good things do not happen. But, yes, this time is different according to perma-bull Bianco because even though above 17 PEs are rare after many years of EPS growth, very low interest rates are even more rare and support higher PEs:
Thus, powerful global structural trends appear at work and we find ourselves more accepting of long-term risk free real interest rates staying well below historical norms through the cycle. The completion of a good earnings season, improved confidence in decent US growth and S&P EPS growth for at least the rest of the year, and these still exceptionally low interest rates is shifting risk firmly to the upside for our longer-term fair value S&P 500 targets. We increasingly see the currently observed PEs as fair with upside at Tech, Healthcare and Financials, partially offset by Energy, with further overall S&P price gains fueled by EPS growth.