The QE Premium

The Federal Reserve maintains unprecedented monetary policy with hopes of eventually sparking sustainable trend economic growth. Although most barometers of economic activity maintain weak levels and worrisome trajectories, there are plenty of indications that Fed policy has promoted excessive inflation in a variety of asset classes.

Among the most important obligations of professional investment managers is the assessment of risk and return expectations across and within asset classes. In times where prices appear divorced from underlying fundamentals, such as today, this job is even more important. In "The QE Premium", we make an effort to quantify the potential risk to equity holders if valuation premiums change.