In our judgement, the answer to the question of whether equities are in a bubble is no. Clearly, some elements do have the required characteristics: Google trends mentions of ‘stock market bubble’ have moved sharply higher, and our exuberance index (which captures the number of companies with price to sales greater than 10x whose share price has more than doubled in 3 months) is the highest since 2000, though only around half of those peak levels. Only c10-15% of our indicators suggest we are in a bubble. That said, we do think the preconditions of a bubble exist, with monetary conditions the loosest on record, a super dovish Fed seemingly unconcerned about rising equity prices and still significant excess liquidity.

Below we look at ten characteristics of a bubble that we in general do not see: