The gap between cyclically-adjusted price/earnings ratios (CAPE) for the non-financial sectors of the US and euro-zone stock markets – using Shiller’s method – has climbed from below zero in May 2008 to a current level of more than eleven, which is the largest it has been since the bursting of the dot com bubble. However, we would be wary of interpreting this as a sign that the equities in the euro-zone are much more attractively valued than those in the US.
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