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People deserve a living wage. Barring a depression, prices will not come back BELOW the zero-line, wherever you peg it. But a living wage gets translated as inflation, and it can't be denied. Wage inflation will remain sticky. Lots of openings for people who are already retired---like me. Labor Force Participation rate continues to fall. Smaller pool of workers. Can't get all the bases covered....A seller's market for would-be employees, selling their time and talent.
Comments
Current estimates SP500 $225 at 3800 PE implied 17.3 or "Fair Value" 16.5
If Growth falls faster than inflation so Earnings down to $210 at current valuation 3700 or "Fair valuation" of 16.5 = 3465.
But this implies high inflation will prevent Fed from lowering rates so multiple will fall to 15 or SP 3150
If Inflation falls faster than growth EPS stays at $225 Multiple can bump up to 18 or 4050
I would bet on falling earnings and stagnant inflation, until unemployment rises to slow inflation