Handicapping the Likelihood of QEIII

Last week, we observed a significant deterioration of market internals. On the slightly brighter side, from a valuation perspective, the pullback in the market has modestly increased our estimate of likely 10-year S&P 500 total returns from about 3.4% at the market's peak to about 3.9% presently. That's an improvement, but the muted extent of that improvement should provide some indication of the extent of market losses that would be required to restore meaningfully attractive prospective returns.