The signs are good

Despite the welcome uplift in the value of riskier assets from March to May, share prices still remain depressed by historical standards. In fact, the FTSE 100, at the end of May, was still below its level of May 1997 (4,621) which, coincidentally, is when Mr Brown became Chancellor. By historic standards, equity fundamentals remain compelling. The current earnings yield spread, at around 6.5%, is indicative of the fact that investors are requiring a much higher potential return from riskier assets relative to safer assets. Other indicators are also positive. The FTSE 100 divided yiel...