This week, Zacks Equity Strategist Mayur Thaker, CFA discusses:

• The latest entry in his regular series of macro updates. This week, Mayur discusses the growing number of valuation metrics that are warning we are entering territory not seen since 2000, and cautions that they could indicate evidence of a market bubble as we experienced back then. Although the more traditional valuation measures remain reasonable, Mayur offers 4 metrics that suggest we are entering bubble territory.

• In addition, Mayur still has his eye on a number of macroeconomic indicators that continue to signal a recession ahead. Manufacturing gauges have been in recession for 16 months; the 10y – 2y UST yield curve has been inverted for 21 months; excess savings is well below trend; leading employment indicators are entering contraction; and credit card delinquencies are rising, to name just a few warning signs.

• How should investors react to these conditions? Mayur believes that the currently strong EPS estimates, signs of disinflation, and easing long-term yields offer a ‘Goldilocks’ blend of conditions that continue to fuel a powerful market rally. However, he advises investors to watch for three key metrics to know when to shift to a very defensive position. Watch this week’s webinar to find out what they are, and to get Mayur’s ideal defensive capital allocation for 2024.