Value vs Growth: Are we back in 2022?

Research evidence excerpt

Value vs Growth: Are we back in 2022?

G4 CPI peaked at >8% in '22, compared to 20.018.0

3.3% today which, depending on the outcome of the war, might rise to ~4%. 16.014.0

Similarly, PPI peaked at over 20% in '22 vs ~5-6% today. At the same time, it 12.010.0

was not until May'22 that the Fed had belatedly started to raise rates from Dec-10 Jul-11 Feb-12 Sep-12 Apr-13 Nov-13 Jun-14 Jan-15 Aug-15 Mar-16 Oct-16 May-17 Dec-17 Jul-18 Feb-19 Sep-19 Apr-20 Nov-20 Jun-21 Jan-22 Aug-22 Mar-23 Oct-23 May-24 Dec-24 Jul-25 Feb-26

Growth Value S&Pzero bound whereas, today, the Fed (and other CBs) are close to estimated

neutral rates. Four, valuation discrepancies of value vs growth are far less Source: Bloomberg; Macquarie Global Strategy

pronounced, due to very strong EPS delivery by technology sectors. While

one could debate the extent to which estimates are flattered by circular NASDAQ Forward PER (x)

revenues and EPS (à la Global Crossing during dot.com), there is evidence Nasdaq Fwd 12m PE Ratio

of strong customer revenue delivery by most platforms, including LLM labs. 4540

In the US, growth styles were trading at ~30x in '22 vs ~24x today, which 35

30represented a premium of 1.7x relative to value when compared 1.3x now.

Moreover, growth ROEs are at the historical high of ~32% vs ~18% for value. 2520

Similarly, NASDAQ is trading at ~27x vs 32x+. Five, but, today's markets 15

10might suffer from an indigestion of new technology-related issuance, amid

2006 2007 2008 2009 2010 2011 2011 2012 2013 2014 2015 2016 2016 2017 2018 2019 2020 2021 2021 2022 2023 2024 2025 2026

rising capital expenditure commitments, unlike '22, when gains were capital Price / Earnings Hist Avg

light. 3. A less discussed topic is more extreme societal polarization and