is still 200bps higher than its average of 390bps. 10 15 20 25 30 35 0 5 LTM PE (lhs) Source: S&P, FRB, Deutsche Bank Implied ERP (rhs) Avg PE = 15.9 Overstated EPS from inflation distortions 0% 2% 4% 6% 8% 10% 12% A -15 forward PE wouldn't be threatened until 10yr yields are wel

implied ERP 10 15 20 25 30 35 0 5 Recession Implied ERP (rhs) Avg ERP ex 1975-82 = 3.5% Trailing PE (lhs) EFTA01476109 Avg ERP = 4% Avg PE = 15.9 Red dot shows implied ERP on 10yr TIPS yield of 1.5% instead of 0.28% currently Source: Deutsche Bank Research, IBES, S&P Overstated EPS f

15 20 25 30 35 0 5 Recession Implied ERP (rhs) Avg ERP ex 1975-82 = 3.5% Source: Deutsche Bank, S&P, IBES Trailing PE (lhs) Avg ERP = 4% Avg PE = 15.9 Overstated EPS from inflation distortions Low offered ERP contributes to crash Long-term growth optimism Return to normal 0% 2% 4%