More to the S&P 500’s strength than the prospect of easier money

While the prospect of looser Fed policy has helped to drive the S&P 500 to new highs in recent months, there is another reason the index has surged. This isn’t an increase in its valuation compared to that of 10-year inflation-protected Treasuries, which has actually dropped back a bit. Rather it’s a broad-based rise in analysts’ expectations for earnings per share (EPS). This rise is intriguing, because it’s at odds with growing concerns about the economy.