Global Equity Risk Premia - 2025-12-07

The US equity risk premium is still the narrowest in the world versus its 18-year mean, and persisting at levels not seen since the 1980s and 1990s. We have marked the "liberation day" peak as a new signpost, probably setting the ceiling for our present epoch. Now the rest of the world has significantly caught up with the US as virtually all markets have performed well amidst a global earnings surge. Small- and mid-cap are still significantly cheaper than large-cap, but there is almost no difference in ERP valuation terms now between so-called growth and value.