From a capital cycle perspective, the above situations only become attractive when stock market valuations fall to a fraction of replacement cost and a path opens up for dealing with the excess capacity.

The debate about whether or not US stocks are cheap often uses a P/E valuation framework. This is misleading, inappropriate and dangerous at the macro-level. Better to understand the liability structure of investors and the direction of cross-border capital flows . These explain why momentum investing has outperformed value investing since internat