[Source | Research Affiliates]
Remember that CAPE uses an average of last 10 years earnings, so it tends to smooth out 1 year very good earnings. It is also inflation adjusted.
The contrarian thought is that the hated emerging markets is where the value is.
Some other thoughts are, earnings should be forward looking, and what if the low interest environment means a challenging emerging markets operating environment?
Would the next 10 years E be different?