Relative value models

For FEd model, the denominator is S& P 500 yield ( meaning E1/P0)

for Yardani model, is it the same ??

yes and the numerator incorporates the A’rated corp bond yeild

numerator or denominator?

i normally use it like this:

E1/Po - (Yb - dLTEG) < 0 then over valueed

E1/Po - (Yb - dLTEG) > 0 then under valued

Si isn’t the first part E1/P0 = S&P earning yield- which is in the numerator in the FED model also ?

I’m totally confused here.

Both Yardeni and Fed model compare vs. E1/P0. You can check this in the 2013 AM session available via the CFA site. There’s a problem in there about Yardeni and Fed.