Deutsche Bank sees S&P500 of 1500+

Deutsche Bank (Chadha c.s.) think US equities are cheap at a PE of 14.2 and deserve a PE of 16.4 based on current low credit rates versus operational profits/ share price.
Stronger for a higher S&P500 is their story that net demand for equities will improve. There is a strong correlation of equity returns with net demand (see figure 7)
Net demand was bad: equity fund flows were negative and net buybacks were also negative because of forced new issuances of financials while M&A were negligible. (see figure 6)
Both net buybacks as equity fund flows will improve substantially (see figure 16). Net buybacks are already quite high.