Two weeks ago Warren Buffett gave an interview on CNBC and gave his usual long term bullish outlook for the stock market and the U.S. in general. When asked about current valuations he said “stocks are on the cheap side.” But did this with what seemed to be a certain reluctance and large caveat; namely this view is predicated by the still historically low interest rates.

In fact, when you look at the metrics Buffett has typically relied on to determine valuations, the stock market looks rather lofty. Before deciding whether we should be concerned whether this seemingly contradiction of his own beliefs is raising a red flag, let’s review the “Buffett Valuation Index.”

Back in late 2014 when the S&P 500 was hitting a new all time high, I wrote about the The Chart That Has Buffett Worried. The two big measures Buffett has longed looked at are comparing GDP to corporate earnings growth and overall market capitalization. He explained the metrics and his reasoning in the now famous Fortune Magazine article in late 1999, prior the bursting of the dot.com bubble.

The thrust of his thesis is thus:

Corporate profitability in relation to GDP must rise. You know, someone once told me that New York has more lawyers than people. I think that’s the same fellow who thinks profits will become larger than GDP. When you begin to expect the growth of a component factor to forever outpace that of the aggregate, you get into certain mathematical problems. In my opinion, you have to be wildly optimistic to believe that corporate profits as a percent of GDP can, for any sustained period, hold much above 6%. If corporate investors, in aggregate, are going to eat an ever-growing portion of the American economic pie, some other group will have to settle for a smaller portion.

So I come back to my postulation of 5% growth in GDP and remind you that it is a limiting factor in the returns you’re going to get: You cannot expect to forever realize a 12% annual increase–much less 22%–in the valuation of American business if its profitability is growing only at 5%. The inescapable fact is that the value of an asset, whatever its character, cannot over the long term grow faster than its earnings do.

So where do we stand now? First it should be noted GDP has been struggling to grow much above 2.5% over the past five years. Of course, expectations have now been ratcheted higher, towards the 3.0%+ level since the election of President Trump and his pro-growth policies.

Still, that remains well below the 7% expected EPS growth and the 18x forward earnings multiple currently being awarded to the S&P 500 Index. On this measure, growth seems to be fully priced in.

Also, the post-election market surge has pushed the market cap measure back near those 2014 levels, which are the highest levels since the dot.com bust.

Again, we need to consider the important variables affecting investment results; interest rates. These act on financial valuations the way gravity acts on matter: The higher the rate, the greater the downward pull. That’s because the rates of return investors need from any kind of investment are directly tied to the risk-free rate they can earn from government securities.

If the government rate rises, the prices of all other investments must adjust downward, to a level that brings their expected rates of return into line. Conversely, if government interest rates fall, the move pushes the prices of all other investments upward. The basic proposition is this: What an investor should pay today for a dollar to be received tomorrow can only be determined by first looking at the risk-free interest rate.

So, it would seem Buffett’s claim that stocks are cheap is merely referring to the fact that compared to other investment opportunities, such as fixed income, you’ll get more bang for your buck in the stock market.

But given we seem to be entering a rising rate environment, that relative valuation could change dramatically. Now, this doesn’t mean the market needs to sell off. But it does seem to suggest a lot of growth has already been priced in. Meaning we may have “pulled forward” future gains and could see another period of flatlining such as the two years following those 2014 highs.