S&P 500: Stagflation To Burst The Bubble
Summary
- The S&P 500 is in a bubble, trading at extreme valuations with a Shiller PE above 37, which is just below the 2000 dot-come levels.
- The recent Fed's SEP suggests that stagflation is a major risk in 2025, and possibly in 2026.
- The recent bounce in the S&P500 was due to multiple expansion, with significant downgrade to 2025 earnings growth, in face of rising stagflationary risks, which supports the bubble thesis.
- The first evidence of stagflation in the hard data is likely to burst the bubble.
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