The stimulus “is going to hit the economy in a big way this year and next year, and then in 2020 Wile E. Coyote is going to go off the cliff,” Bernanke said, referring to the hapless character in the Road Runner cartoon
– Ben Bernanke, former Fed Chairman, June 7
Stunning valuation metric of the U.S. stock market.
We used the Fed’s Flow of Funds for all domestic sectors for corporate equities in the numerator. It is the same numerator as Doug Short’s but includes the equity market value of the financial sector. Yes, it may be a bit distorted due to buybacks.
We invite you to confirm the calculation. Click here to download the data from Table L.223 for the equity data and Table F.2 for the GDP data.
Nonetheless, the Buffet Indicator is not exactly flashing a “buy the market it is cheap” signal.
The sun came up today and “you wanna talk about tail risk?” Come on, man!
Bernanke’s Wile E. Coyote moment is coming to the stock market. The question is not if but when? Our bet it will be certainly before Gentle Ben’s.
Rentals only, my long brothers and sisters.
Stay tuned, Roadrunner.