The S&P 500 is trading at 21x current earnings (vs. the ten-year average of 17x), suggesting there’s more downside than upside to the stock market.
Moreover, apart from the high employment numbers (which many question because they’re composed of part-time workers and retirees who can’t afford to retire, etc.), most indicators foreshadow a tougher time ahead for earnings:
• Inflation sticky way above the goal of 2%
• Yield curve remains inverted
• Federal tax receipts decreasing and IRS refunds down 57%
• Employment: Unemployment claims trending up, temporary staffing down, # of job openings down, hiring is down, # of people quitting is down
• Real wages down 2.5% since 2019 & real consumer spend (retail spend) is down
• Industrial production down
• # of building permits down
Perhaps a good time to consider asset classes other than public stock that don’t trade at 21x?
