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If A Bear Roars In The Woods
Albert Edwards sees trouble. Potentially. And also perpetually and perennially, by the way, which is why "some" market observers dismiss Albert's warnings as, at best, the ad nauseam naysaying of a man who may be right one day, but never today.
"It takes a particular type of (weird) person to stand out from the crowd and be willing to say the unsayable, i.e. be a proverbial 'pain in the neck,'" Edwards wrote Wednesday. "That is me."
Yes, it is. But Albert's mischaracterizing a bit. It's not th
I think it’s a stretch to call that forward:backward EPS ratio “stretched” right now… it naturally (mathematically) goes rapidly higher coming off a difficult (low EPS) period, which we had quite recently due to inflation-related issues. The faster the bounce, the higher that ratio goes… calling it stretched would be if the ratio was high AND the backward EPS values were not low. Example: late 2017 during the buildup to the volpocalypse, the ratio was hovering about 1.15, when EPS was fairly normal 12+ months earlier and the market had been bullish since Q2 of 2016… that time looks stretched to me. This current situation looks like math, not stretch marks.
Thanks for covering Albert occasionally, and/or other bearish indicators, even if they might not be.
At some point the compute build and software tools will have gained what they can. Eventually, the S&P490 will have AI tools working for them, reducing middle- and upper-middle class headcount, accruing profits and margin of AI productivity to management and potentially to shareholders. At that point, chips will be commodities again in a price war to the bottom. So when the 490? We’ll have to wait and see.