The reason this number is important is because it speaks to perhaps the single-biggest reason stocks seemingly never go down anymore, or not for long if they do, and that is because there is no alternative.
S&P 500 trading at around 26 times earnings, stocks are always expensive — or cheap — for a reason.
And one big reason is the outlook for earnings. The S&P 500 is expected to generate record profits per share of around $220 this year, up from an estimated $209 for 2021.
The extra yield investors demand to own junk bonds rather than risk-free Treasuries is lower than this time a year ago. That’s a sure sign that bond traders are confident that the outlook for corporate America is bright.
Robert Burgess Bloomberg January 7, 2022
Buy stocks because bonds have so low yields.
Buy bonds because the stocks are so high.