Räntor, värderingar Wall Street

Futures traders now think a Federal Reserve rate cut is a slam dunk next month, something usually good for stocks when it isn’t due to weaker growth. 

Private-sector job creation has stalled, with the report showing this infuriating the president so much he fired the head of the Bureau of Labor Statistics, which also produces the inflation figures.

A move toward mild stagflation is far from certain.

But the data suggest it is absolutely a risk, and it is even visible in Wall Street earnings forecasts, if you squint. 

It just doesn’t show up in stock prices.

The consensus for S&P 500 earnings in 12 months is 6% higher than at the start of the year. 

But earnings upgrades have been heavily skewed toward three successful sectors: tech, communication services (where Meta and Alphabet sit) and financials.  

One plausible explanation: The artificial-intelligence boom and data-center construction is hiding pain in other areas. That’s not a great foundation for record-high stocks.

Stocks’ price-to-earnings ratio, using forecast profits for the next 12 months, last month hit 22.5. That is the highest in data since 1985

This valuation gauge is down a bit this month because analysts have upgraded their profit forecasts by the most in more than a year, but is still extraordinarily high. 

Lofty valuations also show up in gauges such as the Shiller P/E, and ratios of prices to free cash flow and to book value.

The bad news is that the high valuations are combined with profit margins expected to hit a new high for listed companies in data going back to 2002. 

Investors expect the best of all possible worlds.

James Mackintosh Wall Street Journal Aug. 15, 2025

https://www.wsj.com/finance/stocks/spotting-clouds-in-a-carefree-summer-market-a71a5c58


It’s true that significant differences exist between the current market and the top of the internet bubble. But no two bubbles are alike, and the existence of differences between today and early 2000 doesn’t mean we’re not in a bubble. 

https://englundmacro.blogspot.com/2025/08/feeling-fomo.html


There has been a generational change among investors. Fewer remember calamities such as the dot-com downturn or even the financial crisis. 

https://englundmacro.blogspot.com/2025/08/buy-dip-generation.html


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