28. Connecticut
Population: 3,675,069
GDP growth (Q1 2025): -0.9%
Unemployment rate (May 2025): 3.8%
Top corporate tax rate: 7.5%
Top individual income tax rate: 6.6%
Gasoline tax: 43.40 cents/gallon
Bond rating (Moody's/S&P): Aa3, Positive/AA-, Stable
Economic profile sources: U.S. Census Bureau, U.S. Bureau of Economic Analysis, U.S. Bureau of Labor Statistics, Federation of Tax Administrators, Energy Information Administration (including 18.40 cent/gallon federal tax), Moody's Investor Service, S&P Global Market Intelligence
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17 minutes ago
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What an Elevated CAPE Ratio Means for Stocks
Since we specialize in options here at Schaeffer's Investment Research, I usually focus on technical analysis, sentiment gauges, and seasonal patterns. These types of indicators lend themselves to shorter term time frames. This week, I'm shifting gears a bit and examining the P/E ratio on the S&P 500 Index (SPX). Specifically, I'm looking at the Shiller CAPE (Cyclically Adjusted Price Earnings) Ratio. This metric calculates the P/E ratio of S&P 500 stocks while smoothing out earnings by examining the past ten years and adjusting them for inflation. The chart below shows the current CAPE Ratio of about 38 is extremely high. We have the data since 1928 and the only two times that it was higher than now was in the late 1990's, just before the tech bubble popped and for a brief period in 2021. Next, let's see how the S&P 500 has performed given the reading on the CAPE Ratio. S&P 500 Returns & CAPE Ratio The tables below summarize S&P 500 returns of various timeframes based on the level of the CAPE Ratio. The returns are annualized, which makes the figures, especially at longer timeframes, more intuitive. For reference, since 1928, the average one-year return of the S&P 500 is about 8%. So that's a good benchmark for comparison for each timeframe. The first table shows how stocks performed with the CAPE Ratio above 25, our current situation. The second table shows how stocks performed at the other extreme, when the CAPE Ratio was below 12. An elevated CAPE Ratio has typically led to an underperforming stock market. At longer term timeframes, the difference has been large. With the CAPE Ratio above 25, the S&P 500 has averaged a return of 6.6% over the next year with 69% of the returns positive. However, when the CAPE Ratio was below 12, the average return was 15.4% with 80% of the returns positive. Buy and hold investors should be nervous about the long-term results. With the CAPE Ratio elevated, the S&P 500 has averaged a return of 4.2% per year with 53% of the returns positive. When the CAPE Ratio was below 12, the five-year annualized return was 11% and, amazingly, every single one of the returns was positive. The last time we saw a reading below 12, however, was 1986. For completeness, here is a table showing S&P 500 returns with the CAPE Ratio between 12 and 25. Interestingly, the index has performed better all the way out to two years with the CAPE Ratio above 25 compared to when the ratio was between 12 and 25. It's long term investors with time horizons of at least five years who might want to lower expectations. Implications The data above shows a high CAPE Ratio has led to a significantly underperforming stock market over the next several years. This should make buy and hold investors nervous. As options traders, we are less affected, and this shows up in the data. With the CAPE Ratio above 25, the S&P 500 has performed better or just as well compared to when the ratio was at more moderate levels as far out as the next two years. Sign in to access your portfolio
Yahoo
36 minutes ago
- Yahoo
22nd District race heats up as endorsements roll in
If it wasn't already, the 2026 election season in Kern County is in full swing. Randy Villegas — now one of at least two Democrats to challenge U.S. Rep. David Valadao, R-Hanford — announced an endorsement from the progressive Working Families Party on Monday, setting himself up as a grassroots alternative to the status quo. 'There's an old saying in Spanish, 'dime con quién andas y te diré quién eres,' which translated to English means, 'tell me who you're with, and I'll tell you who you are,'' Villegas said Monday at a rally in front of Valadao's Bakersfield office. 'The same thing can be said about politics. Tell me who you're taking money from, and I'll tell you who you're actually working for,' Villegas said. A Visalia Unified School District board member and a political science professor at College of the Sequoias, Villegas was the first Democrat to officially throw his hat into the ring for California's 22nd Congressional District race. The district is seen as one of the most vulnerable in the nation, and though Valadao has been able to mostly hold onto his seat since 2013, he's been voted out once and regularly has to fight off well-financed challengers. But the centerpiece of Villegas' campaign is that he is refusing to accept money from corporate political action committees, or PACs, which means he'll likely have less money for glossy TV and radio ads, canvassing and all the other expenses that come with political campaigns. But that willingness to stand up to entrenched interests in the name of meaningful change was what could reinvigorate the Democratic base in the wake of the drudging the party took in the 2024 election. 'We know that it's not good enough to say that we're not Trump, or that we're not Valadao. We need to offer something more to our country, to our community,' Villegas said with a crowd of more than 30 people behind him. 'I think we need to start by getting rid of corporate PAC contributions in the Democratic Party,' Villegas said. 'I think we need to be willing to say that we are working for working-class people, and we can't claim to do that if we're taking the same money that Republicans are.' Villegas said Democrats should advocate for policies that reign in profiteering by corporations, which he called corporate greed. 'I think any politician who accepts money from these corporations that say that they need to raise prices while they're reaching record-breaking profits, including the oil industry, is selling us out,' Villegas said. 'Corporations shouldn't be claiming to be struggling when they're seeing record-breaking profits, and then still engaging in corporate greed and passing those costs onto our consumers.' Along with the endorsement of the Working Families Party, Villegas announced his campaign had raised $230,000 since April, evidence, he said, of significant grassroots support. 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Moderates who may have voted for Valadao in the past might be put off by his vote for House Resolution 1, formerly known as the Big Beautiful Bill Act, which enacted steep cuts to programs relied on locally, namely Medicaid. 'I think that vote is going to cause some voters to move away just because the district is so dependent on Medicaid,' Grose told The Californian. Valadao's district has the highest percentage of Medicaid enrollment in the state, 67%, and reductions to the program were cited specifically by Bains, a physician, upon her entrance to the race. Grose said voters in the district might not be motivated by Villegas' pledge not to accept corporate donations but will respond to attacks on the social safety net. 'The corporate money, I don't think that resonates much. It is more about bread-and-butter economic issues,' Grose said. 'I do think the more progressive argument, the lack of the social safety net, that can be pretty powerful in that district.' 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an hour ago
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Aristotle Capital Exited Xylem (XYL) Despite Its Potential and Long-Term Catalysts. Here's Why
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