Latest news with #AlbertEdwards
Yahoo
3 days ago
- Business
- Yahoo
Famed market bear Albert Edwards warns of an 'everything bubble' in US stocks and home prices that could soon pop
Albert Edwards warns of a potential US stock and housing market bubble. Rising interest rates and Japan's fiscal concerns could trigger market corrections, he said. Edwards publishes his notes under Société Générale's "alternative view." Société Générale's Albert Edwards, famed for calling the dot-com bubble leading up to the 2000 crash, is again warning investors of a potentially painful plunge ahead. In his latest note to clients this week, Edwards said US stocks and home prices are in an "everything bubble" that he thinks could soon pop. Stock valuations are indeed steep. The Shiller cyclically-adjusted price-to-earnings ratio sits at 38, one of its highest levels ever, and both the trailing and forward 12-month PE ratios of the S&P 500 are historically high. To Edwards, this doesn't sit well with the fact that long-term interest rates have been on the rise. Rising long-end government bond yields tend to weigh on stock-market valuations as investors can find attractive returns without taking on the high level of risk in the stock market. Yet US stocks have seen a robust rally in recent years, gaining 78% since October 2022 lows. The market's high valuations have kept future estimated equity-market yields low. When stocks are more cheaply valued, they can expect higher future returns, and vice versa. "It is notable how the US equity market has been able to sustain nose-bleed high valuations despite longer bond yields grinding higher," Edwards wrote. "I don't expect it'll be able to ignore it much longer." On housing, Edwards said that the home price-to-income ratio in the US has been virtually flat over the last few years following the pandemic bump, while the ratio has dropped in countries like the UK and France. "The US is the only market in which house price/income ratios have NOT de-rated since 2022 as bond yields have risen. Is the US housing market also exceptional relative to Europe? No, it's nonsense and, in time, investors will come to claim they knew that all along," Edwards wrote. As for what could cause the potential bubbles in US stocks and home prices to burst, Edwards said to watch Japan. "In the wake of the ruling party coalition losing its Upper House majority, concerns in the bond market about the risks of further fiscal easing and high inflation are growing," he wrote. Higher inflation in Japan could mean higher interest rates and a further unwinding of the Japanese yen carry trade, in which foreign investors borrowed cheaply in yen and converted to dollars to buy higher-yielding US assets. In 2024, the Bank of Japan unexpectedly hiked rates, roiling global markets as investors liquidated assets they had bought with borrowed yen. In May, Edwards warned rising interest rates in Japan could cause a "global financial Armageddon." Edwards publishes his notes, which regularly express a bearish outlook, under Société Générale's "alternative view," separate from the bank's house view. "A lot of clients who totally disagree with me like to read my stuff," he told Business Insider in May. "It's a reality check." Read the original article on Business Insider Sign in to access your portfolio
Yahoo
3 days ago
- Business
- Yahoo
Famed market bear Albert Edwards warns of an 'everything bubble' in US stocks and home prices that could soon pop
Albert Edwards warns of a potential US stock and housing market bubble. Rising interest rates and Japan's fiscal concerns could trigger market corrections, he said. Edwards publishes his notes under Société Générale's "alternative view." Société Générale's Albert Edwards, famed for calling the dot-com bubble leading up to the 2000 crash, is again warning investors of a potentially painful plunge ahead. In his latest note to clients this week, Edwards said US stocks and home prices are in an "everything bubble" that he thinks could soon pop. Stock valuations are indeed steep. The Shiller cyclically-adjusted price-to-earnings ratio sits at 38, one of its highest levels ever, and both the trailing and forward 12-month PE ratios of the S&P 500 are historically high. To Edwards, this doesn't sit well with the fact that long-term interest rates have been on the rise. Rising long-end government bond yields tend to weigh on stock-market valuations as investors can find attractive returns without taking on the high level of risk in the stock market. Yet US stocks have seen a robust rally in recent years, gaining 78% since October 2022 lows. The market's high valuations have kept future estimated equity-market yields low. When stocks are more cheaply valued, they can expect higher future returns, and vice versa. "It is notable how the US equity market has been able to sustain nose-bleed high valuations despite longer bond yields grinding higher," Edwards wrote. "I don't expect it'll be able to ignore it much longer." On housing, Edwards said that the home price-to-income ratio in the US has been virtually flat over the last few years following the pandemic bump, while the ratio has dropped in countries like the UK and France. "The US is the only market in which house price/income ratios have NOT de-rated since 2022 as bond yields have risen. Is the US housing market also exceptional relative to Europe? No, it's nonsense and, in time, investors will come to claim they knew that all along," Edwards wrote. As for what could cause the potential bubbles in US stocks and home prices to burst, Edwards said to watch Japan. "In the wake of the ruling party coalition losing its Upper House majority, concerns in the bond market about the risks of further fiscal easing and high inflation are growing," he wrote. Higher inflation in Japan could mean higher interest rates and a further unwinding of the Japanese yen carry trade, in which foreign investors borrowed cheaply in yen and converted to dollars to buy higher-yielding US assets. In 2024, the Bank of Japan unexpectedly hiked rates, roiling global markets as investors liquidated assets they had bought with borrowed yen. In May, Edwards warned rising interest rates in Japan could cause a "global financial Armageddon." Edwards publishes his notes, which regularly express a bearish outlook, under Société Générale's "alternative view," separate from the bank's house view. "A lot of clients who totally disagree with me like to read my stuff," he told Business Insider in May. "It's a reality check." Read the original article on Business Insider
Business Insider
3 days ago
- Business
- Business Insider
Famed market bear Albert Edwards warns of an 'everything bubble' in US stocks and home prices that could soon pop
Société Générale's Albert Edwards, famed for calling the dot-com bubble leading up to the 2000 crash, is again warning investors of a potentially painful plunge ahead. In his latest note to clients this week, Edwards said US stocks and home prices are in an "everything bubble" that he thinks could soon pop. Stock valuations are indeed steep. The Shiller cyclically-adjusted price-to-earnings ratio sits at 38, one of its highest levels ever, and both the trailing and forward 12-month PE ratios of the S&P 500 are historically high. To Edwards, this doesn't sit well with the fact that long-term interest rates have been on the rise. Rising long-end government bond yields tend to weigh on stock-market valuations as investors can find attractive returns without taking on the high level of risk in the stock market. Yet US stocks have seen a robust rally in recent years, gaining 78% since October 2022 lows. The market's high valuations have kept future estimated equity-market yields low. When stocks are more cheaply valued, they can expect higher future returns, and vice versa. "It is notable how the US equity market has been able to sustain nose-bleed high valuations despite longer bond yields grinding higher," Edwards wrote. "I don't expect it'll be able to ignore it much longer." On housing, Edwards said that the home price-to-income ratio in the US has been virtually flat over the last few years following the pandemic bump, while the ratio has dropped in countries like the UK and France. "The US is the only market in which house price/income ratios have NOT de-rated since 2022 as bond yields have risen. Is the US housing market also exceptional relative to Europe? No, it's nonsense and, in time, investors will come to claim they knew that all along," Edwards wrote. As for what could cause the potential bubbles in US stocks and home prices to burst, Edwards said to watch Japan. "In the wake of the ruling party coalition losing its Upper House majority, concerns in the bond market about the risks of further fiscal easing and high inflation are growing," he wrote. Higher inflation in Japan could mean higher interest rates and a further unwinding of the Japanese yen carry trade, in which foreign investors borrowed cheaply in yen and converted to dollars to buy higher-yielding US assets. In 2024, the Bank of Japan unexpectedly hiked rates, roiling global markets as investors liquidated assets they had bought with borrowed yen. In May, Edwards warned rising interest rates in Japan could cause a " global financial Armageddon." Edwards publishes his notes, which regularly express a bearish outlook, under Société Générale's "alternative view," separate from the bank's house view. "A lot of clients who totally disagree with me like to read my stuff," he told Business Insider in May. "It's a reality check."
Yahoo
19-07-2025
- Business
- Yahoo
Get ready for a US stock market crash?
2025 has been a year of record highs for the UK and US stock markets. But while British shares continue to look undervalued, the same can't be said for American equities. In fact, despite numerous economic threats and uncertainties looming on the horizon, the S&P 500 has continued to climb higher. The market's resilience is certainly welcome, but it could also be an early warning sign of complacency. And as a result, numerous investing experts have started warning of the possibility of catastrophe later this year. Caution advised Perhaps one of the most vocal voices of caution is coming from the CEO of JP Morgan Chase, Jamie Dimon. With new US tariffs soon to be reinstated with huge trading partners like Europe and China (unless a trade deal suddenly emerges), he's warned of incoming inflation. Depending on its severity, consumer spending could soften significantly, resulting in slower economic growth. And in the worst-case scenario, that could lead to stagflation. Dimon isn't the only one getting nervous. Other high-profile investors such as Michael Burry and Albert Edwards are also becoming sceptical that the US stock market can sustain its current valuations, with a correction, or potentially even a full-blown crash, due to arrive later this year. Valid concerns These experts have raised some legitimate concerns over the current state of the economy. And the US stock market does look vulnerable in certain sectors, particularly in artificial intelligence (AI), where sky-high valuations are completely divorced from fundamentals. For example, Palantir Technologies (NASDAQ:PLTR) is one US stock that I'm steering clear of. The business actually looks quite promising. As a specialist in data analytics and AI that even the US government uses in counter-terrorism, Palantir has proven to be a force to be reckoned with. That's translated into phenomenal revenue growth rates averaging 27% a year since 2020. And if management's forecast is correct, the company's on track to deliver up to $1.8bn in free cash flow by the end of 2025. Needless to say, those are some impressive feats. And when combined with the hype surrounding the AI industry, the US stock's up a jaw-dropping 395% in the last 12 months alone! However, this excitement has pushed the price-to-sales ratio all the way to 113. For reference, the average for US stocks is 3.2. In other words, all it takes is one missed earnings target for volatility to wreak havoc on the Palantir share price. And considering the business is highly dependent on US government contracts, the slightest cut in the defence budget could be all it takes to push things over the edge. Management's fully aware of this risk and has been actively diversifying into commercial markets to reduce its dependency. But whether this process can be completed fast enough is anyone's best guess at this stage. Keep calm, carry on Is the stock market guaranteed to crash in 2025? No. While investors like Dimon are right to highlight market vulnerabilities, timing market crashes remains exceptionally difficult. And it wouldn't be the first time experts have called for disaster, only for stocks to keep rising. The key takeaway isn't to ignore these warnings but to use them as a starting point for further research to identify potential weaknesses in a portfolio and make sure investors are staying within their risk tolerances. The post Get ready for a US stock market crash? appeared first on The Motley Fool UK. More reading 5 Stocks For Trying To Build Wealth After 50 One Top Growth Stock from the Motley Fool Zaven Boyrazian has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. Motley Fool UK 2025 Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
29-05-2025
- Business
- Yahoo
ETFs in Focus Amid Japan's Soaring Bond Yields
Japan's bond market is causing ripples across global financial markets, with rising long-dated government bond yields threatening to trigger capital flight from the United States and unwind the popular carry trade strategy. The carry trade is a strategy where investors borrow in low-yielding currencies like the yen to invest in higher-yielding assets abroad. Yields on Japan's 40-year government bonds rose on May 28, 2025, with demand at recent auctions reported to be the weakest since November, according to Reuters, quoted on CNBC. These bonds hit a record high of 3.689% last Thursday and were last trading at 3.318% — marking an increase of nearly 70 basis points so far in 2025. Meanwhile, 30-year bond yields have surged more than 60 basis points this year to 2.914%, while 20-year yields have climbed over 50 basis points. These levels bring long-dated yields dangerously close to all-time highs. The steepening of Japan's yield curve is driven by a fundamental change in investor behavior. Japanese life insurers — traditionally large buyers of 30- and 40-year bonds due to regulatory needs — have largely fulfilled their purchasing obligations. This has led to a falloff in demand, per the CNBC article. Compounding the issue, the Bank of Japan has been scaling back bond purchases as part of its broader monetary policy pivot, leaving a demand gap that private investors have not filled. This supply-demand imbalance is expected to continue putting upward pressure on yields. Such moves can add to the strength of Invesco CurrencyShares Japanese Yen Trust FXY. The rising yields on Japanese government bonds (JGBs) could prompt Japanese investors to repatriate capital from overseas, particularly from the United States. Albert Edwards, global strategist at Societe Generale, warned on CNBC that if the trend continues, it could lead to a 'global financial market Armageddon.' David Roche of Quantum Strategy cautioned that tightening global liquidity, paired with rising long-term rates, could slash global growth to just 1% and prolong the bear market across multiple asset classes, as quoted on CNBC. A strengthening yen, driven by higher domestic yields, would further reduce the incentive for Japanese investors to hold foreign assets — especially in U.S. tech stocks, which have seen significant Japanese investment. The tech-heavy ETF Invesco QQQ Trust QQQ may come under pressure due to this situation. David Roche of Quantum Strategy highlighted Japan's status as the world's second-largest creditor, with net external assets reaching a record ¥533.05 trillion ($3.7 trillion) in 2024. This adds a layer of vulnerability to global markets. He also noted that this potential capital shift reflects a broader 'end of U.S. exceptionalism,' with similar patterns emerging in Europe and China. A strengthening yen could be a headwind for Japan's export-heavy companies, but it may benefit domestically focused Japanese stocks. iShares MSCI Japan Small Cap ETF SCJ and WisdomTree Japan SmallCap Dividend Fund DFJ should benefit out of this situation. Top of Form Increased domestic investment demand could support large-cap Japan equity ETFs like iShares MSCI Japan ETF EWJ, particularly if funds shift away from foreign markets. But then, Japan's indexes are export-oriented. If the yen strengthens meaningfully, Japan's export-oriented companies may take a hit. If Japanese investors offload U.S. Treasuries or bond ETFs (like TLT) to repatriate funds, prices could drop and yields rise. Long-duration bond ETFs will be hit hardest due to their sensitivity to interest rate changes. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report iShares 20+ Year Treasury Bond ETF (TLT): ETF Research Reports Invesco QQQ (QQQ): ETF Research Reports Invesco CurrencyShares Japanese Yen Trust (FXY): ETF Research Reports iShares MSCI Japan ETF (EWJ): ETF Research Reports WisdomTree Japan SmallCap Dividend ETF (DFJ): ETF Research Reports iShares MSCI Japan Small-Cap ETF (SCJ): ETF Research Reports This article originally published on Zacks Investment Research ( Zacks Investment Research Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
