The Valuation Signal Investors Should Watch

Alasdair Macleod's takeaways

• Top takeaway The guest argues the S&P is more overvalued than at any point since the 1980s, and probably more overvalued than in the roaring twenties on the run up to the 1929 crash.
• He says the relationship between the yield on the long bond and the value of the S&P has drifted so far apart that equities have pulled away from the bond market.
• He dates the financialisation of the US economy to roughly 1983, 1984 or 1985, which is when banks began operating in stock markets.
• He links that period to the burial of the distinction between commercial and investment banks.