Long-time market bull Edward Yardeni is concerned stocks are getting too expensive.
If the S&P 500 forward earnings multiple ticks to 19 or 20, the Yardeni Research president warns a it could spark a “nasty correction.” Right now, the index is at 17. The historic norm is 15 to 16.
“I just don’t want too much of a good thing here. I’d like this bull market to continue at a leisurely pace not in a melt-up fashion,” he told CNBC’s “Trading Nation” on Friday. “That’s actually the risk.”
Yardeni, who spent decades on Wall Street running investment strategy for firms such as Prudential and Deutsche Bank, expected 2019 to be a winning year — even as stocks were plunging last December.
“When we try to pick out anything by itself, we find it hitched to everything else in the universe,” wrote famed naturalist John Muir more than a century ago, referring to an epiphany he had while hiking in California’s Yosemite Valley.
In our call of the day, Blackstone BX, -0.75% strategist Joseph Zidle offers a similar take, but with dollar signs instead of granite cliffs.
“At the end of any economic cycle, we often get warnings that appear to be unrelated,” he wrotein a recent not. “It’s in hindsight that we realize that they were not at all random.” Investors saw this during the runup and aftermath of the housing bubble, he added, and we’re seeing it now.
Among the recent troubles he thinks are connected are repo market woes, negative-yielding debt, global trade conflicts and collapsing manufacturing. And every cycle ends with excess.
Kashkari: we don't see any bubbles, we have lots of people at the Fed looking for them
Reporter: 'Did anybody at the Fed see the prior two confirmed bubbles??? If we look at asset price charts of prior bubbles vs the current period, how can say it?@steveliesman @neelkashkari pic.twitter.com/yxyNw9fvmj
— M/I_Investments (@MI_Investments) November 4, 2019