SPVU - The Fed Warns About The Everything Bubble

2024-05-24 04:45:01 ET

Summary

• The Fed warns that "valuations across a range of markets appeared high relative to risk-adjusted cash flows".
• This is essentially a warning about the "everything bubble".
• Due to the sticky and elevated inflation, the Fed will be forced to burst these bubbles.
• S&P 500 is facing a recessionary bear market and the bubble burst.

The Everything Bubble

The Fed released the minutes from the May FOMC meeting on Wednesday. The key information from the minutes is that the Fed 1) raised the "assessment of vulnerabilities in asset valuations to elevated" and 2) thinks that "valuations across a range of markets appeared high relative to risk-adjusted cash flows"....

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