
Updated May 26, 2023
Chart shows current Buffett Indicator value as # of standard deviations above/below historic average.
Summary: The Buffett Indicator is the ratio of the total value of the US stock market versus the most current measure of total GDP. When this value is very high it suggests the stock market is overpriced relative to actual economic productivity.
Updated May 26, 2023
Chart shows current CAPE value as # of standard deviations above/below historic average.
Summary: The PE Ratio Model tracks the ratio of the total price of the US stock market versus the total average earnings of the market over the prior 10 years (aka the Cyclicly Adjusted PE or CAPE).
Updated May 26, 2023
Chart shows Interest Rate Valuation Model as # of standard deviations above/below historic average.
Summary: Low interest rates should generally drive higher equity prices. This model examines the relative S&P500 position given the relative level of interest rates.
Updated May 26, 2023
Chart shows S&P500 as # of standard deviations above/below its historic trendline value.
Summary: An extremely straightforward model stipulating that at some point, eventually, the S&P500 will tend to return towards its historic trend line.
Updated May 26, 2023
Chart shows spread between 10-year and 3-mo Treasury debt relative to # of standard deviations from historical norm. Yield curve inversions highlighted red.
Summary: When short term (3-month) Treasury yields are higher than long term (10-year) yields, it is a bearish signal that is almost always followed by economic recession.
Updated April 1, 2023
Chart shows # of US states with shrinking coincidence indicator scores. National recessions are shaded.
Summary: A State Coincidence Index (SCI) is an aggregate measure of individual state economic health. This model charts the number of states with month-over-month declines in their SCI. On average, if more than 25 states are in decline, the US overall is entering a recession.
Updated April 30, 2023
Chart shows margin debt levels as % of total market value, expressed as amount of standard deviations from historical norm.
Summary: Margin debt is money investors borrow to invest in stocks. High margin debt indicates bullish investors, and tends to lead stock market corrections, particularly after margin rates begin falling from their peak. This model looks at changes in margin as a percent of total stock market value.
Updated May 26, 2023
Chart shows historical spread between junk bonds and Treasury bonds.
Summary: High junk bond spreads indicate bearish sentiment as investors require very high compensation for taking on additional credit risk. Low junk bond spreads indicate bullish investors are eager to take on risk, even for relatively low return, compared to safer investments.