S&P 500 Signals Excess as Earnings Yield Falls Below CPI
Accelerating inflation “should start becoming an issue” for U.S. stock investors, according to Crescat Capital LLC. The money manager reached the conclusion in an investor letter posted on its website Wednesday. Crescat cited the S&P 500 Index’s earnings yield on a monthly basis after adjusting for changes in the U.S. consumer price index. The resulting real yield turned negative last month and fell to the lowest level since December 1980, according to data compiled by Bloomberg. This shift shows stocks are suffering from “excessive valuations,” Crescat wrote.