Crash Alert: Priced for Perfection in an Imperfect World

By John Rubino, John Rubino’s Substack

The last few US inflation reports have been ominous, with the general trend morphing from sharp decline to gradual increase. Here’s the Core Services index, which is now rising at a 4% annual rate:

Stocks, meanwhile, are priced for perfection, with the second highest price/earnings ratio on record:

Investors are getting cocky, as evidenced by the soaring popularity of leveraged ETFs:

And gold has shaken off its post-election correction and is now threatening its all-time-high:

Can the Fed keep easing into all this?

Today’s stock market enthusiasm is based in part on the expectation of ever-easier money for the balance of the decade. But can the Fed really deliver this in the face of soaring financial assets, off-the-charts speculation, and rising general inflation? Wouldn’t that spike inflation? Probably. So at some point in 2025 the Fed will have to stop lowering rates.

What happens then? Well, check the above P/E chart for what became of the last few priced-for-perfection markets.

By John Rubino, John Rubino’s Substack

The last few US inflation reports have been ominous, with the general trend morphing from sharp decline to gradual increase. Here’s the Core Services index, which is now rising at a 4% annual rate:

Stocks, meanwhile, are priced for perfection, with the second highest price/earnings ratio on record:

Investors are getting cocky, as evidenced by the soaring popularity of leveraged ETFs:

And gold has shaken off its post-election correction and is now threatening its all-time-high:

Can the Fed keep easing into all this?

What happens then? Well, check the above P/E chart for what became of the last few priced-for-perfection markets.

Crypto markets have been under pressure since October, but fund flows suggest investors are stepping back in ahead of potential CLARITY Act clarity.

America just crossed $39 trillion in debt—and the pace is only accelerating. At the same time, inflation is creeping back, the Fed is holding firm, and geopolitical tensions are pushing oil higher. The result: a market caught between mounting pressure and surprising resilience.

While there may be a short-term breakdown in gold prices, several indicators show it’s still worth adding to your own stash right now…

The stakes are high for the country that prints the world’s reserve currency and chooses to go to war. Perhaps, an unwinnable one against a Mosaic Defense.

Crypto markets have been under pressure since October, but fund flows suggest investors are stepping back in ahead of potential CLARITY Act clarity.

While there may be a short-term breakdown in gold prices, several indicators show it’s still worth adding to your own stash right now…

The stakes are high for the country that prints the world’s reserve currency and chooses to go to war. Perhaps, an unwinnable one against a Mosaic Defense.