Shiller CAPE20%
41.1
4.93
—
98th pct since 1881; web 41.1 vs computed 47.4; divergence 6.3 pts - earnings vintage suspect; 10yr real earnings carried from 2023-06-01 (39 months)
Eight valuation, credit and fiscal instruments plus a nineteen-voice sentiment roster, read against the deployment rules.
At composite 4.5+, historically a 40% probability that a 20%+ real decline begins within 36 months (29% for 30%+) - but 4.5+ zones also produced the longest melt-ups. The signal is regime, not timing.
98th pct since 1881; web 41.1 vs computed 47.4; divergence 6.3 pts - earnings vintage suspect; 10yr real earnings carried from 2023-06-01 (39 months)
median ~85%, dotcom peak 146-172%; 200%+ is the top of the historical range
1/CAPE 2.43% - real 10y 1.52% (nominal 4.96% - trailing 10y CPI 3.44%)
real price vs its 120-month average; 91st pct historically
trailing 12m real price change, 68th pct. Froth marker, not a sell signal - the classic top is momentum turning DOWN while valuation stays red
EARLY-WARNING TRIPWIRE. -3bps vs the 2026-09-07 report (tightening). Tight = complacent; past 500bps alongside an equity drawdown is the staged-deployment trigger
positive after a post-inversion re-steepening = 3.0 (*) - recessions historically arrive 12-18 months AFTER un-inversion, not during the inversion
federal debt/GDP 123%. ~6% deficits at full employment scores 4.5
Scion stopped filing 13Fs in Nov 2025 - positions now come from his Cassandra Unchained Substack, so the disclosure lag is his choice and the newest trades (Aug 4) are paywalled
Disclosed bearish book: puts on NVDA and PLTR at up to ~80% of the portfolio (~$1.1bn notional), plus TSLA, CAT, AMAT, SMH and MU opened 30 June and added 24 July
12m cut to -3, but the rhetoric>action gap stands: JPM keeps lending and underwriting while he says he would not buy
'Margin debt is the highest it has ever been', much of it hidden in prime brokerage, ETFs and Treasury-basis trades; says he would not buy the S&P 500 or long-dated Treasuries at today's prices and the market is one bad trade from panic selling
latest sourced statement is June 2026 - inside the 6-month window but not fresh this fortnight
Calls this 'the most expensive market in American history'; a reversion to trend would be closer to a wipeout than a correction, and the odds an AI bubble does not bust are 'slim to none'
Held: Fed commentary, no equity view
Yahoo Finance interview: Warsh's speech 'utterly conventional' - 'tight money until we see a lot better data'
conviction up: says his own indicators already put AI stocks in bubble territory, and the next crisis is sovereign rather than banking
Late-stage debt cycle; Fed balance-sheet expansion is 'stimulus into a bubble'; most likely path is a 1970s-style stagflationary spiral with the Fed monetising
conviction up: says credit markets are already writing the warning - directly relevant to the HY tripwire
With Richard Bernstein: the AI trade is a bubble, real disposable income is fractionally negative y/y, and ex-AI the four-quarter real GDP trend is under 1.5% - a K-shaped economy where profits take all the income growth
Held: correction-level drawdowns tend to come within 12 months of a first hike; slow cycles are milder
Schwab 'Take a Hike: Rate Hikes and Market Impacts': fast-cycle average drawdown ~-16% vs ~-12% for slow cycles
CUT and GAP CLOSED: reportedly cut AI holdings to ~20% of their level six months earlier (FT, via secondary source), calls AI a likely 'profit bubble' and rates too low
Piper Sandler closed-door meeting (FT): Fed members calling policy restrictive are 'just ridiculous'; 'We are likely in a profit bubble because this AI construction boom will eventually end'
12m cut to 0: frames early 2027 as AI succeeds or fails - in the failure case the Nasdaq could fall 50%
Daily Spark 'Think Six Months Ahead': long rates much lower in six months either way; AI failure means rotation out of equities
Conviction up: more bond-bearish, AI market path getting bumpier; no explicit equity call
CNBC at Cernobbio: global bond sell-off not over; 'I don't see any appetite in the U.S. for immediate fiscal consolidation'
'No crash, just a forward weave requiring a cane'; bearish long Treasuries on deficits, prefers energy infrastructure and MLPs to exuberant tech
Valuation casts a shadow over 2026; the record rally is at risk of stalling unless AI earnings show up
REVEALED PREFERENCE FLIPPED: first net buying in 15 quarters. Cash still $365bn, so the caution is real - but the direction of travel reversed
Q2-26: ~$19.8bn net equity purchases after 14 straight quarters of net selling; cash $397.4bn -> $365.5bn; $4.5bn of buybacks; Alphabet now the third-largest holding at $36.6bn
current worry is private credit, not public equity: fast capital deployment into direct lending, with PE portfolio-company performance as the hinge
Memo 'What's Going On in Private Credit?' - direct lending's growth, and the issues rapid deployment created
Held: Warsh more hawkish than expected, but 1-2 hikes don't derail the target
'US MARKET CALL: Warsh Proof': keeps YE 8,400 (forward EPS $415 x 20.2); 10y still in a 4-5% 'normal-for-longer' range
Held: rotation within megacaps (out of GOOGL, into META), not de-risking
ARK sold ~$28.7M of Alphabet (09-09/09-11) and bought ~$27.9M of Meta
8,000 near-term target BUT explicitly warns of bear-market-like moves Aug-Oct
S&P to 7,900-8,000 this month ('the bigger the base, the bigger the breakout'), year-end 8,000+ with upside to 8,400-8,800 - while flagging four H2 triggers
Held: expects a hike, a 'shudder' and sell-off, then a range-bound market
CNBC Closing Bell: Warsh will 'bite the bullet and raise rates'; 'you'll see a sell off'
RAISED from +1: not worried about an AI bubble; rising real yields reflect AI capex and growth, not a bond crisis
Cernobbio interview (Bloomberg video 'Roubini Says He's Not Concerned About an AI Bubble'): stocks rise with growth, though 'some corrections' possible
hold 3.50-3.75% ahead of the 09-16 meeting; August core CPI +0.3% m/m vs 0.2% expected. hike near-certain: CME September odds ~85%, up from ~70% before CPI
Sonders' drawdown history for hiking cycles - the base rate for what the first hike since 2023 does to the momentum tile
The fiscal tile's input: the deficit is tracking ~6% of GDP at full employment
Composite 4.37 (frothy / hold dry powder). Base DCA continues regardless of score. Above 3.5, so the DCA-doubling rule stays dormant; it arms at 3.5 (+0.87 away). Hold dry powder. HY spreads at 265bps are still inside 500bps, so the staged dry-powder trigger is not armed. Credit is the tripwire: it goes first.