Shiller CAPE20%
41.9
4.94
—
99th pct since 1881; web 41.9 vs computed 48.1; divergence 6.2 pts - earnings vintage suspect; 10yr real earnings carried from 2023-06-01 (40 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.
99th pct since 1881; web 41.9 vs computed 48.1; divergence 6.2 pts - earnings vintage suspect; 10yr real earnings carried from 2023-06-01 (40 months)
median ~85%, dotcom peak 146-172%; 200%+ is the top of the historical range
1/CAPE 2.39% - real 10y 1.74% (nominal 5.22% - trailing 10y CPI 3.48%)
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. -9bps vs the 2026-10-05 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
Held. GAP flagged the other way: rhetoric is maximal but no verifiable current positioning (Scion deregistered 2025), so the scores rest on talk. Market in the 'denial' stage that lasted 6-9 months in 2000/2008
X posts: homebuilders' 'salad days won't last', Fannie/Freddie 'head-and-shoulders top' with heavy dilution risk; ~10-06 'first stage of grief, denial'
Held: the warning is now explicitly about credit spreads on refinancing - the HY tripwire in his own words. JPM Q3 earnings call mid-October is the next read
Bloomberg interview in London: global demand for capital means 'the market will ask for more'; are refinancing borrowers 'prepared for higher credit spreads or not?'
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: AI capex is pushing rates up and crowding out everything else; flags private-credit and CRE spillover; no explicit index call
Substack 'AI Versus Everything Else': hyperscaler boom is driving up interest rates and crowding out non-AI investment 'right now'
Held at maximum conviction: 'we are in a bond bear market', AI a classic bubble near bursting, equities' cushion against yields shrinking - but declines to call an imminent selloff
CNBC at Milken Asia (Singapore): stocks' buffer against rising bond yields is shrinking, credit spreads starting to widen, watch weakening free cash flow
Held: bonds over stocks, a recession surprise ahead; talk only, no positioning
Kitco interview: one hike is not a mistake but four or five would be; 'block your nose and buy' Treasuries; expects bonds to outperform stocks within months
Held: probably not one-and-done, but not a long cycle either
Schwab Market Perspective: stocks fell sharply after Warsh's press conference; slow hiking cycles have historically produced milder declines
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'
Held: still a net buyer - ~2.4M Lennar A shares (~$190M) bought into homebuilder weakness on 10-01/02. Small next to $365bn cash, but buying housing exactly where Burry is shorting
Form 4: bought ~2.40M LEN Class A at ~$78-82 on Oct 1-2, stake now 28.44M A shares (via Kalkine summary of the filing)
Held: near-term rates may peak on oil relief, but AI capex ignores higher rates so the Fed stays higher for longer; flags AI-company CDS widening
Daily Spark: 'AI's Insensitivity to Interest Rates Is a Problem for the Fed' - 'the Fed will have to keep interest rates higher for longer' (follows 10-06 'Are Rates Peaking Within the Next Month?')
CALLED IT: in August he said the Treasury buyback was financial engineering that left long rates untouched. The 10y then went through 5%. His new line - interest-rate risk becoming equity and credit risk - is precisely what the HY tile is now showing
Expects the 10y to stay around 5% even if oil falls, citing a structural bond supply/demand imbalance; 'volatility will be a feature, and elevated yields will be a feature for the rest of the year', and 'the big danger' is rate risk turning into equity and credit risk
MOVED CAUTIOUS from neutral: own nothing but 1-year T-bills, be cautious on stocks at record levels because higher yields will compress margins
Investment Outlook / FT op-ed 'Don't own bonds and be cautious with stocks': 'be cautious with stocks at record levels as higher yields over time will contract profit margins'
No new memo inside the fortnight, but his private-credit memo is the live thesis: the US private-credit default rate hit a record 6.0% in April (Fitch) and the Proskauer index ran 2.73% in Q1 against 1.84% two quarters earlier - while loan spreads were still tightening. Exactly the 'not being paid for the risk' setup he described
Oaktree memo 'Shall We Repeal the Laws of Economics - Part III': buybacks are an ice pack on a fever; long rates stay elevated
Held: ARK is rotating within the innovation theme (out of SHOP/HOOD/GOOG/TER, into CRWV/KTOS/ACHR/META), not de-risking. Talk and trades agree
ARK daily trades: sold ~$23M SHOP, ~$22M HOOD, ~$9M GOOG; bought KTOS, NRIX, GENI, PONY (10-06: sold TER, bought VCYT, ACHR, CRWV, META)
Held: still the loudest bull; softened his October pullback call to a pre-midterm 'speed bump'
CNBC: sees S&P 8,200-8,400 by year-end, Q3 EPS growth near 30%, 2027 estimates up 20%+ YTD make stocks 'cheaper'
Direction held, conviction trimmed: pushed the 8,400 target out to mid-2027 and now says a 10y at 5.25%+ competes with stocks - Bloomberg (10-08) has him calling yields a 'danger zone'
CNBC: keeps 7,900 for YE2026, 8,400 moved to mid-2027; earnings 'phenomenal' but can't rule out a 10y at 5.5%+, and 5.25% is 'pretty attractive' versus stocks
12m back to +2: reads 5% yields as growth, not inflation or deficits; Q4 rally intact while oil stays under $90
Goldilocks jobs report gives Warsh 'cover to hold' in October; stocks can keep rallying in Q4 despite a 'tremendous rise' in yields, which he expects to stay at or above ~5%
Held: benign baseline, tail risks judged less likely; nothing US-equity specific in the visible text
Project Syndicate 'Why Is the Global Economy So Resilient?': markets and economy held up despite tariffs and the energy shock; growth improves in 2027
hold at 3.75-4.00% after the 9-16 hike, hike bias intact: September minutes (released 10-07) show all 19 participants backed the hike and most see another 'likely appropriate by year end'; Waller (10-08) expects more hikes, not necessarily back-to-back. Markets price ~20-25% odds of a hike on 10-27/28. policy headwind, still tightening - no pivot
Unanimous support for the hike and a year-end hike bias with core PCE ~3.4%: the input behind the 10y above 5.2% and the Excess CAPE Yield tile at +0.65%
Slok's case for a near-term rate peak, plus widening AI-company CDS - an early credit signal to read beside the HY tile at 315bps
Why rate hikes may not cool AI capex - the higher-for-longer mechanism that keeps the yield curve and ECY tiles red
Krugman's crowding-out argument: AI capex lifts rates for the rest of the economy, with private-credit spillover relevant to Dimon's and Marks's credit warnings
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 315bps are still inside 500bps, so the staged dry-powder trigger is not armed. Credit is the tripwire: it goes first.