Stock Markets – This is massive and confirms the end stage is underway… pic.twitter.com/DxrjI2potI
— Northstar (@NorthstarCharts) September 13, 2025
TOPS IN!!! https://t.co/Kp2qEpO47r
— The Great Martis (@great_martis) September 13, 2025
‘We are in a gigantic price bubble’: Famed economist warns
- David Rosenberg warns of negative S&P 500 returns due to high valuations.
- The Shiller CAPE ratio on the index is at its third-highest level ever.
- At the same time, recession risks are rising as the labor market slows, Rosenberg warned.
David Rosenberg isn’t always right. The founder of Rosenberg Research, who rose to fame after calling the 2008 recession, regularly expresses a bearish outlook for the economy and markets that often don’t come to fruition.
But in a world where bullish forecasts are the consensus among Wall Street’s top equity strategists, it can be prudent to heed Rosenberg’s warnings. While his predictions usually don’t play out, there’s no denying that the economist sufficiently shows his work, providing relevant data that ought to give investors pause.
In a recent note to clients, Rosenberg provided some concerning numbers on where the S&P 500’s forward returns could be headed, given current valuations.
The index’s Shiller cyclically adjusted price-to-earnings ratio is hovering around 37.5. The measure smooths out business cycles by comparing current stock prices to a 10-year rolling average of earnings.
It’s the third-most expensive level of all-time, behind peaks in 2021 and 2022.
“This summer, Tricolor Auto, a Texas-based subprime auto lender, was still packaging risky car loans into ABS that ratings agency KBRA stamped with AAA grades…
Senior tranches now trade at 78 cents on the dollar, junior slices fetch 12 cents…AAA doesn’t mean AAA.”… pic.twitter.com/z2Y7E4L3QR
— Rudy Havenstein, Senior Markets Commentator. (@RudyHavenstein) September 12, 2025
Earnings are collapsing.
Buybacks are masking reality.
Guess what happens next? pic.twitter.com/ERywoIRqia
— The Great Martis (@great_martis) September 13, 2025
Unemployment, inflation and GDP growth will be worse this year than projected, budget office says
The CBO on Friday released new economic projections for the next three years, updating the outlook it originally released in January, before Trump’s inauguration.
The latest figures, which compare fourth quarter changes, show the unemployment rate, inflation and overall growth are expected to be worse this year than initially projected, while the economic picture is expected to steady in subsequent years.
The CBO outlooks attempt to set expectations for the economy in order to help choices made by congressional and executive branch policymakers. It does not forecast economic downturns or recessions, with its estimates generally reverting back to an expected average over time.
