S&P 500 Real Earnings Yield Goes Negative (As Technicals SCREAM Bubble) Mystery of The Flying Fed!

The stock market mildly rebounded from yesterday’s mild correction, but a glaring problem remains: S&P 500 real earning yields are negative.

With all the Federal government fiscal stimulus and Federal Reserve monetary stimulus, we are seeing inflation and that inflation is eating away at S&P 500 earnings yield.

The S&P 500 is still well above key technical support levels.

However, the Buffet ratio is raging along with Fed stimulus.

And the Hindenburg Omen is flashing RED!

The mystery of the Flying Fed is whether they will withdraw their massive monetary stimulus or not.

The Jackson Hole Omen: What Will Powell Announce At Fed Conference? (Can Overstimulated Market Survive Without ZIRP/QE?)

The financial markets are overstimulated like a cranky child after too much sugar (aka, sugar rush). So what will happen to overstimulated markets if Fed Chair Powell announces withdrawal of monetary stimulus?

The famous Hindenburg Omen is already flashing WARNING ahead of this week’s Fed meeting at Jackson Hole. Will Powell take the punch bowl away?

The Shiller CAPE ratio is at a high since the financial crisis and stock market correction in 2008 and early 2009.

I would expect Powell to walk softly since he has the opportunity to terrify financial markets. But I expect Powell will announce a small adjustment to the growth of The Fed’s balance sheet in line with The Fed’s DOTS project signalling interest rate increases in the futures.

Throw Covid, a slowing China and Europe into the mix, and Powell and the gang had better think long and hard about they are going to withdraw the record monetary stimulus from the cranky financial markets.

Meanwhile I hope that have a few beers from Bond’s Brewing Company, the best beer in Laramie, Wyoming!!