, Columnist
Ponzi-Stage Stocks Are Stable. Just Don't Cough
Far too much is riding on persistently low bond yields.
Everything is stable, until it isn’t.
Photographer: Robert Alexander/Archive Photos/Getty Images
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The U.S. stock market is very expensive. Nobody can sensibly deny this. But is it truly in a bubble? There is a big argument that it isn’t, which comes from the bond market. Fixed-income valuations dwarf those on stocks. All else equal, bonds this expensive justify paying a higher price for equities.
On that basis, markets may be in the grips of exuberance, but it is rational exuberance. And the argument shifts to one about bonds.