While we have no idea where inflation settles tomorrow, there’s a murky feeling that something isn’t quite right. Price action in equity markets looks weak, crypto is trading poorly, and the resurgence of meme stocks isn’t a great sign. To quote Peter Atwater, “Some kids only emerge to play during sentiment extremes.”

On March 13, we cautioned investors to be on guard for a more volatile and disruptive phase at this point in the investment cycle. Though we suggest reviewing it again fully, here’s the gist: 

The peak for the current cycle in US equity valuations occurred in 2021, when the S&P 500’s forward PE ratio reached its climax at 23. The valuation multiple then dropped to 15 by October 2022 and is now back above 20. We assume the S&P 500’s forward PE won’t e

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