September P/E ratio at 28.
Figure 1: CAPE (blue), P/E ratio (light brown). NBER defined peak-to-trough recession dates shaded gray. Source: Shiller, NBER.
SP500 price/forward earnings is 22 in January (according to Yardeni), just below the pre-2000 peak at 24.
That being said, the real 10 year yield is about 1.8 ppts below the rate just before 2000.
Figure 2: CAPE (blue, left scale), real 10 year Treasury yield, in % (red). Real rate calculated using SPF 10 year median (dark red +), Blue Chip and Livingston 10 year (red), and centered one year core inflation (light red). NBER defined peak-to-trough recession dates shaded gray. Source: Shiller, Philadelphia Fed, BLS, NBER and author’s calculations.
That being said, the average SP500 CAPE doesn’t convey the extreme represented by the Magnificent 7. It’d be interesting to see if a similar concentration existed in the late 1990’s boom.
Trade Representative Jamieson Greer on tariffs: “It’s not regressive. Most consumption in America is done by the wealthiest people. So the idea it’s somehow regressive is just wrong.”
Are these folks really stupid or just liars — or both? They use the same argument to say that state sales taxes in place of income taxes aren’t regressive because rich people spend more.
But he is essentially admitting that US consumers are paying the tariffs, so that’s progress, I guess. That’s one up on Trump, Bessent, Hassett and Navarro — hope they didn’t hear or he could be in real trouble.
Kevin Hassett today commenting on the NY Fed paper saying that consumers pay 90% of tariffs:
“I mean, the paper is an embarrassment. It’s, I think, the worst paper I’ve ever seen in the history of the Federal Reserve system. The people associated with this paper should presumably be disciplined, because what they’ve done is they’ve put out a conclusion which has created a lot of news that’s highly partisan based on analysis that wouldn’t be accepted in a first-semester econ class.”
They’ve gone full on fascist: “You have offended the Fuehrer. You vill be disciplined. Heil Hitler!”
Have no doubt about it. Kevin Warsh has loudly called for “regime change” at the Federal Reserve. He intends to do to the Fed what RFK did to the CDC and NIH. He has declared that he wants to massively downsize the Federal Reserve workforce and “reduce its footprint in the economy”. He has said he wants to give the Treasury a more active role in managing interest rates. Warsh and Bessent, what a pair to behold. Like Goring and Goebbels, working hand in hand.
Curiously, there is eerie silence from economists regarding Warsh. They seem to think he will be the adult in the room the way they thought Bessent would be the adult in the Cabinet. They couldn’t be more wrong. The Fed will never be the same again, just like the CDC and NIH.
Economists silent on Warsh? There are quote a few who have spoken up:
https://www.msn.com/en-us/money/markets/paul-krugman-says-trumps-pick-kevin-warsh-is-a-humiliation-for-the-fed/ar-AA1WxqAE
https://econjared.substack.com/p/doing-the-warsh-part-2
https://www.alliancebernstein.com/americas/en/institutions/insights/economic-perspectives/sizing-up-the-federal-reserve-chair-in-waiting.html
https://www.morningstar.com/news/marketwatch/2026013024/heres-what-kevin-warshs-selection-as-fed-chair-means-for-the-economy-markets-and-you
And, of course:
https://econbrowser.com/archives/2026/01/kevin-warsh-on-executing-monetary-policy
https://econbrowser.com/archives/2017/10/guest-contribution-the-choice-of-candidates-for-next-fed-chair