S&P 500 retreat brings potential for real-yield reversal
Here’s my chart for today. I’ll talk about it shortly after 3:30 p.m. Eastern (12:30 p.m. Pacific) on the Bloomberg Businessweek radio show. Also, I’ll present my Stock of the Day just after 4:15 p.m. (1:15 p.m.) on social media. You can hear me on Bloomberg Radio or see me at Bloomberg Global News on YouTube.
Monday’s slide in U.S. stocks may help reset a historical tie between earnings and inflation that has been out of whack for months. The relationship is based on the S&P 500 Index’s earnings yield and the annual rate of change in the U.S. consumer-price index. While the yield is typically higher, the opposite has been true since April, according to monthly data compiled by Bloomberg. Real yields for the last four months were about minus 1.6% — the lowest level since 1980 and half a percentage point away from another low, set in 1974.