The S&P is substantially overvalued on 18 of 20 valuation metrics, with the only exceptions being free cash flow (helped again by depressed capex), and relative to small caps/bonds – the Fed's favorite indicator – where yields remain depressed thanks to the Fed's failure to stimulate wage inflation for nearly 9 years.
But as the relative collapse of the equal-weight S&P relative to the market-cap-weighted S&P, all the gains have gone to the biggest names…
And longer-term, share prices have drifted – some might say 'inflated' – to the point that there are no cheap stocks anymore… literally.
Perhaps this chart will highlight the 'inflation' better…
It now takes the average American worker almost 95 hours to earn enoough to buy one S&P 500 index 'unit'…30% higher than at the peak in 2007 and almost triple its cost at the lows in 2009…
via http://ift.tt/2yjs3og Tyler Durden