Edwards points to extreme valuations in the stock market—most notably, the Shiller P/E ratio standing at 38. This figure underscores a market where investors are paying near-record prices for future corporate earnings, despite US Treasury yields now offering increasingly attractive, risk-free returns. According to Edwards, this growing disconnect between soaring equity valuations and rising bond yields leaves stocks dangerously exposed to a sharp correction. “We’re seeing the ingredients for a classic market top,” he warns.
Wall Street faces “Everything Bubble” riskUS Real Estate: Overvaluation Signals Loom
Edwards also sees worrying signs in the US housing market. While price-to-income ratios have eased in countries such as the UK and France since 2022, these metrics in the United States remain stubbornly high. For the analyst, this is not a structural exception, but clear evidence of overvaluation—suggesting a correction is inevitable, even if its timing remains uncertain.
The sustainability of inflated home prices is being tested as mortgage rates remain elevated and affordability for first-time buyers reaches multi-decade lows.
Japan’s Rate Hike: Global Domino?
Edwards highlights one potential external trigger for a correction: recent monetary tightening in Japan. The Bank of Japan’s unexpected rate hike has already sent shockwaves through yen-based carry trades, pressuring global liquidity. Higher Japanese yields could diminish the relative appeal of US assets, presenting a systemic risk for global markets reliant on cross-border capital flows.
Edwards’ reputation for contrarian, yet accurate, macro calls adds weight to his warnings. Notably, he was among the first to warn of a “global financial Armageddon” as early as May 2025. His “Alternative View” series, published by Société Générale, consistently challenges consensus, offering an early-warning system for investors navigating uncertain macro conditions.