Weekly reports

The main risk right now is vulnerability to a repricing, not current distress. Valuations sit near the top of its long history while measured financial stress remains low, so a shock could hurt more than usual, even though nothing is breaking today. Evidence: [1, 2, 3]

The core vulnerability is how expensive equities look on this long-run gauge. An extreme percentile does not prove a bubble or time a fall, but it means expectations are high and there is less cushion if earnings, rates or confidence disappoint. Evidence: [2, 4]

Activity is still expanding on the latest differently dated readings. Payrolls grew over three months and real spending grew faster than real income over the recent three-month window, suggesting households kept buying even as income growth was more modest. Evidence: [5, 6, 7]

Demand is holding up for now. Year-over-year spending was up while income excluding transfers was softer, with subdued financial stress and easy credit pricing helping households and firms to keep transacting rather than pulling back. Evidence: [8, 9, 3]

There is no evidence in this data that a bubble is actually breaking. Expensive valuations flag fragility, but stress gauges and the credit risk premium remain calm, and a high price alone cannot confirm a bubble exists or that a decline has started. Evidence: [10, 2, 3, 4]

Scenario If a negative surprise hit confidence when prices are stretched, it could lift stress, tighten funding and credit, then weaken hiring and spending, which would in turn pressure earnings and asset prices further in a feedback loop. Evidence: [1, 5, 2, 3]

Scenario My judgment would change if calm gives way to strain. If financial stress rose together with tighter bank lending, or if payrolls turned negative on a three-month view or a valid Sahm-style warning appeared, vulnerability would matter more imminently. Evidence: [11, 5, 12, 3, 13]

The latest week shows no change on published values versus the prior saved report, so the picture is steady rather than newly worsening or improving. Unchanged prints do not prove the economy stood still, only that new data have not yet arrived. Evidence: [1, 4]

Scenario Alternatively, if job gains and spending stay solid while stress stays subdued and credit premiums remain low, high valuations could persist without a disorderly adjustment, with growth gradually validating prices rather than a sharp reset. Evidence: [10, 5, 6, 3]

The biggest blind spot is what this limited lens cannot see. The Sahm-style check is unavailable, data arrive with lags, and coverage is only US macro plus one stress index, so other risks could build unseen and past patterns do not validate forecasts. Evidence: [13, 4, 14]