The S&P 500 hasn’t had an easy ride heading into Jackson Hole, with tech stocks dragging it lower once again on Wednesday.
A fifth straight loss on Thursday would mark its longest losing streak since January, though the index is still up 28% from its April 8 low and only down about 1% over the past four sessions—hardly panic territory.
Still, warnings are growing louder. Societe Generale strategist Albert Edwards sees “a slow-motion crisis unfolding in government bond markets that equity investors continue to ignore at their peril.”
Long bond yields have been climbing relentlessly, with the U.K. 30-year yield now above 5.5% and Japan’s near 3.2%, while the U.S. 30-year Treasury yield sits around 4.91%, well above its 52-week low of 3.94%.
Edwards warns this shift means equities are no longer cheap compared with bonds, a stark reversal from the post-financial crisis “TINA” era (there is no alternative). He argues that stocks are now stretched like “an elastic band that will eventually snap.”
A longtime market bear, Edwards has been flagging a tech bubble since early 2024 and more recently an “everything bubble.” He notes that tech now makes up over 37% of U.S. market value, with capex by the top seven names soaring 60% in a year—squeezing cashflows to record lows.
Meanwhile, doubts are emerging, even from MIT experts, about whether AI will truly deliver profit gains for end users.
While bubbles usually pop when the Fed tightens policy, Edwards warns that today’s mix of weak cashflows, sky-high valuations, and rising bond yields could be enough to trigger a sudden crisis in equity markets.
