The One Chart Stock And Bond Holders Should Be Paying Attention To

Tyler Durden's picture

We have shown divergence after divergence as an indication of the market's relative exuberance. One of the key 'supports' for these hope-driven nominal levels has been forward inflation expectations. In fact, inflation expectations have become the anchor for higher equity (P/E) valuations and yet, they remain unconvinced that this time is different. As Barclays' Jordan Kotick notes, perhaps it is inflation break-evens lack of confirmation of new equity highs that is the chart to watch for the 'believers' to really think this time is different.

Breakevens are NOT making new highs...

 

even as stock valuations are...

 

Charts: Barclays and Bloomberg