Show and guest
Société Générale global strategist Albert Edwards appeared on The Meb Faber Show to discuss the Fed’s tightening cycle, bond yields, and how bubbles end. English original title: The AI Narrative Is Hiding a Much Bigger Problem. The subtitles cover 0:00–53:24; this article covers the full interview.
Key views
- - The 10-year U.S. Treasury yield is expected to reach 10% over the long term. At that point, the S&P’s forward P/E would be only around 6 times. 12:46
- - The S&P will fall 50–60% at some stage. “I’m very sure of that.” 48:44
- - Rising bond yields have already pushed the S&P’s forward P/E down from 23–24 to below 19; tech stocks have fallen from 33 to just over 20. 4:01
- - Only exceptionally strong earnings expectations are keeping the stock market afloat; otherwise, it would already be down 20–25%. 4:23
- - The real skill is judging how far you are from the fire exit—as former Citigroup CEO Chuck Prince said, when the music is playing, you have to keep dancing, but you need to know how close you are to the exit. 2:50
- - It is always the rate cycle and liquidity that burst bubbles: at the end of 1999, central banks flooded the system with a substantial amount of liquidity over Y2K concerns; once 1 January 2000 had passed and liquidity was withdrawn, the Nasdaq bubble burst. 6:48
Background and notes
This episode of The Meb Faber Show features an interview with Société Générale global strategist Albert Edwards, focusing on the Fed’s tightening cycle, bond yields, and how bubbles end. The subtitles cover 0:00–53:24; this article covers the full interview. The views and timestamps in this article are relayed from the original subtitles; each timestamp marks the beginning of the corresponding excerpt.