Jerome Powell gave Alan Greenspan vibes with his latest comments, according to Ed Yardeni. The current Fed chair said Tuesday that “by many measures … equity prices are fairly highly valued.” To be sure, while Powell acknowledged the elevated market valuations, he added that this is not “a time of elevated financial stability risks.” Yardeni, president of Yardeni Research, noted he’s inclined to agree with Powell’s assessment of the stock market. He pointed out the forward S & P 500 price-to-sales ratio is at record levels. He also notes that its forward price-to-earnings ratio is 22.8, just below the tech bubble peak of 25 in 1999. That said, Powell’s latter comment about financial stability didn’t sit well with Yardeni. Powell “triggered our contrary instincts with that last statement. Financial crises tend to be Black Swans, i.e., events that occur unexpectedly, especially when irrational exuberance is widespread and intensifying,” he said. .SPX 5D mountain SPX 5-day chart Powell’s remark reminded Yardeni of the time former Fed Chair Greenspan famously said: “How do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions?” The S & P 500 hit an intraday record on Tuesday before rolling over on concerns around the sustainability of the artificial intelligence trade that has lifted equities in recent years. Nvidia fell 2.8% in the previous session, marking its biggest one-day loss since Aug. 29. Investors grew concerned that a bubble may be forming in the AI space after the chipmaker announced a $100 billion investment in OpenAI , marking an unusual deal between a supplier and customer. “The good news for now is that weekly S & P 500 forward earnings per share has been rising at a faster pace in recent weeks. This suggests that Q3 earnings will rise to another record high,” said Yardeni. However, signs of trouble for the stock market near term are arising under the surface . ( Learn the best 2026 strategies from inside the NYSE with Josh Brown and others at CNBC PRO Live. Tickets and info here . )
