Using P/Y = (P/E)·(E/Y), the article shows that while profits’ share of GDP (E/Y) dropped in early 2025, the Buffett Indicator (P/Y) still rose—so the jump must come from higher price–earnings multiples. It dubs this “the Great Repricing,” and weighs whether it reflects AI‑driven optimism, mismeasured profits, or flow‑driven decoupling from fundamentals.
— If valuations are rising on multiples while profit share falls, policymakers and investors face a market buoyed by expectations and liquidity, heightening inequality and asset‑driven two‑speed dynamics and raising crash or inflation risks.
John Rapley
2025.10.01
70% relevant
The article argues U.S. profits are flat and overall investment is down while stocks rise, implying multiple expansion rather than earnings growth is propelling the rally, consistent with the idea that valuation, not fundamentals, is driving markets.
Arnold Kling
2025.09.19
100% relevant
Buffett Indicator up from ~157% (2019) to ~220% now, with a 2025 plunge in profit share alongside rising P/Y, implying multiple expansion.
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