Famous economists warn that severe stock evaluations indicate the next negative returns

• David Rosenberg warns of negative S&P 500 returns due to high assessments.

• Cape Schiller’s ratio on the index is the third highest level ever.

• At the same time, the risk of stagnation rises with the slowdown of the labor market, as Rosenberg warned.

David Rosenberg Not always right. The founder of Rosenberg Research, who ascended to fame after summoning the 2008 recession, regularly expresses an enormous look at the economy and markets that often do not bear fruit.

But in a world where upward expectations are the consensus between the best strategy in Wall Street, it can be wisely Rosenberg warnings. Although its predictions are usually not run, there is no denial that the economist shows adequate work, as it provides relevant data that must give investors a temporary stop.

In a recent note to customers, Rosenberg has provided some numbers about where the S&P 500 returns can go forward, given the current assessments.

The price ratio to the modified profits in the index is about 37.5. This scale softens business courses by comparing current stocks with an average profit for 10 years.

It is the third expensive level ever, behind the peaks in 2021 and 2022.

The assessments are usually reliable to perform the stock market in the long run. The bank of America data shows that assessments that can explain about 80 % of the market performance over the next ten years. Last year, the Morgan Stanley and Goldman Sachs strategists said that high assessments will lead to relatively weak market revenues during the next decade.

In the short term, the assessments are poor performance predictions. However, Rosenberg data shows that when the market gets this cost historically-the granted, this happened only twice-the returns were forward for a negative year.

The column on the right in the table below shows a return to the front, more than 1, 3, 5 and 10 years when the shilller 35 ratio exceeds.

“It is the only cutting point in which every time is negative,” Rosenberg said in an interview with Business Insider on Thursday.

The assessments alone are not the reason that Rosenberg is skeptical of the assembly. They are the increasing expectations associated with an economic background weakening as the labor market continues to show signs of slowdown. Job growth Data from the Labor Office is less than 100,000 per month over the past four months. The economy added 911,000 jobs lower The BLS said this week what was previously believed in the year during the month of March.