It's no surprise that plenty of finance chiefs are bated breath these days. In just 18 trading days in September, the S&P 500 fell some 5.3%.
But I believe the worst will come.
As I wrote in Fortune, an analysis of stock market valuations compared to historical norms using Robert Shiller's famous CAPE metric suggests that we're looking at a market that has a lot more to fall. I wrote: 'It is clear that there is a long way to go before we end up in a recession,' he said.
Real 10-year rate equals yield on 10-year TIPS, or treasury inflation-protected securities. The recent increase in the long bond has caused the TIPS rate to increase to 2.37%, the highest in 20 years, excluding a brief explosion in the Great Financial Crisis. TIPS offers taxpayers and funds a return of 2.37% over projected inflation, on totally safe bonds. Investors have a choice of a premium over the risk-free real rate to choose equities, given their worry about the safety of Treasuries. Typically, that spread-known as the equity risk premium, or ERP-averages around 3.5 points. The best estimate of the return investors expect from stocks going forward is 5.9, which is the 3.5% ERP plus the real yield of 2.37%, plus inflation.
To achieve a 5.9 real return, you must earn $5.90 for every $100 you invest in a basket of stocks. The S&P average has been around the S&P average over the past 150 years, while it's been much higher in the past decade of Fed-engineered super-low rates.
A multiple of 17 times our 'normalized' earnings estimate of $160 gives an S&P of 2,720. It's 43% lower than the level on September 26.
A 40% drop may not be the future of our future, he said. But a big decline is certainly feasible, because that's what the hard math means.
Effective Nov. 13, Prashanth Mahendra-Rajah was appointed as the CFO of Uber Technologies, Inc.. Mahendra-Rajah is currently the CFO of Analog Devices. He was CFO of WABCO Holdings Inc., where he served as Division CFO and in other financial leadership positions at Applied Materials, Visa, and United Technologies.
Tiffany Sy was appointed CFO and treasurer at Industrial Logistics Properties Trust effective October 1. Sy, a former treasurer of Tremont Realty Capital and Seven Hills Realty Trust, was most recently in charge of the company's CFO and treasurer. In finance and accounting roles at RMR Group, she has had a diverse range of career experiences. Sy was a member of the accounting team at Bank Rhode Island and AlerisLife Inc. before joining RMR.
Effective Sept. 25, Patrick Edwards, SVP, CFO, secretary, and treasurer of Shoe Carnival Inc., a footwear and accessories company, was promoted to SVP, CFO, secretary, and treasurer. The company has been the company's chief accounting officer and secretary since 2021, and VP and controller since he joined the company in 2019.
At Pinstripes, Inc., Tony Querciagrossa was named CFO of the company. Columbus Industries, Inc., president of Querciagrossa, was most recently elected president of the company. He served as president of Purafil Inc. and before that, as CFO of Filtration Group's Indoor Air Quality businesses.
On November 15, Joshua B. Warren, CFO of Envestnet, Inc., was appointed as the CFO of Envestnet, a provider of integrated technology, data and wealth solutions. Mr. Warren is to replace Peter H. D'Arrigo, who has served as CFO since 2008. Warren has served as managing director and global head of business strategy at iShares and Index Investments for BlackRock.
A new Pew Research Center report provides data on women leaders in politics and corporate America. The survey also found that the number of women sitting on the boards of Fortune 500 firms has been gradually increasing, from 9.6% in 1995 to 30.4% in 2022.
What are some good reads on the fortune weekend?
s been predicting a recession for 18 months says the 'litmus test' is finally here, especially with oil headed toward $100 a barrel by Will Daniel.
The city could show other cities how to bounce back with a $200 million investment. Just looking at the Motor City's massive drop in unemployment,' said Matt Heimer, a professor of economics at the University of California.
The software used by Wall Street is developed by Eisenhower. Here's how AI can prevent the next financial crisis, according to Thomas Dohmke.
By Neha Sangwan.
GameStop CEO Ryan Cohen sent a memo to employees Thursday regarding the steps he will take to make sure the struggling video game retailer survives, CNBC reported.