Here's what the stock market has to look like

Here's what the stock market has to look like

So it's no surprise that plenty of finance officials are watching the markets with bated breath these days. In just 18 trading days in September, the S&P 500 has dropped some 5.3%.

But I believe the worst is still to come.

As I recently wrote in Forbes, an analysis of stock market valuations compared to historical norms using Robert Shiller's famous CAPE metric suggests we're looking at a market that has a lot more to fall. As I wrote, he was not a narcissist.

The yield on 10-year TIPS, or treasury inflation-protected securities, is equal to the real 10-year rate. The recent surge in the long bond has resulted in the TIPS rate going up to 2.37%, the highest level 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, seated over the risk-free real rate, are naturally demanding a premium over the risk-free real rate for equities, given their concerned course, over the safety of Treasuries. Typically, this 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.

In order to generate a 5.9 real return, a basket of stocks must pay you $5.90 for every $100 you invest. This is a P/E of roughly 17 that is around the S&P average over the past 150 years, though 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 average level on Sept. 26 compared to Sept. 26.

To be certain, a 40% drop may not be in our future. A big drop is certainly feasible, because that's what the hard math means.

Effective November 13, Prashanth Mahendra-Rajah was appointed the CFO of Uber Technologies, Inc.. Mahendra-Rajah is currently the CFO of Analog Devices. Before joining ADI, he was CFO of WABCO Holdings Inc. Mahendra-Rajah was previously Division CFO and in other financial leadership positions at Applied Materials, Visa, and United Technologies.

Tiffany Sy was appointed as CFO and treasurer of Industrial Logistics Properties Trust effective October 1. In addition to Tremont Realty Capital and Seven Hills Realty Trust, Sy was a CFO and treasurer of Tremont Realty Capital and Seven Hills Realty Trust. She has served as a finance and accounting leadership position at the RMR Group. Sy holds leadership positions in accounting at Alerislife Inc. and Bank Rhode Island before joining RMR.

Patrick Edwards, CVP, secretary and treasurer of Shoe Carnival Inc., Inc., was appointed by the company's president on Sept. 25. Since becoming the CEO in 2019, Edwards has served as the company's chief accounting officer and secretary, and VP and controller since he joined the company in 2019.

Pinstripes Inc., a dining and entertainment company, has named Tony Querciagrossa its CFO. Querciagrossa was most recently president of Columbus Industries, Inc. In his career, he was president of Purafil Inc. and before that company's CFO of Filtration Group's Indoor Air Quality businesses.

On Nov. 15, Joshua B. Warren, CFO of Envestnet Inc., was appointed as CFO of Envestnet, Inc., a provider of integrated technology, data and wealth solutions. Peter H. D'Arrigo, who has been CFO since 2008, will be the new CFO for the company. Warren served as the managing director and worldwide head of business strategy for BlackRock and iShares and Index Investments.

A new Pew Research Center report provides data on women leaders in both politics and corporate America. One of the key findings is that the number of women on the boards of Fortune 500 companies has been gradually increasing for decades, from 9.6% in 1995 to 30.4% in 2022.

What are some of the best reads on Fortune over the 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.

In Detroit, a $200 million investment could show other cities how to bounce back. Just look at the Motor City's massive drop in unemployment,' said Matt Heimer.

The software developed under Eisenhower is essential to Wall Street's operations. Here's how AI can prevent the next financial crisis' by Thomas Dohmke.

Neha Sangwan:

CNBC reported that GameStop CEO Ryan Cohen sent out a memo to employees Thursday regarding the steps he will take to make sure the struggling video game retailer survives.