Powell's Valuation Warning Just Got Scarier

Back in September, Fed Chair Powell dropped a bomb: “Stocks are fairly highly valued.” Fair enough. But here’s the plot twist — Trump’s tariffs have turned that warning into a full-blown red flag.

The damage report:

• S&P 500 still trading at 21.5x forward earnings (vs. 10-year avg of 18.7x)
• Jobs added per month: 123k (Jan-Apr) → 39k (May-Sep) — lowest 5-month streak since 2010
• Unemployment: 4.2% (April) → 4.4% (September)
• Inflation: 2.3% (April) → 3% (Sep-Nov), and consumers expect 4.5% ahead

The real problem: Consumer sentiment hit 51 in November — second worst in history. Worse? The entire year of 2025 is tracking to become the worst on record, averaging 51.0 vs. 2022’s 59.0.

Wall Street’s betting the S&P 500 rallies 20% over the next year (target: 7,928). But with consumer spending cratering and earnings estimates potentially getting slashed, that optimism looks like cope.

The math doesn’t add up when inflation stays sticky, jobs vanish, and Main Street’s wallet is getting lighter. Buckle up.