>Robert Shiller – who correctly and bravely called the 2000 and 2007 bubbles and who is one of the very few economists I respect – is hedging his bets this time

>Robert Shiller – who correctly and bravely called the 2000 and 2007 bubbles and who is one of the very few economists I respect – is hedging his bets this time, recently making the point that his legendary CAPE asset-pricing indicator (which suggests stocks are nearly as overpriced as at the 2000 bubble peak) shows less impressive overvaluation when compared to bonds. Bonds, however, are even more spectacularly expensive by historical comparison than stocks. Oh my! Banks are OK, household debt levels are OK. Corporate bonds are the issue in the current economy. Nonfinancial corporate debt to GDP ratio: hhttps://fred.stlouisfed.org/graph/?g=B5NG https://fred.stlouisfed.org/graph/?g=B5NG * There are too many zombie companies walking around (indebted company that is able to repay the interest on its debts but not repay the principal) * Institutional bond investors have chased profits to the lowest possible bond rating they are allowed to invest. When something changes and ratings are downgraded, institutional investors are forced to sell these companies at the same time. Corporate bond market liquidity freezes overnight. Berkshire Hathaway will by bonds for cents per dollar...