The Shiller CAPE Index certainly scares me at twice times average.
Although the Shiller CAPE has not always been predicative.
It failed to highlight the 2007 GFC nor the 1987 market collapse!
Tho' the yield curve inverted in 2007.
Yet the yield curve did not invert in 2001 OR 1987!
The yield curve inverted in 1929. So presumably an inverted yield curve points to a banking collapse.
The Shiller CAPE index will highlight run away inflation in market prices of assets very well. "Irrational exuberance".
At the moment the yield curve is only starting to flatten, but cannot be described as anywhere close to "as flat". The Banking sector only collapses when it "hockey sticks" at the short end.
So did 1987 simply pass under the radar? Nothing seems to augur its arrival?
Well no... If not so, then what could have caused the 1987 market collapse?
A reason given is "Technical Trades".
The first true "tech wreck"? Hmmm? I'm not sure.
In as much as the 2007 wasn't simply CDO's, but rather a perfect storm or clusterfuck of factors. NINJA loans na part. An inverted yield curve a herald rather than a cause.
