Albert Edwards, the long-time market bear and global strategist at Société Générale, is once again raising red flags—this time about what he calls an “everything bubble” spanning both U.S. equities and housing.
Drawing parallels to his prescient warning ahead of the dot-com collapse, Edwards is urging wealth professionals to prepare clients for a potential valuation-driven reckoning.
In his latest note, part of the bank’s “alternative view” series, Edwards underscores that both asset classes are trading at levels that appear detached from economic fundamentals, especially against the backdrop of rising interest rates. For advisors, the implication is clear: risk is building quietly across portfolios that have grown complacent in an extended rally.
The S&P 500 has surged more than 78% since its October 2022 lows, with earnings multiples stretching to extremes. The Shiller CAPE ratio hovers around 38—territory it has only reached during historic market peaks. Trailing and forward 12-month P/E ratios are also elevated. “It is notable how the US equity market has been able to sustain nose-bleed high valuations despite longer bond yields grinding higher,” Edwards wrote. “I don't expect it'll be able to ignore it much longer.”
For RIAs and wealth managers, Edwards' thesis poses a key asset allocation challenge. Long-term bond yields—now meaningfully higher—offer competition to equities and compress future equity returns. While client portfolios may have benefited from the rebound in equities, Edwards cautions that rising rates will eventually erode the justification for such stretched multiples.
On the housing front, Edwards points to the U.S. home price-to-income ratio as another area of concern. Unlike in the U.K. and France, where this ratio has come down as interest rates rose, the U.S. ratio has remained stubbornly flat—even after the post-pandemic surge. “The US is the only market in which house price/income ratios have NOT de-rated since 2022 as bond yields have risen,” Edwards noted. “Is the US housing market also exceptional relative to Europe? No, it's nonsense and, in time, investors will come to claim they knew that all along.”
This raises the specter of a housing correction, particularly in regions where affordability is stretched and clients have accumulated outsized real estate exposure. For advisors, this means revisiting real estate allocations—not just within portfolios but across clients' balance sheets.
As for what might trigger these bubbles to pop, Edwards points overseas—to Japan. A recent political shift there, with the ruling coalition losing its Upper House majority, has heightened bond market anxiety around fiscal policy and inflation. If inflation continues to rise, the Bank of Japan may be forced to hike rates more aggressively.
This matters to U.S. investors because of the long-running yen carry trade. For years, global investors borrowed at low interest rates in Japan and used the proceeds to invest in higher-yielding U.S. assets. But that trade is now under pressure. As Japan tightens policy, the yen strengthens and investors unwind their positions—potentially sparking volatility in both fixed income and equities globally. “In the wake of the ruling party coalition losing its Upper House majority, concerns in the bond market about the risks of further fiscal easing and high inflation are growing,” Edwards wrote.
Back in May, Edwards described this scenario as a possible “global financial Armageddon,” driven by the collapse of a decades-long liquidity cycle. And while Société Générale’s house view is more tempered, Edwards’ contrarian perspective is valued by clients precisely because it challenges consensus. “A lot of clients who totally disagree with me like to read my stuff,” he told Business Insider. “It’s a reality check.”
For fiduciary advisors, that reality check could be a useful counterbalance. The bullish consensus and persistent upward momentum in asset prices have tempted some clients to overextend—especially in growth equities and real estate. Edwards’ bearish call isn’t a market-timing signal, but a prompt to reassess risk exposure, diversify where possible, and revalidate assumptions about long-term returns in a structurally shifting interest rate environment.
Whether or not the bubble bursts imminently, wealth professionals would do well to stress-test portfolios, scrutinize valuation multiples, and engage clients in conversations about downside protection. Edwards’ warning may not align with the broader market narrative—but as history shows, sometimes it’s the contrarians who get the last word.
