Bill Dudley, former president of the Federal Reserve Bank of New York, believes the US stock market is in bubble territory, citing stretched valuations and an imminent slowdown in artificial intelligence investments. The Shiller CAPE ratio stands near 41, well above its historical average of 17, while the Buffett Indicator reaches approximately 240%, far beyond the 100% threshold considered a sign of overvaluation. Dudley forecasts a deceleration in AI hyperscalers’ capital expenditures in 2027, questioning the sector’s ability to generate the estimated $2 trillion in revenue needed to justify current investment levels. The 30-year Treasury yield hit 5.3%, its highest level since 2007, with the Treasury Department responding by doubling its long-term debt repurchases.
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