S&P 500's real equity risk premium turns negative as FCF lags earnings
With CapEx and stock comp inflating reported S&P 500 profits, the gap between true FCF yield and earnings yield widened 1.4% this year. Earnings now sit 1.11% below Treasury yields, putting the real equity risk premium near -2.5%, a setup last seen before the 1987, 2000 and 2008 busts.