New Delhi, June 1 -- Something unusual happened in May 2026. The cyclically adjusted price-earnings (PE) ratio for US equities-the Shiller CAPE, which smooths out the cycle to give a longer view of valuation-touched 40.8. The only other time in 145 years it had exceeded 40 was in the fevered months around the dotcom peak of early 2000.

Simultaneously, the University of Michigan's long-running survey of American consumers recorded sentiment at its lowest level in over 70 years of measurement-some 10% below the nadir of June 2022, when inflation was at its most punishing. (Justin Lahart, Wall Street Journal, 23 May: bit.ly/3RAHYYQ)

These two facts are not in contradiction. They describe the same underlying reality from opposite ends of th...