Global stock markets are now worth more than 100% of the world’s gross domestic product (GDP) for the first time since 2018, a sign of overstretched valuations, according to the Buffet indicator.
Stock markets are considered to be overvalued when the Buffet indicator – the ratio of stock market capitalization to GDP – rises above 100%.
With the stock market rally looking overdone, the dollar bears need to observe caution. The greenback will likely pick up a haven bid if the equity markets suffer a pullback.
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