Low (equity) yields

The free cash flow yield of the U.S. equity market is now close to its lowest level in 20 years.

In simple terms, investors receive only around USD 3 of free cash flow for every USD 100 invested in the S&P 500. With 10-year U.S. Treasury yields around 4.5%, this is an uncomfortable valuation setup unless earnings and cash flows continue to grow strongly.

This does not mean equities must fall, but it does suggest that investors should stay alert, selective, and focused on quality businesses with sustainable cash generation.