Thoughtful Money with Adam Taggart · Sunday, September 6, 2026
Economist David Rosenberg highlighted the significant impact of the bond market on equity valuations. He stated that rising interest rates necessitate a downward adjustment of discounted cash flows for future earnings. Rosenberg believes that the correlation between real interest rates and fair value P multiples poses a major challenge for the equity market.
“Uh, so, I think the stock market's going to face, um, several hurdles. And it's not just the elevated, uh, oil price. Um, but also the fact that real interest rates have taken on a big head of steam here.”
“And there is a time-worn correlation between real interest rates, uh, and the fair value P multiple.”
“Uh, so, yes, earnings are holding in. Uh, the question for the stock market is that, what with this re-rating of real interest rates, uh, how far does that compress the multiple?”
“Because base point for base point, the move and the P multiple is far more powerful for equity valuation than earnings growth.”