Blue Angels

Markets
Reading Yardeni’s Infamous Blue Angels Charts
Author

Mike Aguilar

Published

September 7, 2026

Ed Yardeni’s Blue Angel charts are a staple for any equity investor/strategist

4Sep2026
TipQuestion

Q: What does the Blue Line with x10 mean?

A:

  • Consider the tautology: \(\frac{P}{E}\times E = P\)
  • Since asset are priced prospectively, that’s actually \(\frac{P_{t}}{E_{t}[EPS_{t+12mths}]}\times E_{t}[EPS_{t+12mths}]\)
  • Now, pick a date along the x-axis. Let’s say that’s 4Sep2026
  • Take the SP500 Earnings Estimates for the Next Twelve Months (NTM)
  • Multiply that a PE of 10
  • That provides an SP500 index price implied by the time \(t\) earnings expectations and the multiple of 10.
  • From what I can gather, Yardeni chooses the range of multiples to span the actual price index over the time range of the chart.
TipQuestion

Q: Go to Yardeni’s charts for the SP500, SP600, and SP400. Comment on their relative valuations.

A:

  • Comments as of my 7Sep2026 visit to the Yardeni website
  • I’ll compare the valuations for the charts covering 2000 through today
  • None of the indices are near their COVID/Dot Com extremes
  • Large Caps are modestly closer to their historic peaks (20 vs 25) then small caps (15 vs 20) and mid caps (15 vs 20)