The equity risk premium for the S&P 500 has fallen close to zero, a level last seen for an extended period before the dot-com bubble burst. With the index trading at about 22 times earnings and the 10-year Treasury yield at 4.45%, the earnings yield on stocks is barely above the risk-free rate. New Federal Reserve Chairman Kevin Warsh, who took the helm with a clear agenda, could push the premium into negative territory by accelerating the reduction of the Fed's $6.7 trillion balance sheet, which would likely drive long-term bond yields higher. Analysts remain optimistic about earnings growth, projecting aggregate S&P 500 earnings increases of 23.2% for 2026 and 16.2% for 2027, well above the historic average of around 7%. While a negative equity risk premium does not guarantee stocks will underperform bonds, it serves as a warning for investors to be cautious about high valuations.