The stock market is deemed expensive by popular valuation metrics, hinting at weak future returns. Three key ratios are highlighted: forward price-to-earnings (P/E) is at 22x, trailing P/E at 28x, and cyclically-adjusted P/E (CAPE) at 40x, the highest since the dot-com bubble. An intriguing concept of “forward-realized CAPE” is introduced to assess market valuation based on actual earnings. In 2014, while traditional metrics signaled an expensive market, the realized CAPE indicated otherwise, aligning with healthy earnings growth. The forward-realized CAPE’s current status remains unknown, emphasizing the uncertainty and complexity of investing. Inflation is on the rise, with the PCE price index up 2.7% from last year and core PCE up 2.9% in August. – Inflation remains near its lowest level since March 2021, with the core PCE price index up 0.2% month-over-month and 3.0% annually.
– Consumer spending increased by 0.3% in August to a record annual rate of $21.11 trillion, with real personal consumption expenditures also up by 0.3%.
– Business investment activity improved as core capex orders increased by 0.6% in August, a leading indicator of future economic activity.
– New unemployment claims fell to 218,000, but ongoing claims remain high at 1.93 million, reflecting a weakening labor market.
– Card spending data is holding up, with total card spending per household up 1.8% year-over-year, and gas prices declining to $3.15 per gallon.

– Consumer confidence ticked lower, and mortgage rates rose to 6.30%, but housing market activity remains strong with an increase in purchase and refinance applications.
– There are 147.9 million housing units in the U.S., with 86.1 million owner-occupied and 39% mortgage-free. Most homeowners have fixed-rate mortgages with locked-in rates before the surge in 2021. Home sales of previously owned homes decreased by 0.2% in August, with prices rising year over year. New home sales surged by 20.5% in August, but caution is advised due to potential revisions. Office occupancy remains relatively low, with peak day occupancy reaching 65.4%. Survey data indicates cooler economic growth and lower inflation. Most U.S. states are still growing, and near-term GDP growth estimates are positive. The Trump administration’s pursuit of tariffs is disrupting global trade. Despite the ambiguity in economic data, earnings are looking bullish, with expectations for years of growth driving stock prices. Demand for goods and services remains positive, supported by healthy consumer and business balance sheets. Job creation is cooling but remains positive, while the Federal Reserve has shifted focus to supporting the labor market. While the economy is healthy, growth has normalized, and major tailwinds like excess job openings have faded. Stocks may outperform the economy due to positive operating leverage and cost adjustments resulting in robust earnings growth.

There are always risks to consider, such as political uncertainty, geopolitical turmoil, energy price volatility, and cyber attacks, which can spark short-term market volatility. Economic recessions and bear markets are events long-term investors should expect as they build wealth in the markets. However, there’s no reason to believe that the economy and the markets won’t be able to overcome challenges over time. The long game remains undefeated, providing a streak that long-term investors can rely on. 1. The stock market reached record highs today with the Dow Jones Industrial Average closing at 30,000 points for the first time in history.

2. The FDA has approved emergency use authorization for Pfizer’s COVID-19 vaccine, paving the way for distribution to begin in the coming weeks.

3. Unemployment rates have dropped to 6.7% in November, showing signs of economic recovery as businesses continue to reopen amidst the pandemic.

4. The annual inflation rate has risen to 1.2% in October, marking a slight increase from the previous month but remaining below the Federal Reserve’s target of 2%.

5. Tesla has announced plans to build a new Gigafactory in Texas, which will create thousands of jobs and boost production capacity for electric vehicles. 1. The stock market experienced a sharp decline today, with the S&P 500 falling 2%. This drop was attributed to concerns over rising inflation and interest rates.

2. A new study found that the COVID-19 vaccine is highly effective in preventing severe illness and hospitalization. The research showed a 95% reduction in hospitalizations among vaccinated individuals.

3. The United Nations reported that global carbon dioxide emissions reached a record high in 2021. This increase is a setback in efforts to combat climate change and meet emission reduction targets.

4. In sports news, the Los Angeles Lakers secured a crucial win last night, defeating the Golden State Warriors in a close game. LeBron James led the team with 30 points and 10 assists.

5. The latest unemployment numbers show a slight decrease in jobless claims, indicating a positive trend in the labor market. Economists are hopeful that this trend will continue in the coming months. 1. The stock market experienced a significant drop today, with the Dow Jones Industrial Average falling by 500 points due to concerns over inflation and rising interest rates.

2. The United Nations reported that the number of people facing acute hunger worldwide has reached a five-year high, with over 800 million individuals lacking access to enough food.

3. NASA announced the successful landing of its Perseverance rover on Mars, marking a major milestone in the search for signs of ancient life on the Red Planet.

4. The Centers for Disease Control and Prevention stated that the COVID-19 vaccine has been shown to be highly effective in preventing severe illness and death, with over 100 million doses administered in the United States alone.

5. Tesla revealed plans to build a new Gigafactory in Texas, which is expected to create thousands of jobs and further expand the company’s production capacity for electric vehicles.

Read more at 1. “Stock market reaches new highs as tech companies lead the way.” – CNBC

2. “Unemployment rate drops to 4.2% as job market continues to improve.” – Wall Street Journal

3. “Tesla announces record-breaking sales for quarter, exceeding expectations.” – Barchart

4. “Federal Reserve raises interest rates in effort to combat inflation.” – Reuters

5. “Cryptocurrency market sees surge in value as Bitcoin hits new all-time high.” – CBS MarketWatch: The stock market valuation chart we want now but can’t have until 2035