A Gross Mispricing Of Risk

My view:
Carl Swenlin's chart of the S&P 500 plotted against price to earnings norms continues a relentless march higher.  The exuberance of the market is stretching values to extreme levels.  On a percentage basis, the S&P is approaching the irrational exuberance highs of the dot com bubble.

Central banks are the instigators of this march higher as they attempt to re inflate the economy after the Great Recession.  As they very gently apply the brake on expansionary monetary policy by small interest rate hikes, we will soon discover that all is not well with this phony economy based on grossly inflated asset values, pumped up by ultra cheap bank lending rates.
Asymmetric risks will appear to catch us unaware.  Counterparty risks will show up in the markets, and the ponzi scheme of government borrowing in the bond market to blow and even larger deficit bubble will pop.  While we expect that the entire system will likely survive in some reduced form, it seems quite likely that within the next month a significant stock market correction will occur, followed by Central bank jawboning about how wonderful the economy is and a postponement in the series of interest rate hikes.

The panic in the eyes of Central bankers is notable given the non-recovery in the general economy after 10 years of unprecedented tinkering and monetary accommodation. 
When the general public does finally wake up to these lying government and central bank shenanigans, perhaps 2 or 3 years from now, the adjustment is likely to be sharp and painful.
Those who prepare for such adjustments will be wiser then they realize.

For contemplation consider this:

Si vis pacem, para bellum