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Registered Investment Adviser Caleb Lawrence 

Little real news sends the major averages into the final hour about even on another day of low volatility trade as has been the recent pattern. The New York Fed regional index jumped 5.8 points to 30.2 in October on gains in employment. Price data softened but remains quite high.

Federal Reserve chairwomen Janet Yellen joined the growing chorus of pundits remarking that the major averages sport dangerously high valuations, better late than never. Warren Buffet went half way there with his statement that valuations while high were justified by ultra-low interest rates. A partially true and partially complete statement. If growth was robust, you might be able to justify current valuations and make the case for even higher market valuations. Yellens recent mea culpa on valuations acknowledges the persistent lack of robust economic and wage growth that has plagued the economy of late. Something recently pointed out by John Hussman who goes on to note using his margin-adjusted Schiller CAPE or Cyclically Adjusted Price-to-Earnings valuation metric that market valuations are higher now than they were in 1929, 2007 and 2000 at the height of the Dot-Com bubble. He noted that the S&P 500 is likely to experience an outright loss, including dividends, over the coming 10-12 year horizon, and estimates likely interim losses on the order of -60% or more.

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