Global central bank (including the US Federal Reserve) has been providing massive liquidity to financial markets, paritcularly (in the case of The Federal Reserve) since June 2007.
While some think asset bubbles are hear, former Fed Chair Alan Greenspan thinks there is a bond bubble, but not an equity bubble.
However, the equity market is priced at a pretty heady level. The S&P 500 Forward 12-month P/E ratio is near its high for the last ten years (corresponding to the massive intrustion in financial markets by The Fed).
NYSE margin is near the all-time high (from Doug Short).
And Robert Shiller’s CAPE (cyclically adjusted price-to-earnings ratio) ratio is about at the same level as Black Tuesday, October 29th 1929.
While Black Tuesday was a memorable event, the more recent crashes were worse (dot.com and financial crisis).
Of course, this doesn’t mean that the equity markets will crash just like the Yosemite Supervolcano isn’t necessarily going to erupt on any given day.
But Winter is Coming.