CAPE at 35.6, free trade ends, recession looms—yet markets party on

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Everyone screams collapse, yet the money still flows in. The market shrugs off panic like a seasoned gambler who knows the house always wins. Fear sells headlines, but portfolios tell the truth. Until investors act like it’s the end, it isn’t.

Free trade, as we knew it, wraps up this week. Along with it, the longest bull market in modern history stands on the edge. Forty-five years of relentless expansion. The era of easy money, globalization, and infinite liquidity is closing fast.

The market is expensive. Dangerously expensive. The CAPE ratio sits at 35.6, a number so high it’s only been topped twice—once before the dot-com crash, once before 1929. Those weren’t great times to buy stocks. Valuation metrics across the board scream warning signs. According to Charles Schwab, 12 out of 13 major valuation indicators show the U.S. stock market is either expensive or very expensive. Normalized P/E, price-to-book, Shiller’s CAPE, it’s all flashing red. Yet, somehow, IPOs are back.

Where did this rally come from? It’s as if the recession isn’t right in front of us. Jobs data weakens, rates remain punishing, inflation sticks. Yet the market surges, pricing in rate cuts that the Fed hasn’t even promised. This isn’t sustainable. When allocation finally matches the fear, the real reckoning begins.

The music hasn’t stopped. But the volume is getting real low.

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