In today's FOMC Minutes, Fed member issued yet another explicit warning to America's investing public (before they pull the pin on the balance sheet normalization) about asset valuations beiung "vulnerable" and also piling on once again that commercial real estate values were "elevated."
Of course, traders don't care and have bid stocks to the highs of the day.
The Fed's explicit warning that "vulnerabilities have increased for asset valuation pressures."
This overall assessment reflected the staff’s judgment that... asset valuation pressures in some markets were notable. Although these assessments were unchanged from January’s assessment, vulnerabilities appeared to have increased for asset valuation pressures, though not by enough to warrant raising the assessment of these vulnerabilities to elevated.
Maybe the Fed was looking at this chart:
As a reminder, according to Bank of America: based on the 20 most widely used valuation metrics, the S&P remains significantly overvalued on 18 of 20 valuation metrics, the only exceptions being free cash flow, helped by depressed capex), and relative to bonds, whole yields are depressed thanks to $18 trillion in global central bank purchases.
And a bonus chart: why is the market so overvalued? Because 2017 has continued the trend seen in 2016, when the market "shrugged off one event after another."
Additionally, as America's retailpocalypse continues, The Fed warned once again on commercial real estate prices:
it was noted that real estate values were elevated in some sectors of the CRE market, that a sharp decline in such valuations could pose risks to financial stability, and that potential reforms in the housing finance sector could have implications for such valuations.
It seems that message is getting to Investors' brains...