WSJ What’s News Government Shutdown Poised to Become Longest in U.S. History
14 snips
Nov 4, 2025 
Spencer Jakab, a markets reporter at The Wall Street Journal, sheds light on the cyclically adjusted P/E measure, warning of potential market struggles ahead. Meanwhile, Katy Stech Ferek, Congress reporter for the Journal, discusses the latest developments in government shutdown negotiations, highlighting signs of optimism amidst bipartisan talks. They explore the pressures facing Speaker Johnson and the influence of Trump's strategies on Republican lawmakers, all while the clock ticks on a historic shutdown.
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Shiller CAPE Hits Bubble-Level Peak
- The Shiller cyclically adjusted P/E ratio topped 40, matching only the 1999 tech bubble peak.
- Spencer Jakab says this historically predicts much lower future stock returns over several years.
Why The CAPE Is Considered Reliable
- The CAPE uses ten years of inflation-adjusted earnings to smooth cycles and recessions.
- Spencer Jakab calls it the "gold standard" for assessing fair market valuation.
Market Valuations Near Historic Extremes
- Even using a modern baseline, current valuations sit far above historical averages.
- Jakab warns the market is among the most expensive in history, implying weak expected returns.
