The slowdown in the rate of change in government spending over the past decade has tangentially reinforced both corporate profits and lowered inflationary expectations. Although government debt has continued to expand, credit market growth has really been fueling corporate and personal balance sheets. As you know, the rate of change in government debt growth has been falling. This slowing in debt assumption and expenditures has helped keep inflationary pressures in general at bay on a relative basis. Tax cuts and the spending of the theoretical government surplus is clearly burning a hole in political pockets.
History says no.
Sure they should. As in any bull market, it's just a simple question of degree. Valuation is always in the eye of the beholder. The high multiples anticipated perfectly the improved profit performance to follow. In the aggregate, valuations have expanded tremendously over the course of this bull market.