High P/E ratio, bearish fixed income market, companies unable to deploy capital and buying back stocks to sustain bull market, QE being drained out, etc. Lots of warning signs that we are at the top of the cycle.

Take this with a train of salt because I’m not an economist, but one of the most often touted general points of the need for a correction is the cyclically adjusted price to earnings ratio being elevated [1].

In other words, stocks are more “expensive” and thus ripe for a correction

https://www.multpl.com/shiller-pe

I am not the original poster but I think they are expressing that we were ready for some reversion to the mean after many years of gains including a spectacular 2019.

Plot a basic best fit line for the DJIA or S&P 500 over the last 30 years and see where it says we should be in a rational market (about another 10% below today). If you need more evidence, plot a second line showing GDP growth for comparison. The markets have been in an unprecedented situation for the last decade since the Fed cut rates to the bone and then left them there. Effectively, money has been so "easy" that all kinds of weird things have been happening to boost the markets without much actual underlying structural support (actual capital investment, median wage growth, GDP output, etc.).

Valuations were continuing to rise parabolically despite slowing earnings and growing debt.

It's widely known state of things because of the current situation (low interest rates for very long time, etc.). Infact, many financial institutions and experts have been of the idea that a major stock crisis was around the corner for a while.

You could argue that most would have disagreed, but at the end 2018 many stock crisis indicators, models and statistics started to turn red and indicate that a crash was close.

2019 had a couple of close calls like the Turkish lira crisis, but there was never widespread panic to feed a worldwide crash. Now there is.

I don't know about "need" and I'm no kind of expert, but it seems to me that there's a hard drop roughly every ten years or so and the last one was 12 years ago. I've only been in the market myself for about 15 years, so I don't know that I have the instincts to call it, but historically this seems to be true.

At this point every time something positive happens in the market:

"It needs a correction"

Everytime something negative happens:

"It's just a cycle"

Maybe we don't have the best economic system where instability is built into its core & foundation?

The market has just been unhinged lately, because there are a lot of huge positions that would love to sell but just can't unwind. Consequently there has not been an effective downward pressure on asset prices, and a lot of garbage is overpriced.

I still don't expect a major correction here because there's so much underused capital flying around out there and it will pour into anything that looks even remotely like a bargain. We have entered a regime where the world's economies have more capital than they are willing to use, which is novel and weird. Expect markets to act in novel and weird ways.

One thing I can easily predict is American governments large and small will take the wrong actions. They will cut taxes and slash spending when the bond markets are begging them to spend more. States and cities should be out there right now selling as many bonds as they can.