Some notes from this week’s Barron’s

UP & DOWN WALL STREET

The slow and steady increase in prices has moved the equity averages to all time highs and volatility to lows. The VIX dropped below 11. Investor’s Intelligence bullish reading is up to 62.20%, second highest on record. Other peaks were 60.8% in August of 1987 and 62% in October of 2007.

SILENT MIGHT

In regards to the low VIX, Ben Levisohn writes that “the lack of heated action might not indicate that something is wrong, but rather that many market participants were just plain wrong. At the beginning of the year, they were nearly united in the belief that the bond yields had to rise, emerging markets would remain weak, and the high-flying, fast-growing stocks had nowhere to go but up. None of that happened.”

THE LINGERING COSTS OF WAR

Big increases in health-care costs for former troops will cause the Defense department to squeeze costs elsewhere which could have a long term impact on defense contractors like LMT, NOC and RTN.

THE PROBLEM WITH VALEANT (VRX)

Vito Racanelli points out that GAAP results “show a history of losses and declining results.” In 2013, free cash flow was negative $4 billion. Debt is up 400% since 2010. EV/Ebitda is about 20.

(Disclosure – short VRX)