FIVE POINTS WORTH MAKING ON THE MARKETS, EARNINGS AND THE ECONOMY

1. This remains a hope-based rally in the equity markets (with strong technicals). What we are seeing transpire is without precedent – the magnitude of the employment slide versus the magnitude of the market advance.

2. Companies have not really been beating their earnings estimates – only the very final estimates heading into the reporting quarter.

3. Valuation is a poor timing device but even on “normalized” trailing 10-year earnings, the S&P 500 is trading near 18x, which is now above the historical average of 16x.

4. All the growth we are seeing globally this year is due to fiscal stimulus.

5. While Mr. Market may be pricing in a fine future for the U.S., but when the 3-month Treasury-bill yield is 13bps north of zero, you know that there are still substantial fundamental imbalances that need to be worked through.

….read pages 1 – 3 HERE.