For the Shape of Our Recovery, CHECK History

Many have suggested that our economic recovery will resemble the letter U or V. However, Gross Domestic Product (GDP) and Employment will likely require at least several years to recover. A rapid recovery is:

Instead envision the recovery resembling a check mark (think Nike swoosh):

This is consistent with the historical analogues we discussed last month the Great Depression and Japan’s Lost Decade(s), although in both of these cases the ‘tail’ (recovery) extended beyond a decade.

The Congressional Budget Office recently revised their estimate for Real Output (GDP) and employment, and they expect both to recover within the next several years:

Source: Congressional Budget Office

Both society and the markets are ripe for turmoil over the next several years. The Cold War with China and civil unrest will flare on and off possibly even conflagrating into a civil or world war. This instability will manifest itself in market turbulence.

Currently massive stimulus is blunting the painful reality that the economy (and some institutions) are broken. For these reasons I am very bullish in the near-term. Like a trauma patient given large doses of potent painkillers, we enjoy a respite from pain; but expect an arduous recovery.

This report reflects the current opinion of the author. The report is based upon sources believed to be accurate and reliable. Opinions and statements about the future expressed in the report are subject to change without notice. The report is not a solicitation or an offer to buy or sell any security. .

S&P 500 Overvalued but Likely to Move Higher

Market headwinds persist while tailwinds subside slightly. The S&P 500 remains historically overvalued , while the bullish effects of massive fiscal stimulus persist but are subsiding. The S&P 500 has traded within a range around 3250 (red line) to near 3600 (green line) for the past couple of months: The S&P 500 will likely continue to trade within a range until earnings catch up with stock prices and/or additional fiscal stimulus arrives. When the S&P 500 breaks out we believe it’s more likely above the green line than below the red line. We believe the S&P 500 is in a bull market and are bullish for the upcoming month. This report reflects the current opinion of the author. The report is based upon sources believed to be accurate and reliable. Opinions and statements about the future expressed in the report are subject to change without notice. The report is not a solicitation or an off...

Is the Covid Crisis a Recession or a Depression? (Historical context)

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Market Valuations in Danger Zone as Federal Reserve Pledges Afterburner

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