Gluskin Sheff‘s David Rosenberg points out:
1. This remains a hope-based rally in the equity markets (with strong technicals). The magnitude of the employment slide versus the magnitude of the market advance is unprecedented.
2. Companies have only been beating their radically lowered earnings estimates – not the earlier, higher 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. That is not cheap;
4. Global growth has been inorganic — it is due to government fiscal stimulus.
5. Mr. Market may be pricing in a fine future for the U.S., but when the 3-month T-bill is 13bps north of zero, you know that there are still substantial fundamental imbalances that need to be worked through.
Good stuff to think about, Dave . . .
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