SPX -- Update

Back on Christmas '18, I opined that the stock market was quite reasonable down at 2350 and
that I was comfortable with SPX 2650 as a fair value call for 2019 - 2020. The market has
already jumped over that level, but I am not inclined to increase the fair value assumption at this
point in time. The evidence continues to point to decelerating US and  global economic and
profits growth in the year ahead and there is but a smattering of excess financial liquidity in the
system to fuel the stock market ahead as the real economy has been gobbling up the modest
liquidity available. On the bright side, inflation pressure has moderated and the Fed has taken Its
foot off the break. The up trends in interest rates in evidence in 2018 have broken down, thus
confirming the Fed's more dovish tone. But there is plenty that could still go wrong. There could
be a nasty Brexit, the US and China could still screw up the trade talks, and the global economy
could slow further and faster of its own. I am also a little nervous that there is such hard and fast
consensus that the inflation rate will not misbehave but stay gentle. I also do not like the wild
swings in investor sentiment in view since late 2017. In summary, I am conservative on SPX
earning power through 2020 and am carrying a lower p/e ratio estimate in the 2650 fair value
number (SPX eps projected around $160).

For the short term, the SPX is getting overbought and continues to have an unnaturally steep
positive trajectory.  SPX Daily

True China Giant Goes To His Rest

Li Rui joined the the communist party in China in 1937. He witnessed the entire revolution and
as a former confidante of Mao, he saw the dark side of the Chinese moon. He died a few days ago
at the age of 101. Betrayed years ago by his wife, he carried on, preaching against authoritarianism,
and as a demonstration of how that ugly centralized power continues today, his daughter announced
she will boycott his funeral. Know your enemy.....Li Rui Obit NY Times