Economic / Markets Fundamentals

My primary liquidity indicators are strongly positive. This suggests that economic recovery is
not far off in time and it is supportive of the stock market. Based upon accelerating monetary
liquidity, a degree of economic recovery should begin before summer 2020 is over.

Presently, the US economy is still in a state of deep free fall with the indicators suggesting a
deeply distressed state.

With mounting sector wide defaults in prospect, further fiscal and monetary rescue efforts may
well be needed through 2020 to underwrite a very strong monetary liquidity trend and assure
the economy of a good shot at recovery.

Inflation vs. deflation measures remain in the deflation camp, but will switch over to inflationary
if recovery takes hold and strong inventory pipeline filling efforts materialize.

Eventual economic recovery will put downward pressure on Treas. and top quality bond prices
even if short rates continue at historically low levels.

Business profits measures are currently deep in the tank, but should improve as economic
recovery takes hold.

Covid-19 will remain a major wild card especially if economic reopening measures such as
social distancing and personal protection recommendations are flouted by a goodly number
of folks. With vaccines and therapeutic measures not ready tomorrow, the virus could make
a vigorous comeback and throw economic expansion possibilities into a cocked hat.

The US and other economies are going to need help from Lady Luck if slow, grinding recoveries
are to give way to strong and sustainable expansions

Consensus appears to favor SPX net per share rising from whatever depths to the $170. level
in 2021. That would put fair value at SPX 2800. Since we're already above that level, I view
the market as uninteresting except for the occasional long side trade should times come along
when obviously bubbly sentiment may falter.

SPX Daily