An added thought for today

Social distancing is working at the moment, things are looking better. The S&P bounce today back up to yesterday’s highs seem to be based on that fact.

Key issue is to watch. Let’s see if Trump and Mnuchin have the patience to let this work out.

Some risks to stocks are;

1.  Ending distancing too soon and then having a bigger second peak, that is what apparently happened in Italy.
2. A realization that the market is overpriced, a 2450 S&P relates to earnings down 10 % and a 16.0 P/E.  Many analysts see earnings down 20 to 30%
3. That boils down to S&P 2205, if earnings are down 20 %, and if down 30 %, S&P 1985. Of course the market could jack the P/E up to 25 and make a new high by that measure, which still says the market is overvalued at the moment.