Think about earnings, earnings revisions, and how much you are paying to buy stocks.

Lance Roberts, Chief Strategist at RIA Advisors has the "Tweet of the Day" 

Uhm....if you are overpaying for stocks #today, based on 2021 #estimates, then how are you going to #rationalize overpaying in 2021 when #earnings fall 33% short of those estimates as they historically do? pic.twitter.com/A4Mcg2sQ1u

— Lance Roberts (@LanceRoberts) June 3, 2020

Too Fast, Too Furious 

#TooFast #TooFurious describes both the March #correction and the April/May #rally. Of course, with #Fed #liquidity triggering the #Pavlovian response, the #market has gotten ahead of itself short-term. We discuss why we #hedge.https://t.co/L7dYnD6Unp

— Lance Roberts (@LanceRoberts) June 2, 2020

Buy the Unknown the Unwanted, the Unloved 

Mickey Fulp: Buy the Unknown, Unloved, Unwanted, Undervalued: https://t.co/cNarsrLseT

Mickey Fulp discusses his investment strategy w/ Maurice Jackson.$HAN.CA $HANNF $TMQ #gold #silver #copper #platinum #metals #mining #commodities #TSXV @ProvenProbable @mercenarygeo pic.twitter.com/Tgt99qlUaZ

— Streetwise Reports (@SWReports) June 3, 2020

Small Cap Valuations Through the Roof 

Small cap more overvalued than anytime in history. pic.twitter.com/oRcFgOszEf

— Jim Bianco (@biancoresearch) June 3, 2020

Agree with Bianco on that.

Marijuana Legalization Coming?

"The Regulations Review Committee of the Connecticut General Assembly approved the Department of Consumer Protection (DCP) regulations that add two new conditions to the Medical Marijuana Program for adults only."

via @HedgeyeCannabis & @HowardWPenney https://t.co/NtmtII3rD3

— Hedgeye (@Hedgeye) June 3, 2020

My answer: Yes, if Biden wins, and perhaps anyway.

China-US Trade Souring

US - China trade relations update - souring further https://t.co/Ca3M02c9gz

— ForexLive (@ForexLive) June 3, 2020

Reflections on Liquidity 

All that matters is liquidity? Wow!

The rational, causal explanation for this is that recessions trigger easier money which leads economic recovery. And at the end of the cycle a bubble engenders it’s own liquidity.

I suspect fundamentals & maybe valuation might still matter. https://t.co/dnu8Ul3gDX

— Albert Edwards (@albertedwards99) June 3, 2020

Pent-Up Spending Coming 

If you can’t access article all you need know is April’s 7,000 furlough is now half permanent/half temporary...for now

As we’ve written ⁦@Quillintel⁩ pent up spending is mathematically guaranteed

What counts is follow through

ht ⁦@LewBowman⁩ https://t.co/YXO0kzzI47

— Danielle DiMartino Booth (@DiMartinoBooth) June 3, 2020

For how long no one knows, and that is what matters. 

I suspect something like a W- or square-root-shaped recovery with weak uptrends following that deep second-quarter decline.

Grim Economic Data

1. May 8: Over 20 Million Jobs Lost As Unemployment Rises Most In History
2. May 15: Retail Sales Plunge Way More Than Expected
3. May 15: Industrial Production Declines Most in 101 Years
4. May 30: GDPNow Forecast is Negative 51.2 Percent
5. June 3: Bad Economic Reports? Yes, But They Were Supposed to Be Bad

Ripple Impacts

For a detailed synopsis of the state of the economy and the ripple impacts, please see The Economy Will Not Soon Return to Normal: Here's Why.

Global COVID-19 Risk Ranges Up to $82 Trillion

To understand the total global risk, please see Global COVID-19 Risk Ranges Up to $82 Trillion

GDP Projections Before and After Covid-19

(Click on image to enlarge)

I added that red line and expect a shape something like that. 

Why?

In addition to depleted savings and an expected huge change in attitudes on risk, presidents prefer to have a recession or weakness in the first two years of their term, not their 4th year.

The US is in recession now. After a weak rebound, it is not at all far-fetched to believe there could be another shorter double-dip coming.

Regardless, I believe the CBO projections in the above chart are optimistic for the reasons stated. 

For discussion, please see CBO Estimates it will Take 10 Years Just to Get Back to Even.