Shares on Wall Street wiped out all off 2020’s losses even as the US was officially declared in recession. The S&P 500 is now up 0.05 per cent for the year, after rising 1.2 per cent on Monday on what looks like a mad fear-of-missing-out trade. The broad index finished at 3,232.39 on the cash close having gained another 38 pts and is now just 160 points away from its all-time high at 3,93.52 and trades with a forward PE multiple of 23.4. In other words, unless earnings bounce back significantly faster than consensus estimates, then it’s very richly priced. It’s remarkable that equity markets can be this stretched on such a catastrophic economic contraction – but that is what unlimited Fed liquidity does. Read why Mark Robinson thinks the rally is overdone.
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