Testy Tuesday – Trouble at Dow 34,000?

What a run we've had! 

The Dow is up almost 100% from last year's low at 18,200 and we are 12.5% higher than the record high of just under 30,000 – right before the market plunged 35% in March of last year.  It's very hard to do the math on where we SHOULD be as we began stimulating the economy on March 27th of last year when the CARES Act sent $1,200 checks (with Trump's name on them) to 162M Americans.  

We also gave a weekly bonus of $600 to what became close to 20M unemployed people – that added $12Bn/week to the economy and then in December, that was extended and another $1,200 went out to every taxpayer under the Consolidated Appropriations Act and, more recently, in March, it was the American Rescue Plan with $1,400 checks for everyone.   

Then there was another couple of Trillion in Fed Asset Purchases and a couple of Trillion worth of Government Aid to business…. All in all, $6Tn of our $20Tn GDP (30%) has been stimulus so that's about 30% more earnings for companies than has been realistic during the pandemic.  Of course, now things are getting back to "normal", hopefully – but what is normal now?  It's pretty much impossible to believe that 2021 will be 12.5% better than 2019 was for the S&P 500 or the Wishire 5000 but that's where we're priced – to perfection and beyond.  

We'll see how Q1 Earnings look but we have a Global Chip Shortage that's certainly being felt in many industries and the virus is still ravaging parts of the World, especially South America and India, where they had 259,167 new cases yesterday alone.  Still not as bad as the US peak of 300,669 that we hit on Jan 8th, towards the end of the Trump error.  Yesterday, the US had "only" 70,355 new cases and "only" 483 people died vs 3,895 people who gave their lives for Trump on January 8th – so things can get better rather quickly but Modi is still in office in India and, so far, doesn't seem like he's going to make the changes needed to curb the virus there.

As you can see, even at India's pace, it's going to be very hard for any…

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