The P/E for the S&P 500 is about 25, near historic highs. Credit spreads in both developed and emerging markets are tight. Real government bonds yields are negative. Companies have repurchased own shares at record levels for almost 10 years, reducing outstanding stock of marketable securities. Asset price volatility has been extraordinary. Contrast that with market fundamentals: the U.S. economy entered recession in February; total hours worked in May were 12.5% below Q1 average; total wages paid were down 8.5%; and governments have provided cash transfers and guaranteed loans to support incomes.

Dr. Robert Gay is a 30-year veteran of international financial markets. He is managing partner of Fenwick Advisers LLC, a financial advisory firm that he founded in 2005. Prior to that, he was global strategist for Commerzbank Securities as well as head of asset allocation for the bank’s fund of hedge funds and a member of the management committee for investment banking in the United States. Dr. Gay also served with Bankers Trust and Morgan Stanley & Company and for eight years was a senior economist with the Board of Governors of the Federal Reserve Systems in Washington, D.C, most of which were during the chairmanship of Paul Volcker.

Here is a link to the Fenwick Advisers web site.