Now we're all well again, hmm?

The dramatic return from the walking dead of mid-March has been marked by extraordinary price gains in financial stocks. The only analysis that could've provided advance notice for the rally was the knee-deep pessimism among investors. The re-ordering of the US economy by the new administration has yet to play out, but investors are simply glad they haven't yet gone broke. The US economy is resilient, at least it has been so in past recessions. Even without immediate stimulus by government, downturns have slowed and reversed in time. Employment is usually a lagging indicator and the stock market is a leading indicator. However, the prospect of higher taxes on businesses' foreign operations, energy/carbon taxes on consumers and a crippling of the health care business does not encourage optimism. Cash flows for companies are damaged but will recover if no further burdens are imposed. We don't yet know the details, but we do know that piling on new taxes is the wrong way to get growth going again.