Comstock Partners: V shaped move in stocks doesn't mean V shaped recovery

A very nice piece in Comstock Partners Market commentary where they suggest the market is out on a limb:

The stock market rally has now reached a point where it is forecasting a V-shaped recovery that is not likely to happen.
The recent catalyst for all of this optimism is a bullish interpretation of current economic activity, some apparent stabilization in the housing market and various companies beating earnings estimates. Also not to be overlooked is the perceived strength of the Chinese economy that is affecting global growth and the upward move in some basic commodities. We think that all of these points are being exaggerated while the fear of missing the train leaving the station is resulting in a speculative surge that is likely to leave the majority disappointed.
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As for the housing market, although we've seen some signs of stabilization at extremely low levels, the picture is nowhere near as bright as the screaming headlines in some major newspapers. New home sales for June were actually down when seasonally adjusted. Moreover the number of new homes sold in June was the worst since June 1982. You'd never know that from reading the newspapers or watching financial TV. Furthermore, income and employment, the main drivers of housing demand, are still too weak to support a meaningfull housing recovery. When we add in falling prices, excess inventories, more foreclosures and another surge of resets ahead, the housing picture is not too pretty.

Another factor that is being hyped is the bullishness over 2nd quarter earnings reports. Sure, earnings are beating expectations, but that's because they were deliberately set so low in the first place. While earnings are beating the most recent estimates they are actually still below the forecasts made in February.

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