The below tidbit from Sanford Bernstein head of strategy summarizes the massive consensus view right now. Two questions bears have to ask themselves:

1. can consensus be right?

2. if many of the bears out there anyhow are bullish on a 12m time frame – how close to switching sides are they…?

If the markets are made to make as many participants to look foolish all the time we will now continue to rally 10% more in the next 2-3 months to then totally collapse (perhaps on a second corona wave late summer) and massively break through the 2400 low.

Sanford Bernstein:

With markets rallying strongly in the last few trading sessions we thought it might be useful to lay out our thinking. We worry that the market is getting ahead of itself and that it is likely to be too early in this crisis to see a definitive market low point. We realise this might sounds like a controversial thing to say in the face of current price action but we would make two points:

1) Despite a tentative discussion of the relaxing of lock-downs in Italy, Austria, Denmark and China we are still at too early a stage to know how long the lockdown will impact economic activity. We are still, unfortunately, at an early stage of this in the US. Moreover, despite the understandable excitement at seeing an initial relaxation of the lockdown, this is not fully accounting for the fact that lockdowns will likely need to be re-imposed at a future date in response to increases in infection rates. Markets hate uncertainty and any sense of certainty – however bad – tends to provide a floor for the market. But we simply do not think that we are at that stage yet.

2) Equities have not yet become cheap. Consensus numbers are currently useless (70% of analysts still haven’t downgraded). If we assume earnings fall 36% in the US in 2020 and recover by 33% in 2021, then the market troughed at a PE of 17.5x 2021 earnings last week. Hardly a recessionary trough.

Exactly timing the bottom of such a market is simply not possible in our view. Thus investors may like to trade into risk assets via a phased approach over months. That process could start now, but we think it likely that we will re-test lows. Please note that we are not bearish though, as looking ahead 1 year+ equities are our favoured asset class (second favourite is gold) and we think the market will be higher in a year’s time.