Here’s the close to my latest entry to our internal market log:

“While, again, I see a good chance that stocks trade higher in the near-term, the market faces somewhat of a double-edged-sword setup. Should, as some economists expect, the headline data begin to improve, traders will fret over the Fed becoming therefore less accommodative. Should, on the other hand, the data sour even more rapidly, traders will fret that the Fed is behind the curve and, thus, won’t be able to skirt a near-term recession.

The best near-term scenario for the market (which is my short-term base case) would be one where the data continue to trend negative, but less so than in previous months. I.e., still justifying Fed dovishness, but not in dramatic, or panicky, fashion.

Longer-term (and what counts for our clients): Beneath the headline data ominous developments are forming; in the debt markets in particular. In a nutshell, amid dozens of concerning indicators/developments, the fact that corporate debt as a % of GDP is at a record, and that far too much of that debt is at lower credits (ratings), and that bb debt, for example, is being issued with a 3-handle, and that corporate interest expense for S&P 500 companies is the highest since the Great Recession, and that the Fed has had a devil of a time controlling overnight repo rates of late (whatever that portends??), and I could go on and on, demands that we remain very cautious right here (as long as our macro index continues to signal heightened recession risk). Despite the fact that the market is likely to remain buoyed by trade deal expectations, Brexit expectations and Fed assurances for the time being…”