On another note, once a month I receive an index of 22 economic indicators constructed by a money manager. According to the index, we had been in a depression since October. As of the last reading, the index has popped up from "depression" to "recession." In fact, the index had been trending up since January. The index had the economy in severe depression until February when it perked up to merely a depression. Also, the data suggests that deflation is abating. (Sorry but I cannot post the index. You will just have to take my word for it. (That's a dicey proposition. - ed.))
In other words, the rate of decline is slowing, which is consistent with what we have been seeing in the corporate bond market lately.
Currently, stocks are trading at 6x-9x earnings. Such valuations imply depression and deflation. If instead the economy is in a recession and prices are beginning to stabilize, stocks could have a powerful counter-trend rally.