In my view the bear market in equities will resume beyond the so-called summer rally. Crucially, the huge fall in household wealth will dampen consumer demand and rising risk aversion will delay a revival of global investment. There will also be much weaker corporate earnings growth, making equities overvalued; a weaker dollar spreading deflation into emerging economies; and poor leadership from the US administration on global economic policy and geopolitics.
But the most important factor suppressing equity market revival is intensified disinflation in the US. This means that US corporations can only recover profit margins at the expense of consumer purchasing power. That increases the risk of a double-dip recession at worst and weak corporate earnings growth at best. Profit margins won't recover and more jobs will be lost, drastically postponing economic recovery.
Global ripples
Disinflation also applies globally. As the euro and sterling have strengthened against the dollar, eurozone and UK inflation is slowing significantly.