Pelosi stimulus has done much to alleviate concerns

My count is the Pelosi stimulus plan is roughly $450 billion in actual spend over the next two years. If expectations can be firmly rooted in that it as good as money up front. I did not include any tax changes or transfer payments as they will just either reduce debt or increase savings.

Based upon my work below on Kalecki-Levy I find that $450 billion with savings going to 7% rate will result in SPX earnings of $58 which with a 14 multiple would be a 810 level in SPX.

Now I think the attention now goes to savings rate that develops from the crisis and using K-L the following table can be derived assuming the $450 bil of Pelosi does come in:

Savings Rate.......SPX Ern......Multiple.........SPX

3%............................83...................15.............1250

5%............................72....................13...............936

7%.............................61....................12...............850

9%............................49.....................11...............545

11%...........................38......................9................340

Lets hope Obama does a good job alleviating fears and stirring up or maintaining animal spirits. But if Obama does a wonkish let deal with the facts speech a la Jimmy Carter - savings rates response could swamp any fiscal stimulus.

Basically any increase or decrease in savings rate of 1% results in a change in SPX earnings of $6, and any change in stimulus from the Pelosi current plan of $100 bil plus or minus results in an SPX earnings change of $4.