The stock market has been looking a little top heavy for weeks on end after an early winter melt-up. But absent President Trump signing off on a new stimulus bill that features his demands for fatter stimulus checks to households reeling from the COVID-19 pandemic, the math suggests stocks would be too overvalued to not justify a correction.

Long-time market strategist Hugh Johnson of Hugh Johnson Advisors told Yahoo Finance Live he thought stocks were about 8.5% overvalued before Trump threw a fresh $900 billion bipartisan relief bill into question Tuesday evening. Now the markets look even more overvalued given the fresh dose of fiscal uncertainty and crumbling economic rebound from the worst of the pandemic.

“Right now it’s pretty clear that things are slowing. We do need the stimulus. We perhaps need more stimulus than the $900 billion called for. So maybe the president is on the right side of this thing. You see the Democrats quite clearly jumping all over it and saying yes, let’s get this done and let’s pass the additional stimulus and the bigger paychecks the president is currently espousing,” Johnson says.

In a video posted on Twitter Tuesday evening, Trump said the relief package “really is disgraceful” and includes “wasteful” items. “It’s called the Covid relief bill, but it has almost nothing to do with Covid,” Trump said, calling for stimulus checks of $2,000 for individuals and $4,000 for households.

WASHINGTON, DC – DECEMBER 22: A Marine stands guard at the West Wing of The White House on December 22, 2020 in Washington, DC. President Donald Trump spoke against the COVID relief bill in a video posted to Twitter, urging Congress amend the bill to increase the direct payments given to Americans to $2,000. (Photo by Tasos Katopodis/Getty Images)

Under the proposed legislation brought to Trump’s desk, single people earning up to $75,000 will receive a check of $600. Married couples bringing in $150,000 will get a check of $1,200. Both amounts are half of what was paid out directly to folks in the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

The bill also includes $1.4 trillion in funding to keep the government open.

Johnson may be on the mark that the economic slowdown is gathering speed as regulators clamp down on mobility to contain the out of control pandemic.

New homes sales plunged 11% in November, the Census Bureau reported Wednesday. The Commerce Department reported Wednesday consumer spending fell in November for the first time since April. On Tuesday, the Conference Board said its closely watched consumer confidence index dropped to 88.6 in December from a downwardly revised 92.9% in November.

And a week ago, the government said retail sales fell 1.1% in November. Consumers are also spending less on holiday gifts, data out of JPMorgan Chase shows.

Johnson says he has shaved his GDP forecasts for the fourth quarter of this year and the first quarter of 2021. Wall Street economists have begun to follow Johnson’s lead in revising GDP forecasts down for the current quarter and start of 2021.

Economists expect fourth quarter GDP to rise 4.6% (after a 33.4% pop in the third quarter) followed by a 2.6% gain in the first quarter, per Bloomberg data, which is about one full percentage point lower than seen just several weeks ago for both projections.

Next up on the chopping block much to the chagrin of equity bulls — in light of the economic growth slowdown — could be S&P 500 earnings estimates.

“I might have to pull down my earnings estimates for 2021,” Johnson adds. “We’re still looking at 2021 being about a 4% growth rate for the economy and a fair substantial, maybe 22% growth rate for earnings. Those are really good numbers. They include a lower number in the first quarter, but good numbers for the second, third and fourth quarters. So I am holding the line on my numbers. But believe me, I’ve gone back to the drawing board almost every minute of every day as we see a new number [economic number] come out. There’s no question things are slowing more than I expected.”

S&P 500 earnings in 2021 are expected to rise nearly 23% year-over-year, according to Factset data. But without those Trump bucks, that earnings growth number would need to be marked down. And so would the stock market.

Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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