The travel stocks are all shooting back up to pre-COVID levels. Dipped my toes into options trading for first time ever with Tanger Outlets and its already in the money and up 600% in less than a week, and shares I got are up 33%. Since SPY blew past the boundary you posted about last week, do you expect ATH now by July?
I know i don’t want to get too addicted to options trading. Right now it’s easy. Basically buy calls on anything below it’s pre-COVID price and profit. I know that won’t last.
I don't expect an all time high, because it is entirely speculative, but I won't rule it out. There is a ton of underlying damage to the economy. Reopening is great. But it's a long road to hoe. Coronavirus in the fall is way down my list of worries, but it alone is a big one.
So many businesses are going under once PPP ends, we can't get a count. How many people will go back to work vs back to unemployment once those businesses run out of PPP? Will we print more money to do another round? Printing money is bad if the country is not producing more, it can lead to nasty inflation. In the short term, people will likely save more money and spend less so we either won't see inflation or might even experience deflation. The only long term solution will be either higher interest rates to curb inflation or higher taxes to reduce the money supply.
The cart is way ahead of the horse. There's no reason to put valuations of most businesses ahead of where they were in December. International trade will be a disaster for years to come. I believe many domestic consumers have rushed back out after being stuck inside and with income tax money, stimulus, and some savings there is a nice bump in spending. Over the long-term, weigh who is getting a raise vs a paycut. When is unemployment going to get close to 3.5% again? It might be years.
Helicopter money is inflationary, it actually hurts the economy if it continues.... Maybe not as much as 20 million people in a bread line, but it's nowhere near as good as a 3.5% unemployment rate. A whole bunch of high income earners are going to retire this year. And next. Their spending will go down dramatically.
I think we need to see a couple of quarters of earnings. Everyone will get a pass for Q2, but we need guidance. Q3 earnings are going to come out around election time. I will be happy sitting on cash until then.... The S&P was up 30% last year and is flat for the year now. I wasn't expecting anything grand this year anyway.... There are a thousand landmines between now and November. If we dodge them all I will jump back in and catch the election bump. I have no interest in stepping on one.
So I see tons of risk. The only positive I see is that if we experience significant inflation globally, the markets are a good inflation hedge.... I am all ears on what else I am missing that will drive growth and earnings for the next 12-18 months. Don't fight the Fed isn't going to do it for me. We need the real economy to catch up and surpass its previous trajectory.
