It feels like a huge wave just crashed, and many people standing waist-deep in the water think things are on the upswing now -- when really they're about to get sucked into a powerful undertow.
Judging by the state of the stock market, many investors seem oblivious to the magnitude of the effects of the pandemic.
The S&P 500 lost more than a third of its value in the pandemic crash. Yet the index is now two-thirds of the way back to its high point:
But look at the levels of initial jobless claims still coming in at multiples above where they should be. Look at how many businesses are still shuttered, with an uncertain H2 ahead.
Given the harsh economic reality, I'm very bearish right now. I think we're going to see another significant drop as the full effects sink in, which is what has happened in other crashes. Investors call it a dead-cat bounce. But in this case, I'm picturing a bigger animal. Hippo maybe.
Judging by the state of the stock market, many investors seem oblivious to the magnitude of the effects of the pandemic.
The S&P 500 lost more than a third of its value in the pandemic crash. Yet the index is now two-thirds of the way back to its high point:
https://www.npr.org/2020/06/04/865117170/the-economy-is-in-t...
But look at the levels of initial jobless claims still coming in at multiples above where they should be. Look at how many businesses are still shuttered, with an uncertain H2 ahead.
Given the harsh economic reality, I'm very bearish right now. I think we're going to see another significant drop as the full effects sink in, which is what has happened in other crashes. Investors call it a dead-cat bounce. But in this case, I'm picturing a bigger animal. Hippo maybe.