Today we are watching…
1. Carnival (#cuk)
This cruise line operator will probably be cutting back on dividends and its fleet of ships to pay running expenses. It will also need the current demand shock to start abating right now, because bailouts look said and done. The market believes in all this and thinks it’s buying a future much rosier than the current reality, as evidence by the parabolic 30% increase this week in Carnival shares. If the company survives the next six months, its shares are going to multiply. However, if consumers decide that a holiday on water isn’t a risk worth taking given the odds of a second coronavirus wave, Carnival will need extra financing, and that can’t be good for investors. It will mean dilutive share issuances or more debt. It could take years before Carnival invests in growth again!
2. Goldman Sachs (#goldmans)
The big banks aren’t big fans of decentralized payment systems, and that’s not a surprise. The concept would put them and the government out of a job, which may explain why Goldman Sachs analysts have gone on the record to say that cryptocurrency investments make no sense for the firm’s clients. “We believe that a security whose appreciation is primarily dependent on whether someone else is willing to pay a higher price for it is not a suitable investment for our clients. Cryptocurrencies aren’t even appropriate as an asset class!” These are harsh words, but the market never learns from manias and if Goldman is proved wrong, it’ll look silly. It will be interesting to see how the price of Bitcoin reacts in today’s session!