Bullish Spreadsheets and Earplugs
Former Federal Reserve Chair Janet Yellen has joined a chorus of high-profile economists claiming we’re in for catastrophe, but stock markets just found a three-week peak. Every American index rocketed 7% yesterday, led by a weird mix of tech, luxury goods firms, and utilities.
The bulls say it doesn’t matter that global coronavirus cases are rising exponentially. Non-essential businesses have closed their doors already, and everyone knows pandemics are temporary. The bears get it, but the mounting losses and lengths of this shut down might also be underestimated.
We saw weekly unemployment numbers break the y-axis last week, and stocks still went up. It could be the coming earnings season to really test markets, starting next Monday with the likes of Alibaba and Aphria.
If you have a strong opinion about the business impact of coronavirus, buy or sell these names. Their early profit-per-share readings are being predicted amid sentiment swashing through markets right now. Their results will set the bar for companies reporting later!
At the moment, faith is in spreadsheets. “Incoming data suggests that at least in New York state, could peak even before the governor’s optimistic date.” That’s why Tom Lee, head of research at Fundstrat, believes “buyers feel back in control.”
Let’s hope that holds, as hedge fund managers also said that such was the bullish conviction yesterday; any bearish converts could make an even more emotional splash if they were to swap sides and become sellers. Watch those ticks!