I bring to you my thesis that the stock market will plummet immensely over the next 2 months on these catalysts:
1) The Fed cannot continue to print money at this rate — We just posted an all time high deficit of 800 Billion for the month of june, and have added 2.47 Trillion to the debt in the first 9 months of this quarterly year (Beginning Oct. 19). The market is completely propped up due to this.
2) Unemployment benefits will not be extended. This is the reality, regardless if it’s dropped down to $400 or eliminated completely, over 40 Million households receiving unemployment benefits will lose spending power of upwards of 96 Billion dollars PER MONTH (2400 extra unemployment assistance x 40,000,000). That’s money that won’t go to small businesses or into those RH accounts we love to shit on. (I happen to be one of those RHer’s but I digress)
3) The housing market. No, not just the residential one, but commercial as well. Over 80% of restaurants in NYC did not pay their rent in full in June according to a survey done in conjunction with Eater(Source: ny.eater.com/2020/7/2/21310016/nyc-restaurants-rent-payments-june ) Multiple retail outlets (JCP, Brooks Brothers, etc) have filed for bankruptcy and will sell their properties for pennies on the dollar. Forget about malls as they’re indoor and places like California just essentially went back to phase 1 will not permit them to be open.
What about residential rent? Well, if schools like Boston College (just an example) don’t have kids on campus, the rent rates will fall in the surrounding area of Chesnut hill come August as landlords will have to fill em at a loss or eat their mortgage losses and input less into the economy. Nearly a THIRD of renters didn’t pay their rent for April, 2 weeks after the initial shutdown (Source: www.npr.org/sections/coronavirus-live-updates/2020/04/08/829850505/millions-didnt-pay-rent-last-week-amid-pandemic-woes) . What happens when you cut off $2400 off unemployment assistance at the end of July and the eviction moratorium ends on August 25th? What happens when folks who were already barely getting by on full employment who’ve had their hours cut can’t pay their rent in full? We’re about to witness a scale of misery this country hasn’t seen in a long time folks.
Now why am I writing this aside from the doom & gloom? SQQQ, SRS, DRV and other similar ETF’s should be on your radar immediately. Options for DRV and SRS skyrocketed today for Sept/Oct/Nov/Dec, and this can help blunt the impact of the inevitable market correction for some of you invested in blue chips down to pennies. This is not a rational market, and it hasn’t been for a while. What goes up must come down, and I’m hoping I fall onto a trampoline and skyrocket to the moon with those calls come 2 months from now.
I am not a financial advisor, and I’m not advising you to throw your life savings at this. To be honest, I was an XSPA bag holder (cleared half my position today for a 33% loss) and I may have watched The Big Short/Margin Call one too many times. That being said, if today was any indication, i’m not wrong on this. Some of you have helped me here, so I’m just playing my part in spreading good karma to try helping anyone who hears it stay in the green.
Disclaimer: This information is only for educational purposes. Do not make any investment decisions based on the information in this article. Do you own due diligence.