For those retards that have been here since 2018, you’ll recall that I called for a V shape rebound in the December China growth scare sell off. I’m usually a big fat bull (see flair), but I have to be realistic given the landscape.
The market will have a big pivot this week on Monday to trigger a new down move. Why?
- Market is out of steam – Thursday should have been much higher following the fed announcement. One of the largest packages in history met with a whimper +1.5% when the VIX is north of 40. What does that mean? At these levels, government support is, say it with me, PRICED IN. Yes, jobless claims numbers were bad but that was known.
- Banks announce next week, and the commentary will be awful – Look, everyone knows Q2 outlook will be shit except a lucky few (amzn, zoom, cost, etc.). Management is growing to throw everything and the kitchen sink because they have a free pass this quarter. However, the reality is they don’t have visibility into later in the year, let along 2021. Who is going to stick their neck out and not speak grim death with unemployment rising to 20%? Earnings is where the rubber meets the road when all the macro/emotion driven swings subside, and the reality is no one can say with confidence what the E in PE will be going forward.
- Followup to point #2. Consensus numbers from Wall Street are literally retarded. 5% earnings decline in 2020 with a rebound to $170 on the SPX in 2021. I know the market expectations are for a worse 2020, but consensus is for 2021 to exceed 2019. Show me another recession, let alone one this sharp, rebounds like that. You think animal spirits of 2019 will be back later this year after all this? It’s risk off and gradual rebuild for several years. 80% of layoffs / furloughs outside of effected industries will be permanent. Effected industries will downsize as well. Main Street businesses and consumers are wiped out. Risk off, everywhere.
Could I be wrong? No, I can’t. We’re drilling on Monday after a higher open, bookmark this.
For you retards who were stubborn enough to hold your puts 3 weeks too early, congrats you finally made it to the other side.
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.