Is It Time To Buy The Dip??? - Part 24
Goldman Sachs thinks that despite the US Feds buying up everything and the kitchen sink, the lows aren’t in yet due to the “X-factor,” Covid-19. But if theU.S. doesn’t have a second surge in infections after the economy reopens, equity markets are unlikely to make new lows, they said.
Ari Wald of Oppenheimer thinks that the equity markets are in a new bull market. Ari said the 35% drop from February to March has been followed by a huge retracement that will continue through the rest of the year.
Treasury Secretary Steven Mnuchin on this evening that U.S. economy will open up in May or June and rebound this summer and early in the fall.
Barron’s latest Big Money Poll results show, 39% of money managers say they’re bullish about the outlook for U.S. equities this year; 20% are bearish, and 41% are neutral. But 83% of the managers are bullish on stocks’ prospects for 2021.
Dozens of states have announced plans to relax social distancing restrictions. Georgia has been the most aggressive by announcing this past week that gyms, tattoo parlors, hair and nail salons, massage therapists and other businesses could reopen. Restrictions on in-person religious services, restaurants and theaters were all also set to be relaxed.
Although testing in the US has picked up in recent weeks, relative to other countries, the US is still behind. For example, Germany is testing their people at 2X the rate of the US. Anthony Fauci, the head of the National Institute of Allergy and Infectious Diseases, told Time magazine that he wasn’t confident that the US is equipped yet to test on the scale needed to minimize the spread of COVID-19. And Dr. Deborah Birx, the White House Coronavirus Task Force coordinator, told NBC News’ “Meet the Press” Sunday that the U.S. needs a “breakthrough” on coronavirus testing to help screen Americans and get a more accurate picture of the virus’ spread.
As the US starts to open up the economy again, we need to learn from other countries who are ahead of us.
Japan’s northern island of Hokkaido offers a grim lesson in the next phase of the battle against COVID-19. It acted quickly and contained an early outbreak of the coronavirus with a 3-week lockdown. But, when the governor lifted restrictions, a second wave of infections hit even harder. Twenty-six days later, the island was forced back into
lockdown.Hokkaido’s story is a sobering reality check for leaders across the world as they consider easing coronavirus lockdowns: Experts say restrictions were lifted too quickly and too soon because of pressure from local businesses, coupled with a false sense of security in its declining infection rate.
“Hokkaido shows, for example, that what’s happening in the U.S. with individual governors opening up is very dangerous; of course you can’t close interstate traffic but you need to put controls in place,” says Kazuto Suzuki, Vice Dean of International Politics at Hokkaido University. “That’s what we now know: Even if you control the first wave, you can’t relax.”
Bill Gates said the new normal after the US economy opens back up will comprise of airports not having large crowds, sport being played in empty stadiums because people's risk aversion getting infected with COVID-19. Thus, the economy will be be depressed as demand remains low until a vaccine is created.
With all that said, the levels that I'm watching above price on the DOW are daily demand at 24700 and 26400.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.
I am cautiously bullish. The swift drop in stocks in late Feb to March has unwind a ton of bulls to the point that there is over $5 trillion in money market funds and $15 trillion in treasury bonds. So although economy may be sluggish in the near term and likely be extended over the course of how this virus plays out there is not much who are holding stocks besides the ones who held through the Feb/Mar crash.
This is not to say we can't crash soon, but chances are more likely people will buy rather than sell since most are on the sideline. Just my take on this.
Posted Using LeoFinance