Wednesday, June 10, 2020

Flight Data

The “real” economy is still very far from recovering, as witnessed by airline passenger data from TSA.  Daily traffic is off the absolute bottom reached in mid-April, but it is still 84% lower than last year.

Meanwhile, stocks have rebounded 100% as they discount a sharp and complete economic rebound in record time.  I remain a sceptic, and I have come up with a historical parallel for this disparity: the dotcom craze of 1999-2000.

Just like 20 years ago, stocks are rising vertically, discounting a future that is way out of touch with the present reality  In other words, it’s all “story” and no fundamentals.  The danger is that even a minor disappointment on how the said story evolves will produce a disproportionately negative effect on share prices.


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