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.
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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