Most of the countries are hit by Covid-19 and are in some form of lock down.
Even some countries that opened up (the likes of China, Hong Kong and Korea), they had opened up cautiously and implemented strict restriction.
I am not expert in medical field and I hope I am wrong too. But from my understanding, vaccines will not be available so soon and most likely we will have to live with the virus and manage the impact.
Hence, most likely we are not going back to same economic level. Not in the next 1 to 2 years.
As of today, US cases are still running at 29k cases. Probably the curve is flattened but 29k cases per day is still extremely high. That is 870k per month.
US unemployment rate hit 14.7%
S&P 500 once hit 2305 from 3380 (31.8% drop) but recovered to 2929 (13.3% drop from 3380)(as of 8-May) and going strong.
This is really puzzling me.
There is unlimited QE but QE without equivalent return (reduced economic activities due to Covid-19) will not be able to sustain the stock market.
Ultimately,
Stock market depends on stock price of each stock
Stock price depends on company revenue and profit
Revenue depends on consumer spending.
Consumer spending depends on income of each consumers.
All things happening just remind me of The Big Short
(movie: https://www.imdb.com/title/tt1596363/)
The movie is based on the book The Big Short: Inside the Doomsday Machine
It is a non-fiction book by Michael Lewis about the build-up of the United States housing bubble during the 2000s.
The Big Short describes several of the main players in the creation of the credit default swap market that sought to bet against the collateralized debt obligation (CDO) bubble and thus ended up profiting from the financial crisis of 2007–08.
(Sited from wikipedia : https://en.wikipedia.org/wiki/The_Big_Short)
My Take
This is not a buy or sell call. I still believe in value.
If I find good value in stock, I will still buy
