6 Comments
 

We are definitely going to swing at least 5% several times by the end of the year (not necessarily in one day). Whether or not we dip fully into correction territory depends on how bad the COVID news gets, especially with the Fed and government providing so much support.

 
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I might be more pessimistic on this compared with others, but I think in the next 6 months the combination of:

  1. Continued Covid cases through summer and slower than expected recovery in travel, hospitality and leisure

  2. Likelihood of a true 2nd wave in September, which history suggests is very likely to happen

  3. Increasingly high probability of a Biden presidency

Would suggest to me a lot more reason for the market to move further down (or stay the same) and much less cause for excitement about a rally back to earlier highs. Curious to hear what others think though. As PPP money finishes up now as well, I am assuming a lot more small businesses will have no option but to lay off large numbers of their employees, assuming that they are continuing to see a huge decline in demand.

 

I have to say I generally agree but I think there is more nuance to the situation. It's very hard to know what the market has already factored in, so I doubt that travel and hospitality will cause that big a swing, especially with tech stocks going up. Honestly, same with number 2. The only thing I don't think has been factored in is the Biden presidency because we would be way lower if that was the case. You also have to consider that the GOP might let another stimulus pass as elections are right around the corner.

 

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