Good
Subscriber Account active
since
Markets plunged earlier this week as concerns about the outlook swelled. The fear is in many ways understandable. COVID conditions, …
Good Subscriber Account active since Markets plunged earlier this week as concerns about the outlook swelled. The fear is in many ways understandable. COVID conditions, at least as proxied by cases, are deteriorating. At the same time, worrying economic trends have popped up in the form of a potentially more aggressive Federal Reserve and the market reflecting signs of weakening growth. But just as stocks have mostly shrugged off their heartburn from earlier in the week, so too should you not get concerned about these developments. There’s good reason to believe the US economy is going to hold up just fine. First, let’s see why people are getting spooked. First is the COVID story. In the US, hospitalizations are on the rise and case positivity is at its highest rate since April. Policymakers are even bringing up the possibility of renewed restrictions in some areas. In response, reopening stocks got clipped. Carnival Cruise Lines and Delta Airlines saw big drop offs early in the week and have sunk over the last few months. Planet Fitness is down while Peloton is up sharply. In other words, these companies are trading as if it is spring 2020 again and there is no effective vaccine. Next, there are worries over the Fed’s next meeting and whether the central bank is ready to take the foot off the gas when it comes to helping the economy.
