Coronavirus second wave already here
It’s time again to take a look at the current market situation, facts, and figures on the second wave of the Coronavirus.
Since the low in March of this year, the S&P500 has gained an incredible 50%. As everyone waited for the second downward wave, the stock market simply turned around and soared back up as quickly as it had crashed before.
This rally was mainly driven by the great technology values and that makes perfect sense. Their business was not so badly affected by the crisis, and in some cases even boosted.
At the same time, we all know that the economy as a whole is mediocre at best.
Many small and medium-sized companies are struggling to survive.
Therefore, it seems as if the stock market has completely decoupled from reality, in my opinion, that's not the case.
On the one hand, the unprecedented flood of liquidity is lifting all boats and driving prices higher.
22% of all US Dollars were created in 2020!
On the other hand, there is definitely a differentiation in the stock market. Tech stocks may be overvalued by now, but they were seen as a safe haven and so easily bought. The price hardly played a role anymore.
At the other end of the equation are, for example, airlines and tourism values. The business for those sectors has completely collapsed and who knows when we can get back to normal?
Another sector says a lot more about the state of the economy.
And yes, it really looks that bad
You just have to look at the bank’s prices. Classic banking is a reflection of the real economy. And it’s getting worse and worse.
The lending business is paralyzed because companies and consumers are reluctant. Investments are being postponed and savings rates have risen all over the world, the people just take precautions. In the US, where the economy is primarily dependent on consumption, the buying mood is historically bad.
The granting of consumer credit has collapsed.