The Wall Street story told by analysts and stock brokers is that the economy is bad now, but is near a bottom and a second half boom is coming as things reopen. Hold your stocks and buy more is the implication. At the same time the White House is arguing that testing is finally coming and that the situation has been won. But didn’t Trump and Pence say mass testing was upon us four weeks ago? No matter it is a fun show.
In reality corporate CEO’s are not seeing this rosy future. This is a quote last night from an analyst call with the CEO of Eldorado Resorts (NYSE: EY):
“As I look at what’s out there, what strikes me is when you read the research reports that are put out there on the various companies, including us, there’s a fairly uniform view on how things will shake out in terms of recovery — pace of recovery and strip — regional before strip and the pace of the recovery in both of them. And frankly, my experience in markets is when everybody thinks the same thing, they tend to be wrong. No offense to those of you on the phone that will end up asking questions, but that’s been my experience. So you start to think about which way could you be wrong. And in the negative area where you could be wrong is that the health situation could turn out to be worse than we anticipated. You could see a spike in the fall and winter that leads to more restrictions. There, you’re looking to how much liquidity will you have. We’d expect we’ll have the better part of the year, if not more, at closing, on a pro forma basis with no revenue. So we feel good about that.”
You can find the whole call here.
And yesterday billionaire trader Paul Tudor Jones – who in late March called for an April stock market rally to go on into the summer – was on CNBC crying about what he sees as a “second depression” coming.
I don’t mean crying as a figure of speech – he had real tears in his eyes.
The reality is there will be stocks that suffer in this environment and a few that benefit. They are the ones worth trading. I talked about this in an interview with David Skarica you can find here.
-Mike
