The stock market is too optimistic about a quick economic recovery

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OPINION: Everyone wants a quick V-shaped economic recovery from the global pandemic. That's not going to happen. The likeliest winners of our gradual recovery will be patient, long-term investors willing to ride the waves.

Equity markets are factoring in a V-shaped economic recovery, with S&P 500 SPX, -0.01% earnings expected to recover in 2021 to a slight increase over 2019. Better-than-expected May and June jobs reports — and record May retail sales growth — provided a boost to more cyclical and value-oriented areas.

First-quarter earnings are now meaningless. Enterprise budgets are due to be cut across the board as companies reassess revenue assumptions in a very uncertain environment. The COVID-19 impact is also obvious in the growth of over-the-top content consumption. Disney+ DIS, -0.32% has benefited from more time spent at home and a search for entertainment to fill the gap left from live sports. This has come partly at the expense of traditional cable companies, where cable cord-cutting has accelerated.

Retailers such as Ulta Beauty ULTA, +1.34%, the cosmetics and skin care retailer, with its omnichannel capabilities and strong balance sheet, are positioned to take share from less-well-positioned retailers as the economy starts reopening. Home Depot HD, -0.39% has been investing in online capabilities for several years and is reaping the benefits: online revenue growth spiked to 79% in this year’s first quarter, up from 21% in the second half of 2019.

 

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How is it possible that Margaret doesn’t follow the markets?

Sure looks V shaped to me. Unions and pensions are celebrating

Umm, have you seen the stock markets? Pretty sure it was a V shaped recovery.

That's what makes a market.

It's already happening, many in the the doom and gloom crowd are very upset and almost bankrupt from shorting this great rally. Good!

Willing is not the criteria. You need to be financially capable of 'ride the waves'.

GeneralStrike

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