Stocks Jump on Virus Treatment Hope

Catch Up Quick

• The Pentagon is discussing removing confederate symbols from military bases

• Brooks Brothers file for bankruptcy

• In Q2, median analyst estimates for S&P 500 EPS fell by 37%

• Supreme Court grants access to Trump's financial records

• The Mayor of Seoul was found dead after his daughter reported him missing

• Rivian raises $2.5B in plan to beat Tesla

• Trump says China trade deal is "not a priority"

• United Airlines is considering terminating almost half its staff

My Friday Opinions

• Air travel is down more than 70% since 2019, with major airlines striking deals for federal aid packages, downsizing, etc— air travel has long boasted a high barrier to entry for new players, but with industry titans on the verge of collapse, keep an eye on smaller airlines who are better poised to whether the crisis with more flexible capital stacks and the ability to gain new market share by implementing better hygiene practices than the mega airlines have thus far

• Wells Fargo is now requiring new customers to have at least $1M in balances if they want to refinance a jumbo mortgage— as many aim to refinance their mortgage during a time in which low rates are achievable, this could be the beginning of action taken by banks to hedge against the risk of receiving smaller interest payments from borrowers

Thought of the Day

• The price of gold has recently exceeded $1800 per oz, reaching a 9 year high

• Historically, gold and stocks have shared a negative correlation, as institutional investors, especially hedge fund managers, treat gold as a safe haven from market risk when recessions loom

• However, within the last month both gold and the major equity indexes have both rallied hard together

• I believe this split will cease to exist once the pandemic subsides and institutions move capital away from save haven positions to revamp exposure to more risky assets

The Bottom Line

• In the now however, this trend rigidly supports the thesis of smart money positioning for a market downturn while retail investors continue to buy

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