Markets stocks

The Great Disconnect And QQQ’s $100 Billion Pandemic Party

Absurd? Maybe. But money is money, I suppose.

Just how dramatic is the disconnect between the furious rally in equities from the March bear market lows and the rapid deterioration in corporate bottom lines? Well, pretty damn dramatic, as you might imagine. We're now some 31% off the ostensible bottom, and while the unprecedented nature of the current environment is certainly conducive to abrupt sentiment shifts, the scope of the bounce suggests we may not revisit the lows after all. For what it's worth, the visual in the top pane shows that the scars have hardly healed - and indeed, how could they? It's been less than two months. And yet, after last week's 3.5% gain, some are coming around to the notion that this time may be different. A 20%, knee-jerk surge following a bear market plunge is one thing. A 31% rebound in a matter of weeks is something entirely different. And you can take "entirely different" literally - we've never seen anything of the sort. At just 33 days from peak to trough, the COVID bear would be the shortest in history. With the rally winning converts in the face of astounding economic destruction, critics point not just to the absurd juxtaposition between rising stocks and the single-worst data poi
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2 comments on “The Great Disconnect And QQQ’s $100 Billion Pandemic Party

  1. QID was at a 5 year low of 18.81 in February, now it’s 15.79 so it’s so cheap it’s almost crazy not to hedge that the NASDAQ is more likely to go down than up. On the other hand the Dotcom runup could happen again: euphoria where the market (with a little help from our friend the Fed) stays irrational longer than I can solvent.

    • Well I got burned shorting irrational players more times than I can count. So I would not count on that hedge being cheap 🙂 Sure it will bounce up a bit, but as you correctly stated, you are figting FED and all the irrational players who now think if stocks will go down again, FED will just start buying those too..

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