What's Next After The Big Bounce - Mark Dow Joins Alpha Trader
Summary
- This week's Alpha Trader podcast features hosts Aaron Task and Stephen Alpher talking about the markets with fund manager and Behavioral Macro blog author Mark Dow.
- Following a crash in markets and a monster bounce, Task and Alpher mull what's next. Bears may be in hiding at the moment, but bulls may need to see a path to corporate profitability to take things higher.
- Mark Dow is now positioned for some momentum to the downside, noting a lot of good news last week failed to move the averages upward. Fed liquidity, he argues, ensures the system keeps operating, but it's investors taking on more risk appetite that sends markets higher.
- There's more, including why Dow thinks the Fed's Jay Powell is doing a good job, why he likes the homebuilders, and how a shortage of assets ultimately means good things for stocks.
This week's Alpha Trader podcast features hosts Aaron Task and Stephen Alpher talking about the markets with fund manager and Behavioral Macro blog author Mark Dow.
Prior to chatting with Dow, Task and Alpher consider that we might be entering a new phase for markets. Phase one was the panicky crash from late February into mid-to-late March, and phase two was the straight from central casting big bounce.
The "hard" part may be starting now. The idea of a re-opening economy may seemingly have the bears on the defensive, but the bulls need to ponder profits, or lack thereof. Amazon (AMZN) plans on spending its anticipated $4B+ in profits in Q2 on safety measures for workers and customers, and business is booming for the House of Bezos. Pity the retailer, restaurant, or fitness chain that - even if allowed to open - will surely be doing so at reduced customer capacity and higher labor costs.
Following the stunning move higher, Mark Dow is now positioned for some momentum to the downside. He turned from being bullish only last week after the market was unable to rally despite a decent amount of good news - Wednesday's Fed meeting and pledge to support markets, positive data on Gilead's (GILD) COVID-19 treatment, and strong results from important players like Apple (AAPL) and Amazon.
But shouldn't the Fed's continued pumping assure that markets march even higher? No, says Dow. Fed liquidity is important to keep the engine of the system running, but the money the central bank "prints" doesn't find its way into equities unless investors place it there. While the Fed might assist through a placebo effect, ultimately it has to be investors taking on more risk appetite.
There's plenty more, including Dow's review of Fed Chair Jay Powell (Cliff's Notes: Thumbs up), why he likes the homebuilders (NYSEARCA:XHB), and his continuing thesis that a shortage of investable assets ultimately means good things for stocks.
Listen to or subscribe to Alpha Trader on these podcast platforms:
This article was written by
