I own a truckload of PAA that I bought under $5, mostly for the dividend.
In the US, what I can see unfolding is:
- vaccine available in next 4 months. USG wants to perform challenge trials. Maybe not ethical, but it will immediately demonstrate effectiveness or lack thereof
- supplementary high quality rapid testing rolled out by the private sector. Want to eat at my restaurant? Take a test. Want to go into Target, take a test. That will crush Covid extremely quickly. My company would certainly mandate this if there was a solution low cost enough to test everyone daily. This would be a god send for schools. I'm optimistic about this in a big way.
- rush for solutions before fall / winter cold and flu season. From my same VC contact I have heard that HHS and the CDC are "very concerned" about what may be coming re: infections if we don't have any solutions, hence the rush for a solve. Very concerned = utter panic to me
- some portion of the population won't get vaccinated because they won't or they can't. The testing should help with a ubiquitous solution. Until there is a great private sector testing, life can't really return to normal
- per same contact, the actual infection rate is somewhere between 5-10X greater than reported cases. Daily positive cases have gone down because not required to be reported rapid tests are a greater share of total tests. Don't be fooled. This is continuing to expand. IFR probably 4-5X more deadly than flu, biggest unknown is long term disability and lowered life expectancy
Taking it back to markets, less appetite for stimulus once vaccine or rapid testing is close. Main Street really suffering and banks are going to take huge losses in Q3/Q4. Trade it but be careful on being long on a fundamental basis. Expect democrat White House and Democrat house. Possibly senate too but only 1/3 of seats are up and possible republicans can retain most. Our beloved home state may fall to the communists. My gut tells me we are very close to a near term top, I could be wrong. Eventually momentum has to reset and we are near that point. Seasonality, election uncertainty, continuing economic pain (1M weekly claims is not good news ever...). I think floor is 3000 unless black swan occurs. Inflation will sneak up on us. Refi now if you can.
Net net, we are probably through the worst of covid but now have to deal with mega unemployment and inflation. Bullish after market takes a break.