Since November, I’ve been mainly writing about macro stuff. Among other things, we’ve delved into:
- Bullcrap-yielding bonds and how they justify the record valuation of stocks
- The effect of inflation and rising interest on stocks
- Biden’s ambitious plan to rebuild America funded by tax hikes—and how it would affect stocks
- The flood of stimulus money and how it could drive up inflation…or not.
I fell over myself to spice these topics up with graphics and analogies. Still, abstract and theoretical models don’t make for the most interesting read. From a selfish readership standpoint, I was better off writing about Apple and Tesla.
But when stock prices are so out of touch with fundamentals, I can’t help it. In this market, macro is king. And there’s no better proof of that than the past month:
- Stocks are reporting the biggest earnings growth since the Great Recession and blowing away all estimates 👉 stocks sell off
- Job growth slows down. Bad for the recovery, but on the flip side, it deters the Fed from raising interest rates 👉 stocks go up
But it’s time to shift gears a little and talk about stocks.
In the next few weeks, we’ll go over some of the hottest recovery industries and stocks. Instead of taking sides, I’ll make a bullish and bearish case for each—so you'll have a better idea what you’re betting on.
Today the series will kick off with a deep dive into the airlines industry. We’ll discuss:
- How airlines are pulling through Covid while burning billions of dollars
- The lofty valuations of airline stocks and what would justify them
- The bullish and bearish cases
Let’s dig in.