To my amazement, my Southwest flight was almost full on Sunday!
As I mentioned to you weeks ago, for family reasons, I’ve been flying throughout the pandemic.
Many times, I’ve been the only person on the plane. So this flight being close to capacity seemed like an encouraging sign.
But don’t be fooled. All is not well. Not yet, anyway.
In fact, it’s important not to get deceived by any green shoots like this.
So today, I’ll explain why the worst of this crisis is likely still ahead…
And why we need to be very careful about diving back into beaten-down stocks.
Lockdown 2.0 — Here We Come?
Yes, testing is increasing and death rates are declining…
But the media’s obsessed with something else: case counts.
And the higher that case counts rise, the more pressure builds to shut down cities, states, and the whole country. Again.
That alone could send airline stocks plummeting. Again.
After all, even with the recent increase in air travel, travel volume remains extraordinarily low.
To see what I mean, look at this chart for TSA checkpoint foot traffic…
It compares daily traffic from this year to daily traffic from last year — so there’s no better measure of airline travel.
As you can see from the blue line, things are better than they were a few months ago…
But still, total traffic is currently down by more than 70%!
Clearly, things have a long way to go before airlines start prospering again.
So the fact that an airline stock like Southwest Airlines (LUV) has nearly doubled in price since May makes no sense.
Or course, airlines aren’t the only companies at risk of collapsing again…
As I shared in June, all travel related stocks have staged a big rally — and yet they’re still extremely risky investments.
The thing is, recent data suggests that other sectors might be at risk, too…
No Immunity for Tech
You see, earnings seasons just got started…
So we’re finally seeing the impact of the shutdown on technology companies.
For example, for the quarter, International Business Machines (IBM) reported a significant decline in revenues.
Why? Because customers keep delaying orders for hardware and software.
And keep in mind, if we enter another lockdown, these orders will be delayed again…
And sales will fall again.
I Don’t Believe We’ve Hit Bottom Yet
Over the years, I’ve learned that Wall Street is often late to detect key changes in the market.
For instance, when I predicted the bottom in the residential real estate market in 2009, many “experts” called me crazy. And yet the bottom was put in just one month later.
How’d I do it?
Simple: I lived in Central Florida, which was Ground Zero of the crisis. So I saw firsthand all the changes that pointed to a clear recovery…
For example, mothballed developments were being brought back to life… custom-home builders were raising prices… and real estate appraisal values were hardening.
But this time around, I don’t think we’ve seen the bottom yet…
For example, as you saw a moment ago, travel is still down 70%...
And meanwhile, Americans aren’t shopping for things like clothes, and they aren’t going out to the movies or dinner, either. In fact, as you can see in the picture below, dining reservations in places like California are down 75%!
With the U.S. economy driven largely by consumer spending, this is bad news. This is why, in the first quarter of 2020, U.S. GDP was down 5%. That’s recession territory.
Furthermore, nearly 15 million Americans lost their jobs in March and April. And they haven’t been rehired.
Add it all up — and like I said, I don’t think we’ve hit bottom yet…
The thing is, when we do hit bottom, you can earn a fortune when the market rebounds.
And that’s why I have a favor to ask of you…
What Are You Seeing
What are you seeing out there right now?
I can’t possibly see as much as our collective group, which numbers in the tens of thousands and spans the country and the globe.
But if you can share what you’re seeing, I can respond by providing you with the best — and hopefully, the most profitable — investment takeaways…
So please take a minute and share your insights with me…
How much longer do you think it’ll take for this market to bottom out?
And when do you think the rebound will really start?
Ahead of the tape,