The Fed’s Market and Airline Layoffs

Stocks are stable to start the week but we should expect a bit of volatility as companies unveil their post-COVID comeback plans during this earning season.

Dallas Mavericks owner and billionaire, Mark Cuban, is the latest person to speak out about the Fed’s artificially inflated market. After saying that “everyone is a genius in a bull market”, Cuban warned the market of the massive amount of momentum trading that is happening. Momentum trading is essentially when the market buys based on the upward trend of a stock and sells when they believe it has peaked without any technical analysis. He claimed, “this is not a fundamentals-driven market and it hasn’t been since the Fed intervened”.

Back in April, the government paid $25B for what they thought would be a bailout of the airline industry. Airliners agreed to not lay off employees until the end of September when they believed traveling would pick back up….. turns out, Coronavirus is still a problem. With TSA entrance date showing a 74% decrease from this time last year, airliners are taking it in the shorts as they wait for the end of September or a larger bailout.

Heartbreaking data regarding small businesses survival across the country was released this weekend. The online review company, Yelp, estimated that 66k small businesses will not reopen post-COVID while Harvard estimated 110k.

Mortgage bonds are up slightly after Fridays decline from out current ceiling of resistance. As bond prices head toward that ceiling again, we can expect to see another slight decline – we hold a locking bias.