APRIL 6 (EVENING) – Today’s huge rally has increased the odds that this Bear Market rally has a ways to go. The high end for the rally is in the low 25,000s. This is beyond what I thought could happen initially. However, the goal of this first major Bear Market rally is to convince the public that a V-shaped recovery is underway and we are headed back to new all-time highs. A Bear Market’s goal is to get as many people in to it and then go down to a level where people don’t ever want to own stocks again.
Regarding real estate, since this market lags the stock market by 4-5 quarters it will be awhile before things become more clear.
One property type to add to the high-risk list is movie theaters. DIsney and others had to quickly learn how to get their new movies to the public without going thru the movie theater distribution routine. Now that they have done this, will the public be content to go back to the old way of doing things? Forever, new music has been sold directly to the public and the public then decides if they want to go see the artist in concert. Why should movies be any different? Sell movies directly to us and we will decide if we want to go see them in a movie theater, also. Will movie theaters die a slow death like drive-in movie theaters have? These properties are certainly attractive to those seeking last mile distribution points.
Reports are that developers are moving forward with projects. Investors may have called a time-out. But, developers have not.
Dozens and dozens of national and regional retailers have asked their landlords for rent relief. This puts landlords in a tough spot as their mortgage payments are obviously due each month. A domino effect will occur with everyone helping each other. But, there will be enough hiccups that things won’t go smoothly.
Many businesses will close up for good (one report is 30% of all restaurants in California will be closed permanently…..I would think this would occur nationwide, too). As a result, some property owners will default on their loans. This won’t be 2006-2011 all over again. But, there will be enough carnage for everyone to deal with.
A former head of the SBA predicts 20%-30% of all businesses will fail. This sounds dire. However, I also heard that 1/3 of businesses fail every year anyway. As always, I encourage you to do your own research. Don’t take anything you hear as gospel – especially if it is coming from the Fake News Media! The number of conspiracy theories grows by the day. People (who desperately need to do something better with their lives!) are circulating reports that quote Stanford or Johns Hopkins or other such respected organizations as saying this or that. Those are made up stories. Go to Snopes.Com or other places to see if they address any story you think may be fictitious.
An interesting item of note…..Amazon has their annual Prime Day on July 15th. An internal memo says they plan on delaying this event. That is a telling sign. For Amazon to think that consumers will not be ready to spend, even online (!), by mid-July is extremely negative. Keep that in mind as we hear cheerful news in May and June.
Depending on how the markets move, I may post Wednesday evening or wait til Friday evening.
Everyone stay safe and well. Have a blessed Holy Week.