Transcript:
Hello, everybody, welcome to Tuesday, the S&P 500 was down .1%. Today, and I’d really like to talk about something that I’m seeing, that’s part of the theme in terms of the way that we’re investing. But I think it creates some potential for some pretty big upside. So first of all, you know, the theme is that we’re heading into a reopening obviously. And as that reopening happens, you know, we might see some tightening of supply, which would create some, you know, inflation for the short term and those types of things. But what’s really happening, that’s fascinating me is that almost every single number that comes out to show how things are going, you know, the analysts that are certain level, and the actual numbers coming out significantly higher. And so you know, the market tends to price itself, at that analyst projection level, maybe a little bit below it. So if there’s some room, you know, in case it’s wrong, but then all of a sudden, when the number comes out much higher, and this works for everything for economic numbers, or for you know, earnings, you know, those types of things.
So, for example, today, the Institute of Supply Managers released the numbers on the service industry, and it was 8.9%, higher than it was in February, and it hit an all time high, I’d never it’s never been there before, on a beat the high that was established back in October. And it wasn’t supposed to do that. Right. So I mean, it’s the same thing over and over and over again, you know, they’re talking about, hey, May 1, is going to be, you know, all the states should be able to allow us to, you know, take the vaccine no matter what our situation down to say, age 16. Now, they’ve moved that back to April 19. That’s another piece of this puzzle. I think the vaccine is coming out faster than what is expected on Wall Street, and that’s partly why we’re seeing some of these surprises. And even in places where, you know, there are some restrictions, people are still getting out more than they were, you know, and you look at Texas, had 40,000 people at the Texas Rangers home game yesterday, right. So I’m not passing judgment on whether it’s a good idea to do this or not, just from a standpoint, as an investor, you’re looking for reopening and you’d like to see wrote reopening happen for you know, for yourself personally, but just in terms of making money in the markets.
And one of the other things that I think is really happening, like American Airlines, so that they’re just about 10%, below where they were in total miles at the top before the pandemic started. And so we’re almost all the way back, well, we’re not just gonna go back, okay, we’re making up for lost time. And so all these trips that we’ve delayed and going to see our parents or kids or whatever it is, people are going to just really, really go for it here. And they’re going to start to get out and travel, you know, gasoline usage is only about 1%, below where it was, again, people are going to be making up for lost time here. And I do not think the market has priced that in fully. And so if you take that down to the company level, the analysts are probably expecting a certain amount of earnings for some of these companies. And because the reopening is happening so quickly and so aggressively, and there’s so much pent up demand, I think that’s where you get kind of the upside surprise. And there’s a lot of money to be made and upside surprise, especially for some of the stocks that have, you know, had such a hard time during the pandemic that have slimmed down. And now you can see an even bigger, you know, explosion to the upside.
I think once that starts happening, we’re going to see some money kind of dragged away from the growth side, which has been doing fairly well for the last 10 days or so. Because you know, that it’s going to be something that captures the attention of Wall Street, or these earnings beats, you know, when a company really beats the earnings, that’s expected, all of a sudden, you’ll see it kind of a big pop, and money starts going that way. And I think there’ll be some momentum there. I think that’s going to create some issues for the bond market. We’re prepared for that. You know, right now, it’s not doing that great, because, you know, the interest rates are kind of holding up. Okay. I think that changes here. Again, I don’t think that the market has fully priced in yet the explosiveness of this reopening and the quickness in which it’s going to happen as far as that goes. So I think this is really good news. We saw it today, even though the market was down .1% leisure and entertainment piece that we haven’t our model was up 1% today, and again, this is Disney. So Disney’s you know announced their opening April 30 limited capacity here at Disneyland here in California. California is going to reopen, you know, with everything open, just the only criteria be masks, and June 15. So I mean, it’s just again, it’s just coming and coming. You know, California is going to be allowing everybody over the age of 16 to get a vaccine without any issues. You know, after April 15 was just really a few days from now.
So really the race’s on the people that want to get vaccinated are going to be able to get vaccinated pretty quickly here nationally. We’ll have to see what happens with that group that doesn’t want to get vaccinated, obviously so I’m not sure how that will play out. But we are seeing you know, just amazingly quick recovery in some of these areas that seems kind of surprising, you know, seemed like it might have taken longer. People were talking about the big reopening really happening and the end of 2022. Man, I think this summer is going to really go. And you know, so anyway, that’s what’s happening. I think we’re in the right spot. Just you know, let’s just keep seeing what’s going on. Look forward to talking to you tomorrow. Thank you.