This week's Alpha Trader podcast features hosts Aaron Task and Stephen Alpher talking first with Jeff Kilburg, the founder and CEO of KKM Financial and a CNBC contributor, and then with investor, entrepreneur, and host of his own podcast, James Altucher.
Kilburg sees the risk in the market now being with those overweight cash, and expects the S&P 500 (SPY) to soon test the 3,000 level (it closed at 2,955 on Friday).
What might throw the market off is what we saw a bit of last week, and that's a resurgence in trade tension between the U.S. and China. While acknowledging that possibility, Kilburg sees as far more important the drive towards a COVID-19 vaccine, and acceleration in economic reopening across the nation.
Speaking of reopening, Kilburg takes note of what drove the market higher last week, and that was economically sensitive plays like energy (IYE), financials (XLF), and industrials (XLI). That doesn't necessarily mean this bull move is about to shift from tech leadership - Kilburg expects the Nasdaq (QQQ) to soon return to its February all-time high.
Altucher recently published an article on Seeking Alpha titled "Stocks: The Good, The Bad And The Ugly." In it, and on the podcast, he describes his cautiously optimistic outlook as driven by the end of the lockdowns and the massive government stimulus.
He takes note of comparisons to the Great Depression, but says that makes zero sense. He reminds that the initial response then - hiking tariffs, crimping fiscal policy, and allowing the banks to fail (and the resultant crash in money supply) is the exact opposite of what policymakers did this time around.
Getting to the "Ugly" part, Altucher describes why it kind of makes sense for the stock market to surge as the economy crumbled: The economic shutdown is to the benefit of the large, well-capitalized companies that make up the major indexes. Just think about Starbucks (SBUX) vs. mom-and-pop cafes. Yes, Starbucks was already grabbing market share from them, but the pandemic has sped the process up - those mom-and-pops aren't coming back, and Starbucks will end up with their business.
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