Markets took a massive plunge today on fear.
All thanks to surging fears of a pandemic rebound around the world, including every U.S. state.
According to USA Today, “In some states the increases were startling. New cases in Rhode Island almost tripled week over week, a USA TODAY analysis of Johns Hopkins data shows. Maine and Vermont’s hikes were almost as large. New cases in Massachusetts, Alaska and Kentucky more than doubled their case counts in one week.”
Worse, according to the World Health Organization, the uptick in cases can be attributed to low vaccination rates, lax mask rules, and the spread of the delta variant, which has now been found in 111 countries, and could become a global issue in months.
“Amid the surge, the death toll in hard-hit Argentina surpassed 100,000. Daily coronavirus deaths in Russia hit record highs this week. In Belgium, infections, driven by the delta variant among the young, have almost doubled over the past week. Britain recorded a one-day total of more than 40,000 new cases for the first time in six months,” adds U.S. News & World Report.
Short Side Opportunities
All are raising concerns we could see another round of global lockdowns, and economic slowdowns, which is already negatively impacting cruise stocks, like Royal Caribbean (RCL) and Carnival, and hotel stocks, like Hilton Hotels. It’s also taking its toll on travel site stocks, such as Trip Advisor (TRIP) and Expedia (EXPE). In fact, at the moment, all are great short ideas.
Long Side Opportunities
As for opportunities on the long side of the pandemic, investors should pay close attention to work and school from home stocks, including Zoom Video Communications (ZM) and Slack Technologies Inc. (WORK). Another hot stock to keep an eye on with the work/school at home trend is Advanced Micro Devices (AMD).
Advanced Micro Devices is benefiting from cloud-computing service demand. As companies race to invest in infrastructure to handle the demand from everyone staying at home, as we noted in July 2020. “If you look at Amazon or Azure and how much infrastructure usage increased over the past two weeks, it would probably blow your mind how much capacity they’ve had to spin up to keep the world operating,” said Dave McJannet, HashiCorp Inc., which provides tools for both cloud and traditional servers. “Moments like this accelerate the move to the cloud.”