Look, big business won. By delaying the stimulus this long Congress has handed you a buy list that can be beat.
It's funny and ironic that I was criticized on Twitter to stick to stocks and forget politics. I say you have to be kidding me. When people say the stock market doesn't reflect the real economy they are missing a salient point: By designating some companies as essential and others as non-essential the state governments doomed lots of smaller businesses. They ended up desperate for funds.
The federal government answered with the equivalent of lifeline, kind of like an insurance plan for those small and medium-sized businesses to tide them over until we conquered the virus.
It was such a great idea and many businesses that were pretty essential but not designated, particularly medical franchises, came right back to life. Anyone who sells used cars came back with a vengeance. It's been a V recovery those companies.
But anyone had to face the fact that the disease will just cost small and medium-sized businesses too much because of social distancing for individual non-protected retailers and struggling restaurants that can't open for more than a few tables. Sure the outside restaurants are working. But I don't know a restaurant owner who thinks she can get past October, even without all the tables and heat lamps in the world.
Contrast that with the amazing numbers Costco (COST) put up last week. Costco, the company that first embraced masks, is doing extraordinarily well. Why not? Prices you can't beat and wide aisles that make it safe to shop there. What smaller grocery chain can keep up?
Same with smaller hotels. About a third are in arrears in New York, in part because business travel has been curtailed and in part because there are far fewer travelers and tourists. They could be helped if they can get money instantly but I think they, too, could be goners: good news for Marriott (MAR) , which can survive because it has a great balance sheet.
Oh and let's not forget Chipotle (CMG) and Darden Restaurants (DRI) . They could handle devastating comparable store sales and bounce back stronger than ever. My charitable trust, Action Alerts PLUS, owns Starbucks (SBUX) as a bet against Congress and the administration doing anything to help. Chipotle and Starbucks have been driving hard bargains with real estate investment trusts that are truly additive to the gross margins. They are able to scoop up good real estate because the small and medium-sized retailers have already vanished.
No, I am not being political. If you told me that the consumer was flush, I would tell you that retail sales would be spread among so many different stores, that there could be a boon.
But if you told me that there would be no safety net for small and medium-sized businesses from Congress and the White House I would say buy Amazon (AMZN) , Walmart (WMT) , Target (TGT) Costco, Home Depot (HD) and Lowe's (LOW) because they are just going to get stronger and stronger as the little guys falter without PPP.
You could argue that we don't need restaurants. We can eat at home. Smaller retailers? You can get it on Amazon. But the notion of someone working like mad to succeed and hope to get bigger than one store or one retailer?
It's too late.
Great for the stock market. Horrible for the 14 to 15 million souls trying to put food on the dinner table. Thanks for nothing.