3 Potential Signs of a 2020 Stock Crash

Welcome to StockUp, the investing newsletter that knows all about "security theater" yet still can't stop wiping down its groceries. -------------------------------------------------------------------------------------------------- [View this email in your browser]( Welcome to StockUp, the investing newsletter that knows all about "security theater" yet still can't stop wiping down its groceries. This week, we've spotted three ominous economic indicators that could spell trouble ahead for the market. Plus, two different perspectives on the cost of a COVID-19 vaccine (and the companies that might benefit), and how the cable company you probably love to hate is navigating its industry's seismic shift toward streaming. — Nathan Alderman, StockUp Editor LAW OF GRAVITY UNREPEALED 3 Potential Portents of a Stock Market Crash --------------------------------------------------------------- The stock market in 2020 has worked like a roller coaster in reverse. First came the steep drop — down 30% in less than five weeks, compared to an average of 11 months for previous bear-market corrections. Then, investors enjoyed a slow but steady rise to dizzying heights — the strongest rally in 22 years, with the S&P 500 back in the black for the year and the Nasdaq posting multiple record highs. But while Wall Street and Main Street have never seemed farther apart, the stock market still remains tethered (we think) to the underlying economy. And Fool Sean Williams has found three particular economic indicators that suggest Wall Street's good times just can't last. - No, Mr. Bond, I expect you to yield: Usually, investors buy bonds when they're scared. Buying bonds drives up their price, but drives down their yield — the percentage they'll pay investors above their face value over a given term. When all that buying pushes yields so low that they actually lose money compared to inflation, investors tend to sell their bonds and move back into stocks for a better return. That ... does not appear to be happening. The stock market's near record highs — but 10-year bonds are posting record low yields, suggesting that investors are still scared enough of what stocks might do next that they're willing to lose at least a little of their money by hanging on to those bonds. - Not just unemployed, but underemployed: The unemployment rate for June fell — fell! — to 11.1%, which is still 1.1 percentage points higher than it ever got during the Great Recession. (In July, the jobless rate dipped further, to 10.2%.) But focusing on that number can distract from an even less encouraging one: the labor underutilization rate. This figure factors in not only folks who've lost their jobs, but folks who've only been able to find work part-time, or take jobs that don't fully use their eligible skills. This figure peaked this year at 22.8%, and as of June, it had only fallen to 18%, meaning that nearly one in five American workers can't find a job, are stuck working less than they want to, or have been forced to take whatever they can get just to make ends meet. (As of July, that figure had fallen only slightly to around 17.5%, per The Washington Post.) - Beware the auto loans: Most people take out loans to buy cars. Lately, increasing numbers of those folks haven't been able to make their payments. Not surprising, you say, given [gestures] all of this. Except that these delinquencies have been rising since 2012. The auto loan market isn't as huge as the slushy, toxic sea of mortgage-backed securities that tanked the global economy in 2008 — but outstanding loans add up to a far-from-tiny $1.19 trillion. If even 10% of those loans go belly-up for any significant length of time, the banks that lent them could be in for a world of hurt. OK, fine, doom and gloom — but what should you do about all this? We've got a few simple strategies that can help you prepare to take positive action if the market heads south. To discover them, [read the rest](. --------------------------------------------------------------- Already subscribed to a premium service? [Click here]( to view your subscriptions. Not a member yet? [Click here]( to sign up! --------------------------------------------------------------- COVID-19, MEET KA-CHING-21 What a Coronavirus Vaccine Could Cost You (and Uncle Sam) While the odds look good that we'll have one or more safe and reasonably effective COVID-19 vaccines by sometime next year, this shot isn't going to be a magic bullet. We'll still face a massive global logistical challenge to manufacture and distribute enough doses to make a real difference — assuming we can even get enough people to take the inoculation to create herd immunity. Still, a vaccine will represent a big step forward from our current calamity. And the even better news? It won't cost you a dime. As Fool Keith Speights reports, the Department of Health and Human Services will make sure vaccines reach the public for [the low, low price of $0 a dose](. And yes, that applies to everyone. If you have insurance, your insurer might have to fork over cash to the government, but you won't. That said, you may be able to spot the wrinkle in this scenario: The government's paying for the vaccine, but, uh, we pay for the government, via taxes. And when you add up all the money Uncle Sam has spent so far on vaccine development and purchases, the price tag comes out to $51 per taxpayer. (Still not bad, all things considered.) Plus, the $0-per-shot deal, at least for now, only includes the current doses the government has agreed to purchase. After those, vaccine makers may jack up their prices, and you may find yourself paying at least something out of pocket for future inoculations. Considering the likelihood that complete containment of COVID-19 has failed, and that the virus will stick with us as a seasonal threat like the flu — albeit with a vaccine to help ward it off — more of your dollars might yet find their way into big pharma's coffers in the years ahead. Meanwhile, some of those drugmakers may enjoy a greater windfall than others. Uncle Sam pledged to pay around $19.50 a dose for a vaccine candidate from Pfizer (NYSE: PFE) and BioNTech (NASDAQ: BNTX). But rival Moderna (NASDAQ: MRNA), per a report in the Financial Times, plans to charge the government as much as $30 per dose — even though Uncle Sam has already footed the bill for nearly $1 billion of the vaccine's development costs. (Pfizer, in contrast, didn't take a dime in government funds.) Can it get away with this? The laws of supply and demand say, "probably." To learn why, and to see what kind of financial benefit Moderna might derive from a successful vaccine, [read the rest](. --------------------------------------------------------------- ALEXA, IS IT WHAT IT IS? [Smart Speaker] Not sure what to ask your smart speaker? Keep up with what's happening in the market by asking your Amazon Alexa or Google Home to "Play Motley Fool podcasts." --------------------------------------------------------------- A CABLECO BY ANY OTHER NAME As Streaming Surges, Comcast Ponders Cable TV's Future Comcast (NASDAQ: CMCS.A) knows you hate it. The jacked-up cable box fees, the never-convenient "service windows" for installation, the outages — for years, the de facto cable monopoly in much of the country hasn't given customers much to love. But the TV market is changing — and with the surprising success of its own new streaming service, Comcast sees a chance to change with it. (While, uh, still taking all of your money.) Fool Stephen Lovely chronicles what the TV market might look like as it [switches from bundled TV channels to stand-alone subscription services](. Even as TV providers moved from your cable company to the internet, bundles of channels — whether subscribers wanted all those options or not — moved with them. Bundles haven't gotten any more popular, but they hide a grim secret: Without them, all but the biggest, most popular channels might not survive. That classic movie channel subscription you pay for subsidizes your neighbor's love of the regional sports network that bores you to tears (or vice versa). And as bundles get "skinnier" and more customizable, prices keep rising to make up the difference. Comcast has seen the writing on that wall. (Some of it more ... colorful than others.) But its ownership of NBC and Universal Pictures gives it an ideal opportunity to shift its focus from the infrastructure that delivers entertainment to the entertainment itself. Fool Jeremy Bowman chronicles how the company, buoyed by strong subscriber uptake for its Peacock streaming service, is devoting more of its resources and attention toward streaming shows and movies straight to its customers. To see how that might affect Comcast's future fortunes — and what other companies might benefit — [read the rest](. --------------------------------------------------------------- THAT ARC'S NOT GONNA BEND ITSELF Elevate Influencer – On Color and Money Too often, financial opportunities aren't available to everyone. People of Color are disproportionately excluded from wealth-building opportunities, like investing in stocks, as a result of generations of systemic inequity. The Motley Fool is proud to be involved with an upcoming conference: Elevate Influencer - On Color and Money, taking place Aug. 13-15. The event aims to discuss financial issues unique to communities of color. We're sponsoring the first day of the event, Thursday, Aug. 13, so that this important conversation can be open to everyone. To learn more and register to attend, watch the video below, then head to [Fool.com/elevate](. [Elevate Financial Influencer Conference August 13-15 Sponsored by The Motley Fool]( --------------------------------------------------------------- NO INFANT BIFURCATION REQUIRED FEATURED PODCAST [Motley Fool Money]( Making Solomon's Paradox Work for You Solomon's Paradox, the ability to think more sensibly about other people's problems than our own, is common. In her book Weird: The Power of Being an Outsider in an Insider World, Olga Khazan shares how people can use Solomon's Paradox to their own advantage. [Subscribe on iTunes]( --------------------------------------------------------------- SAFETY OFF Quick Reads - [Trigger warning?]( Gun sales soar as the FBI reports 3.6 million background checks performed in July — the third-highest monthly figure ever. (The top two came in June and March.) - [Wiped out:]( Expect shortages of disinfecting wipes to continue into 2021. - [But now who will I fistfight for this year's hottest toy?]( COVID-19 seems to have canceled Black Friday this year. --------------------------------------------------------------- DO: CLICK ON THIS Social Media Post of the Week [Dos and Don'ts of Beginner Investing. Follow these Foolish principles and we think you'll be on your way to financial success.]( [See all our Instagram posts!]( Join the 1,300,000+ people who follow us! [Facebook]( [Twitter]( [Instagram]( [YouTube]( [LinkedIn]( We work fervently, fastidiously, and Foolishly to make sure all the facts and figures we publish in our emails are 100% accurate and up to date. Returns as of August 05, 2020. Have a question or topic you'd like to see covered in a future edition of Stock Up? Email us at stockup@fool.com. Our mailing address is: The Motley Fool | 2000 Duke St. | Alexandria, VA 22314 Want to change how you receive these emails? You can [update your preferences]( or [unsubscribe from this list](. This is a promotional message from The Motley Fool Copyright © 1995-2020 The Motley Fool. All rights reserved. [Legal Information.](