S&P 500 12 month forward earnings are going to the roof...
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Source. SocGen
Fast forward to 2026 and $CAR - Avis Budget - is up 656% in a month!!! The US government shut down. Airport security workers stopped getting paid. Thousands quit. 4-hour queues. Passengers abandoned flights. Road trips surged. Add a massive short squeeze and you get a 600% move. So what's going on? ---------- In 2021, the surge was driven not by fundamentals but by market positioning. At the time, Avis was heavily shorted because many investors viewed it as weaker than Hertz—citing valuation concerns, exposure to used car price volatility, and a less attractive balance sheet. Meanwhile, a popular hedge fund strategy involved a pair trade: long Hertz (fresh out of bankruptcy with an EV narrative) and short Avis. This created a crowded short position. The situation reversed when Avis delivered a strong earnings surprise and broader industry news (including Hertz-related developments) disrupted expectations. As the stock price rose, short sellers faced mounting losses, margin pressure, and forced liquidations. Since closing a short requires buying the stock, this triggered a feedback loop: rising prices forced more short covering, which pushed prices even higher. This self-reinforcing cycle—not fundamentals—drove the explosive rally. Once most shorts had exited and buying pressure faded, the stock rapidly collapsed. Today’s conditions—crowded positioning, limited float, and market structure—mirror that setup. If similar dynamics unfold, prices could again detach from fundamentals and rise sharply due to forced buying rather than intrinsic value. Source: Bull Theory
Why ??? Trump just signed ex order expediting research/access to psyche drugs to cure depression. The sector has been in dog house, waiting for catalyst, up 10% today. Watch this space. Source: Eric Balchunas

