Please click the image below to view our November 2020 market calendar.  This calendar includes the S&P 500’s average percentage change and average intraday chart pattern for each trading day during the upcoming month.  It also includes market holidays and options expiration dates plus the dates of key economic indicator releases.  Start a two-week free trial to one of Bespoke’s three research levels.

Welcome to Bespoke Brunch Reads — a linkfest of the favorite things we read over the past week. The links are mostly market related, but there are some other interesting subjects covered as well. We hope you enjoy the food for thought as a supplement to the research we provide you during the week.

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Voting

How Long Will Vote Counting Take? Estimates and Deadlines in All 50 States by Alicia Parlapiano (NYT)

A helpful reference for the time it will take for states across the country to total up votes cast early and on election day amidst very high turnout and a pandemic in 2020. [Link; soft paywall]

Inside Decades of Nepotism and Bungling at the N.Y.C. Elections Board by Brian M. Rosenthal and Michael Rothfeld (NYT)

Some background on why New York City is one of the worst places in the country to vote, plagued by inefficiency and lines that other parts of the country wouldn’t tolerate. [Link; soft paywall]

Politics Gets Weird

Quiz: Can You Tell a ‘Trump’ Fridge From a ‘Biden’ Fridge? by John Keefe (NYT)

A fascinating if completely haphazard insight into voters’ mindsets, including both analysis and the enjoyable and mystifying game of guessing which is which. [Link; soft paywall]

They’re Afraid. They’re Buying Guns. But They’re Not Voting for Trump. by Ciara O’Rourke (Politico)

Democrats in deep blue parts of Texas are buying guns and getting trained to use them in the midst of a turbulent election season that has exposed all kinds of anxieties. [Link]

COVID

A room, a bar and a classroom: how the coronavirus is spread through the air by Heather Galloway (El País)

A fascinating piece of journalism that is very helpful in explaining how various mitigations can reduce risk of COVID spread indoors. [Link]

COVID & Humidity by olfadreyer (Github)

Humidity is one major factor in how much of the SARS-COV-2 virus builds up in the air. This project seeks to illustrate how lower humidity can drive more airborne viral load. [Link]

A large national outbreak of COVID-19 linked to air travel, Ireland, summer 2020 separator commenting unavailable by Murphy et al (Euro Surveillance)

Using detailed contact tracing, this study seeks to identify the COVID risk associated with air travel, despite low passenger loads and mask wearing. Bottom line: masks and lots of space between passengers still led to lots of cases. [Link]

COVID Lifestyle

With No Commute, Americans Simply Worked More During Coronavirus by Jo Craven McGinty (WSJ)

Less time commuting led to a lot more time working and doing chores per survey data, with primary jobs taking up 35% of the additional time. [Link; paywall]

Chewy launches virtual vet visits as pandemic fuels pet boom by Melissa Repko (CNBC)

With telemedicine taking off for humans, it probably shouldn’t be a big surprise that furry friends are also getting veterinary attention over the internet. [Link]

Need a Pandemic Puppy ASAP? Call the Bernedoodle Delivery People by Michael M. Phillips (WSJ)

High demand for companionship during the pandemic has led to a boom in long-distance doggy deliveries, with specialists keeping an eye on pups flying commercially across the country. [Link; paywall]

Algos Gone Wild

Virtual Influencers Make Real Money While Covid Locks Down Human Stars by Thuy Ong (Bloomberg)

Social media accounts for non-human characters are gaining popularity, with hundreds of thousands of followers eagerly awaiting photos created in photoshop. [Link; soft paywall]

How an Algorithm Blocked Kidney Transplants to Black Patients by Tom Simonite (Wired)

A widely-used algorithm makes adjustments that assign healthier scores to Black kidney patients holding other factors equal; the result is less intensive care for more seriously ill Black people. [Link; soft paywall]

Games

The baseball card market is thriving thanks to COVID-19 by Paula Froelich (NYP)

Prices for rare baseball cards are exploding as investors enter the market as well as the same enthusiasts which have kept the market alive for so many years. [Link]

Hasbro revenue slips on production delays in movies, TV shows, shares fall by Uday Sampath Kumar (Reuters)

While Hasbro is seeing massive demand for board games, the shutdown of filming of movies and TV tied to its intellectual property have hurt revenues badly. [Link; auto-playing video]

Harley-Davidson officially spins off new electric bicycle company with stunning first model by Micah Toll (Electrek)

While Harley is known for its internal combustion engines, a new unit spun out of its skunkworks is dedicated to building electric bikes and the initial teaser is mouth-watering. [Link]

Big Names

David Einhorn Says Tech Stocks Are in an ‘Enormous’ Bubble by Hema Parmar and Joshua Fineman (Yahoo!/Bloomberg)

Greenlight Capital’s principal thinks mania in IPOs, concentration in a small number of stocks, and aggressive valuations are all factors cited in the claim. [Link]

Investor Bill Gross accused of blaring ‘Gilligan’s Island’ song on loop to torment neighbor by Laurence Darmiento (LAT)

Billionaire and former PIMCO head Bill Gross allegedly blared the theme song to Gilligan’s Island on a loop as a way to annoy his neighbor amidst a dispute over a statue. [Link]

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Have a great weekend!

Equity markets around the globe had been hanging in there up until early September, but since then we’ve seen a sell-off that has left global equity indices down quite a bit year-to-date.  Below is a table showing the year-to-date performance (in local currency) of major equity indices for 72 countries.  As shown, the average country is currently down 12.7% year-to-date, while the median decline is 12.38%.  Of the 72 countries, only 12 are currently in the green for the year, while the remaining 60 are in the red.

Denmark’s equity market is currently up the most with a YTD gain of 16.82%, followed by Nigeria at +13.74% and Latvia at 7.76%.  China ranks fifth with a gain of 5.72%, while the US (S&P 500) is now just barely hanging on to a YTD gain at +0.79%.

The remaining G7 countries are performing quite a bit worse than the US.  While Japan is only off 2.87% on the year, the big European countries like the UK, Italy, and France are all down more than 23%.  The UK is down the most in the G7 with a decline of 26.33%.

Of the four BRIC countries, China is doing the best, while India is down 3.97%, Brazil is down 17.77%, and Russia is down 30.92%.

Seven countries are currently down more than 30% year-to-date — Poland, Russia, Mauritius, Austria, Kenya, Spain, and Greece.  Greece is currently down more than any other country with a YTD loss of 37.83%.  Click here to view Bespoke’s premium membership options for our best research available.

We have frequently been making note of the extraordinary beat rates for earnings this earnings season. As such, companies are reporting triple plays at an astounding rate.  An earnings triple play is when a company beats estimates on both the top and bottom lines while simultaneously raising guidance. These can be taken as a sign of a solid fundamental picture for a stock.  We keep track of the 100 most recent triple play, and over a third of that list reported within the last 24 hours!  We are currently in one of the busiest 24 hour periods of earnings season with 238 companies having reported last night after the close and this morning.  Of those, 38 reported triple plays. On a slightly longer time horizon, in the charts below we show the percentage of stocks reporting triple plays over the past 90 days on a rolling basis.  In the past 3 months, 12.18% of earnings reports have been a triple play.  In the history of our Earnings Explorer database, there has never been a period with such a massive share of stocks reporting these types of results.

We also thought it would be worth taking a look at the inverse of this. In the second chart below we show the percentage of stocks reporting a reverse triple play: miss on both the top and bottom line while lowering guidance.  While there has been a small uptick in this reading over the last few days, it is still at a historically low 0.54% of stocks reporting.   That is just 10 stocks over the past three months! When it comes to the recent uptick, this month there were only two reverse triple plays and both reported in the past day: Fastly (FSLY) which reported last night and FTI Consulting (FCN) releasing results this morning.  In today’s session, both stocks are getting hammered with FSLY down over 6% and FCN down more than twice that.  When the number of companies reporting triple plays is at record highs, you don’t want to be one of the companies reporting a reverse triple play. Click here to view Bespoke’s premium membership options for our best research available.

The American Association of Individual Investors released this week’s reading on investor sentiment and things were little changed despite the S&P 500 having fallen roughly 4.75% in the past week.  Last week, bullish sentiment rose above 35% for the first time since April 9th reaching 35.75%. This week, optimism held above 35%, but it was slightly lower than last week dropping to 35.29%

Conversely, bearish sentiment rose 2.26 percentage points this week. That is the first time bearish sentiment has moved higher (and the first time bullish sentiment has moved lower) since the last week of September. Whereas last week marked the end of a record-long streak of negative readings of the bull-bear spread (meaning bearish sentiment outweighed bullish sentiment), this week bearish sentiment is dead even with bullish sentiment at 35.29%.

In the history of the AAII survey dating back to mid-1987, there have only been 47 weeks in which bullish sentiment matched bearish sentiment with the most recent example being late January of last year.  On average across those instances, the two readings on sentiment have been 33.5%. In the table below, we show all 11 occurrences that have happened without another occurrence in the prior year. As shown, the last such occurrence was in September of 2018, a few months before the previously mentioned January 2019 instance. Back then, bullish and bearish sentiment stood at 32.04%. As for the performance of the S&P 500, even readings in bullish and bearish sentiment have usually been followed by gains although the magnitude of the advance is pretty much right in line with the historical averages for all periods. Click here to view Bespoke’s premium membership options for our best research available.

Jobless claims have kept up their momentum as they fell for a second straight week.  With the caveat of differences in seasonal adjustment methodologies beginning in September making comparisons not exactly like for like, this week’s print of 751K is a new low for the pandemic. That is down 40K from last week’s upwardly revised reading of 791K.  It was also significantly better than expectations which were calling for claims to only fall to 778K.

Lagged one additional week to initial claims, continuing claims also reached its lowest levels since March this week.  Seasonally adjusted claims fell to 7.756 million.  That is 709K lower than last week.  Since the first week of September, continuing jobless claims have fallen every week but one (9/12) when claims were unchanged.  Although claims did improve this week, forecasts had penciled in for a slightly larger improvement, calling for claims to fall to 7.7 million.

On a non-seasonally adjusted basis, claims were actually not at a new low for the pandemic, but they did come very close.  Unadjusted claims did fall from 760.6K last week down to 732.2K, but that is 1K above the prior post-COVID low from the first week of October.

Even though unadjusted initial claims are not necessarily at a new low, recent improvements have appeared to be going against seasonal tendencies.  As shown in the charts below, both initial and continuing claims have historically risen from now through the end of the year. Instead, this year has seen claims continue to grind lower. In fact, unadjusted continuing claims did reach a new low in the most recent reading.

While the inclusion of all programs in addition to regular state claims creates yet another week’s lag, by this measure claims also fell to a new post-COVID low. For the week of October 9th, total continuing claims were 22.7 million, a decline of 0.4 million from the previous week.  Total claims have now declined for four consecutive weeks, the longest streak of back to back declines of the pandemic. Regular state claims drove this decline while Pandemic Unemployment Assistance (PUA) and Pandemic Emergency Unemployment Compensation (PEUC) have actually risen. For PUA claims, the most recent week’s increase actually still leaves the count for the program at the low end of its range. Meanwhile, PEUC claims, which extend regular unemployment benefits up to 13 weeks after expiration are at new highs for the pandemic. Given this, they now take up their largest share of total continuing claims yet (16.2%). Extended benefits, on the other hand, were lower in the most recent week but remain at the high end of their range. In other words, net overall claims have continued to improve, but the declines in some measures (namely regular state and PUA claims) have not necessarily meant all those people are exiting the unemployment insurance system, but rather a growing number of people are filing for available extensions.  Click here to view Bespoke’s premium membership options for our best research available.

Following the record decline in Q2, economists were expecting Q3 to be a record in the opposite direction.  And that’s exactly what we got.  While economists were expecting growth of 32.0% on a seasonally adjusted annualized rate (SAAR), the actual reading came in even stronger at 33.1%. With economic growth of 33.1% following a quarter where activity shrank 31.4%, a person’s first reaction may be to think it’s a wash, but you know math, so you know that’s not how it works.

The chart below shows US GDP in dollar terms going back to 2000.  After Q2’s decline, economic activity in the US was more than 10% below its prior peak, and even after Q3’s rebound, we’re still down 3.5% from Q4 2019.

3.5% may not sound like much of a hole, but it’s still a large number. The chart below shows how far GDP was off its record high each quarter since 1950.  Because the US economy is normally growing, GDP is typically at record highs, and even when activity contracts, the magnitude of the decline is usually measured in the low single-digit percentage range.  Prior to the COVID shutdowns, in fact, there was never a time in the last 70 years where GDP was more than 4% off a prior peak.  At the end of Q2, the hole was more than twice that at 10.2%.  Because of that, even after a record quarter of growth, GDP is still further below its peak than it has been in all but two other periods (1958 & 2009) in the seventy years leading up to the start of 2020.  Like what you see? Click here for instant access to our actionable research and interactive tools.