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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Politics

Pelosi, Trump and impeachment: How the speaker got to ‘yes’ by Lisa Mascaro (AP)

A tick-tock of the days leading up to the decision by the Speaker of the House to pursue articles of impeachment against the President. [Link]

The Moderate Middle Is A Myth by Lee Drutman (FiveThirtyEight)

While political pundits love to urge a shift to a mythical middle, there are very, very few voters who are some combination of politically moderate, undecided, and independent, suggesting that fighting for those votes is a waste of candidates’ time. [Link]

Research & Development

Daimler stops development of internal combustion engines: Complete focus on EVs (Financial Express)

While the Mercedes-Benz parent will still be producing internal combustion engines for some time to come, the company is halting all future development of fossil fuel-burning engines. [Link]

A Beating Heart, Even After Death by Haider Warraich (NYT)

While severe heart failure is still best remedied with a heart transplant, pumps that replace the left ventricle of the human heart are keeping patients alive dramatically longer in a novel combination of human and machine. [Link; soft paywall]

Google’s ‘Quantum Supremacy’ Isn’t the End of Encryption by Tom Simonite (Wired)

A quantum computer operated by Google was able to surpass the performance of a conventional machine at a specific task, but the improvement is not yet generally applicable. [Link; soft paywall]

Warning Signs

Miami Real Estate Is About To Collapse…by Harris Kupperman (Adventures In Capitalism)

A detailed walk-through of the highly levered and cyclical Miami housing market, which is choking on new supply and has no bid underneath in a potentially bad sign for the national economy. [Link]

Life in China Is Getting Harder, and Xi Jinping Should Worry (Bloomberg)

Slowing demand from abroad related to the US trade war, pork prices sent flying by swine flu, and the trend of declining growth are all causes for concern as the world’s most populous economy grinds along. [Link; soft paywall, auto-playing video]

The World’s Wealthiest Families Are Stockpiling Cash as Recession Fears Grow by Suzanne Woolley and Ben Stupples (Yahoo!/Bloomberg)

Very low interest rates, high valuations across equity markets and the private corporate market, and low corporate credit spreads leave cash looking pretty attractive. [Link]

Obituaries

Stories About My Brother by Prachi Gupta (Jezebel)

A memorial to a brilliant young man snuffed out too soon after a dangerous and painful procedure fueled by a lack of confidence. [Link]

Food

The Beyond Meat burger is coming to McDonald’s in a Canadian test by Jordan Valinsky (CNN)

The world’s largest burger purveyor is dipping its toe into the meatless waters, in a possible preview of broader plans following the successful roll-out of plant-based meat substitutes at a number of US chains. [Link]

Weird Scenes

U.S. Military Issues Warning to Troops About Incel Violence at Joker Screenings [Updated] by Dell Cameron (Gizmodo)

The US Army warned servicemembers about potentially dangerous situations at screenings of Warner Brothers’ Joker after the FBI uncovered social media posts that suggest a risk of violence. [Link]

The Libertarians on the Anti-Krugman Cruise Just Want to Be Left Alone by Lizzie O’Leary (Bloomberg)

Does a high seas foray into the world of libertarianism, animated by the foil of New York Times economics editorialist Paul Krugman, sound interesting? We have just the cruise for you. [Link; soft paywall]

Social Networks

The Complete Beginner’s Guide to TikTok by Matt Schlicht (Medium)

Ever heard of Tik Tok and wondered what you’re missing? You probably should have and you probably should wonder. Here’s a quick explainer. [Link]

ETFs

Why ETF Launches Have Ground To A Halt by Jeff Schlegel (Financial Advisor)

Only four new ETFs hit the market in August as product saturation and a lack of new ideas helped keep the industry from rolling out new options. [Link]

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Have a great weekend!

Last month, we highlighted how Nektar Therapeutics (NKTR) has been on a one-way trip lower since its inclusion to the S&P 500 in March 2018. In fact, by the time NKTR officially became a member of the S&P 500, the stock had peaked out at $108.44 only eleven days earlier. Since then, the stock has dropped over 83%.  A bad reaction to the last earnings report in August when the stock fell 29.25% in a single day has only added to the pain, but also caused another issue.  With the market cap being cut by $1.49 billion that day alone—on top of the $11.74 billion loss since the first day as part of the S&P 500—the company no longer met the minimum market cap requirement for the S&P 500 of $4.1 billion. Additionally, the August report also showed four consecutive quarters with negative EPS which violated the S&P 500 requirement of positive earnings for the previous four quarters.  As a result, after the close yesterday, S&P announced that it would be removing NKTR from the S&P 500.  Instead, it will move to the S&P 400 Mid-Cap Index with casino company Las Vegas Sands (LVS) taking its place in the S&P 500.  Ironically, after falling over 80% from its high, NKTR is trading up 3.13% today in the wake of the news.  Perhaps, the S&P 500 and NKTR was a combination that just wasn’t meant to be. Start a two-week free trial to Bespoke Institutional to access our interactive economic indicators monitor and much more.

We’ve discussed the S&P 500’s rangebound trading pattern of the last 20+ months numerous times here and in our client research, but in the short term, we’re seeing what’s an even tighter range for the S&P 500 Software group.  As shown in the chart below, ever since the start of August when the group initially sold off, the 50-day moving average (DMA) has been acting as an anchor on the group’s price.  To the upside, the group hasn’t traded more than 2% above its 50-DMA, while the maximum downside damage has been limited to less than 4%.  In between, the group has had more than 25 crosses of its 50-DMA.

While the Software group is stuck next to its 50-DMA, individual stocks are trading all around the 50-DMA.  The chart below is from our Trend Analyzer tool and shows where each of the 12 stocks in the group are trading relative to their 50-DMA along with how they’ve traded YTD.  Currently, three stocks in the group are on the verge of being oversold – Cadence Designs (CDNS), Fortinet (FTNT), and Intuit (INTU).  At the other end of the spectrum, another three stocks are overbought – ANSYS (ANSS), Synopsys (SNPS), and Microsoft (MSFT).  In between, the only three stocks that are hovering right near their 50-DMAs are Autodesk (ADSK), Oracle (ORCL), and salesforce.com (CRM).  The net result is that the overbought and oversold stocks essentially cancel each other out, leaving the group where it is now, stuck at the 50-day. Is this consolidation for the group the pause that refreshes or just a last-ditch effort to hang on to the year’s gains? Start a two-week free trial to Bespoke Institutional to access our interactive market tools and much more.