As could have been expected in the midst of a global pandemic, one of the most rapidly growing companies has been vaccine producer Moderna (MRNA).  As shown below, since the start of the year, the company has seen its market cap nearly quadruple to $162.2 billion; that is the largest growth in market cap of any S&P 500 stock year to date. In fact, those big gains saw MRNA go from the 162nd largest S&P 500 stock at the end of last year to the 58th largest today.  And that compares to pre-pandemic (the end of 2019) when MRNA was only valued at $6.52 billion. While it was not part of the index back then, MRNA would have been the eighth smallest S&P 500 stock at the time with that market cap. That massive growth now leaves the stock as the tenth-largest company of all S&P 500 Health Care stocks with the next largest being Medtronic (MTD).  While there are a handful of larger stocks in the Health Care sector, again, no others have seen as rapid of growth. With that said, other vaccine-related stocks like Pfizer (PFE) and Johnson and Johnson (JNJ) have also seen significant market cap growth.

MRNA joined the upper echelon of Health Care market caps in a very short span of time.  As shown in the second chart below, since its IPO in late 2018, MRNA has risen nearly 2,000%. Of the ten other largest S&P 500 Health Care stocks, the next best performer has been Danaher (DHR) with just under a 200% gain in that same span of time.   Click here to view Bespoke’s premium membership options.

On Friday, we highlighted some of the long-term charts and generally extended readings of the stock markets of various major global economies following big gains over the past year and a half. While equities around the globe have surged, it is still the US that has gained the most in terms of the percentage of world market cap.  As shown below, according to Bloomberg’s market cap indices the US currently accounts for 43.17% of total global market cap. That is up 1.86 percentage points from the start of the year and is up roughly 4 percentage points since the bear market lows last year.  As for the other largest countries, China is the only other one to account for a double-digit share at 10.15%, although, that is down significantly from the start of the year.  Japan and Hong Kong are two others of the largest equity markets, and they have both lost even larger shares.

With US equities having continued to grow, the country’s share of world stock market cap is now around some of the highest levels since the fall of 2004.  Those gains to the US’s share of global market cap are also in the context of a general upwards trend that has been in place for the better part of the past decade now.

For most of the year, Chinese and Hong Kong equities have traded off of their highs and more recently have fallen dramatically as a result of concerns surrounding the region’s regulatory picture.  While the declines were quite dramatic, they have not necessarily brought the countries’ combined share of market cap to any sort of major new low.  With that said, prior to the past week’s bounce, at the July 27th low, the one-month drop in the combined share of total market cap stood in the bottom 2% of all readings.  Click here to view Bespoke’s premium membership options.

FBI background checks for the month of July have been published and showed another sharp decline.  For the month of July, background checks totaled 2.883 million which was down 172K from June’s total.  That marks the fourth straight monthly decline in which total background checks have dropped by 1.8 million from the record high of 4.692 million in March.  In terms of the raw number of checks, the current four-month decline is the largest on record, and on a percentage basis, the 38.6% drop is the largest since early 2014.

On a y/y basis, the surge in background checks brought on by the pandemic and civil unrest last year looks like it has been fully unwound.  After nearing a record surge of 79.2% early last year, we’ve now seen two straight months of 20%+ y/y declines.  The last time we saw a y/y decline of this magnitude was back in July 2017.

With such large declines in background checks, you wouldn’t think that would be a positive backdrop for gun companies, and judging by the recent performance of the two publicly traded gun companies, you would be partially right.  While both stocks up still up YTD, they have pulled back sharply from their recent highs. On July 1st, both stocks traded at 52-week highs, but since then SWBI has dropped over 38% while RGR is down 18%.  In the case of SWBI, its peak from late 2020 has so far held up, but for RGR, support from the highs late last year just recently broke.  Click here to view Bespoke’s premium membership options.

Please click the image below to view our August 2021 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.

While the S&P 500 finished last week slightly lower, the general theme across each of the eleven sectors was mean reversion.  As shown in the snapshot of our Trend Analyzer below, the best performing sectors were those that are coming from oversold territory or below their 50-DMAs: Materials (XLB), Energy (XLE), and Financials (XLF). XLB was the top performer of these with its 2.8% gain resulting in it exiting oversold territory, and Friday’s close saw the sector finish above its 50-DMA for the first time since June 14th.  Conversely, some of the sectors that have recently been at more overbought levels like Consumer Discretionary (XLY) and Communication Services (XLC) were the worst-performing sectors.  XLY came back within one standard deviation of its 50-DMA on that move.

Over the past few weeks in our Sector Snapshot, we have noted the consistent oversold readings that the Materials sector has seen, but as noted above, the strong run recently has brought it back not only within a standard deviation of its 50-DMA but above its 50-DMA for the first time in a month and a half. Additionally, it hasn’t been just the last five trading days.  Friday’s higher close extended the sector’s winning streak to nine days long.  As of this morning, the sector is again higher and looking to extend its streak to double digits. If the Materials sector keeps alive its winning streak, it would be the first double-digit winning streak since an 11-day long streak for Consumer Discretionary ending on July 6.  As shown in the second chart below, for the Materials sector that would be the first 10-day winning streak since last June and before that, you would need to go back to the end of 2013 for a streak as long. While still uncommon, there is also some historical precedence for other nine-day-long streaks scattered throughout the past few decades.

Looking at those past winning streaks of nine or more days long, the current one has actually seen a relatively modest gain through the first nine days of 5.91%. Similarly, the S&P 500 is up by a below-average amount through the first nine days of those prior streaks.   Click here to view Bespoke’s premium membership options.

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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COVID Research

Outbreak of SARS-CoV-2 Infections, Including COVID-19 Vaccine Breakthrough Infections, Associated with Large Public Gatherings — Barnstable County, Massachusetts, July 2021 by Brown et al (CDC)

A detailed investigation of how the Delta variant acts on vaccinated persons; the data suggest that vaccinated people still face a significant risk of contracting the virus and material risk of symptomatic infection with the same viral load as unvaccinated persons, but existing vaccines do an excellent job protecting against both hospitalization and death. [Link]

Comparison of Neutralizing Antibody Titers Elicited by mRNA and Adenoviral Vector Vaccine against SARS-CoV-2 Variants by Tada et al (Bioxriv)

Lab-based experiments show that antibodies from mRNA vaccines are slightly less effective against Delta while adenovirus-vector Johnson & Johnson jabs are much less effective, basically consistent with the findings of the above CDC study. [Link; 30 page PDF]

Athletics

Athletes Greatly Benefit from Participation in Sports at the College and Secondary Level by James J. Heckman & Colleen P. Loughlin (NBER)

This study catalogues average student benefits from participation in college athletics, where participants tend to enjoy higher graduation rates, better jobs after college, and higher earnings. The authors do not compare foregone earnings for high-potential athletes to identify opportunity costs. [Link]

Barstool Sports Taking Over AZ Bowl From CBS to Broadcast Online by Emily Caron (Yahoo!)

Irreverent sports media company Barstool will broadcast a college football bowl game on its platforms next season, part of a broader diversification of the multi-faceted business. [Link]

Tokyo

Time For The End Of The Teen Gymnast by Dvora Meyers (538)

An indictment of the post-1960s practice of launching young people (especially young girls) into extremely high intensity athletics via gymnastics competitions. Note: this article was published the day Simone Biles withdrew from Tokyo, but is not a response to that specific situation. [Link]

Team USA Trails in the Other Tokyo Olympics Medal Table: Vaccinated Athletes by Rachel Bachman and Georgi Kantchev (WSJ)

While delegations from Italy and Spain have been entirely vaccinated, the US looks more like Poland with almost 15% of athletes not inoculated against COVID before arriving in Tokyo. [Link; paywall]

Tokyo 2020: S Korea TV sorry for using pizza to depict Italy (BBC)

A South Korean broadcaster is in hot water for depicting Italy with pizza, Romania with Dracula, and perhaps most depressingly Ukraine with Chernobyl in its introductions to the Tokyo Olympics. [Link]

Food

Slice of Charles and Diana’s 40-year-old wedding cake to be auctioned (BBC)

A slice of wedding cake given to a member of the Queen Mother’s household back in 1981 has been preserved since and will be sold at auction, for reasons that escape us. [Link]

Sun, Sand, and Spaghetti by Mike Diago (Eater)

An investigation of the niche but fascinating question “why do Dominican-Americans bring spaghetti to the beach?”, filled with history on the Dominican diaspora, food culture, and the appeal of noodles in the hot sun. [Link]

Infrastructure

Small Cities Can’t Manage the High Cost of Old Infrastructure by Jake Blumgart (Governing)

Cities with more limited tax bases that want to make changes to infrastructure either due to cost of maintenance or shifts in their populations’ needs are in deep trouble as tax bases erode and costs rise. [Link]

Police Are Telling ShotSpotter to Alter Evidence From Gunshot-Detecting AI by Todd Feathers (Vice)

Audio tools that locate the sound of gunfire via algorithm can be overridden to provide different evidence when it suits prosecutors per recent filings in murder cases from Chicago. [Link]

Banking

Credit Suisse Claws Back Pay as It Faults Staff for Archegos by Marion Halftermeyer (Bloomberg)

Former execs lost $70mm in compensation and 9 were fired as a result of the $5.5bn in losses booked by the bank over the Archegos blow-up earlier this year. [Link; soft paywall]

Investing

America’s Investing Boom Goes Far Beyond Reddit Bros by Talmon Joseph Smith (The Atlantic)

A survey of the broader world of novice investors that extend beyond the most high-profile communities like r/wallstreetbets. [Link; soft paywall]

Economics

Earnings and Income Penalties for Motherhood: Estimates for British Women Using the Individual Synthetic Control Method by Giacomo Vagni and Richard Breen (European Sociological Review)

British mothers see medium and long term earnings reduced by about 45% when they have children, though interestingly on average households that those women are a part of do not suffer from income declines. [Link]

Great Expectations

A Key Gauge of Future Inflation Is Easing by Gwynn Guilford (WSJ)

Consumer surveys and financial markets proxies for future inflation are not showing the same kind of concerns as short-term metrics of realized inflation. [Link; paywall]

Birds

What we know about the mystery bird death crisis on the East Coast by Natasha Daly (NatGeo)

Birders across the eastern US have recorded a massive surge in deaths of fledgling songbirds, with the causes a complete mystery. [Link]

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Have a great weekend!