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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Vaping

‘It is time to stop vaping’: Kansas reports sixth U.S. death linked to mystery illness by Matthew Lavietes (Reuters)

Low quality vape equipment and ingredients, especially tied to THC, are being linked with sudden deaths around the country. [Link]

Vape Store Owners Are Freaking Out About Trump’s Ban by Francisco Alvarado (Vice)

Rising vape use among youth has gotten the attention of the White House, and the ban proposed this week in response has Florida vape shop owners incensed. [Link]

Energy

Saudi Arabia Shuts Down About Half Its Oil Output After Drone Strikes by Summer Said and Jared Malsin (WSJ)

Drones used by Yemeni Houthi rebels set off a series of explosions which shuttered half of Saudi oil output over the weekend. Officials hope to have the capacity mostly restored by Monday. [Link; paywall]

The Growing Market for Clean Energy Portfolios & Prospects for Gas Pipelines in the Era of Clean Energy by Charles Teplin, Mark Dyson, Alex Engel, and Grant Glazer (Rocky Mountain Institute)

New research suggests clean energy portfolios that combine various renewables with battery storage are approaching cost parity with new construction natural gas plants, and will be cheaper to build than operating gas plants by 2035. [Link]

Weird News

Google Maps shows sunken car where missing man’s body was found (BBC)

A happenstance search led to a wild find: a car that was the watery tomb of a Florida man who has been missing since 1997. [Link]

Tough-guy jaywalker glares at driver, gets instant karma by Lauren Steussy (New York Post)

Jaywalking isn’t the end of the world but holding up traffic while staring down a driver is the sort of thing that cries out for swift adjustment by the fates of fortune. [Link; auto-playing video]

Real Estate

Millennials, priced out of homes locally, shop for investment properties online by Patrick Sisson (Curbed)

Priced out of home markets, investors can access the housing market in the rest of the country via online marketplaces which make buying and selling property a breeze. [Link]

The affordable housing crisis, explained by Patrick Sisson, Jeff Andrews, and Alex Bazeley (Curbed)

Inadequate construction, rising labor and materials costs, subsidies from the government that favor homeowners, slower turnover in the housing market, and more contribute to a massive challenge for home renters. [Link]

Labor Markets

Carl Icahn moving hedge fund to Miami, whether his workers like it or not by Josh Kosman (New York Post)

Icahn Enterprises is fleeing New York, and employees that don’t want to join on the trip to Florida will be out of a job with no severance per internal memos. [Link]

UPS to hire 100,000 workers this holiday season and pay $14 to $30 an hour by Adam Shapiro (Yahoo!)

Large seasonal hiring at the package carrier this year is in-line with past years, with wages running at a robust pace as well. [Link]

Seafood Fixing

StarKist Hit With $100 Million Fine in Tuna Price-Fixing Case by Micah Maidenberg (WSJ)

After Chicken of the Sea let the government know about price fixing in canned tuna, it avoided prosecution, but Bumble Bee’s $25mm fine in 2017 pales in comparison to what the DoJ wrung out of StarKist this week. [Link; paywall]

Modern Living

The Dangers of Love in the Age of Dating Apps by Akiva Thalheim (Washington Square News)

As young people have opted in to dating apps, they’ve joined a world that is designed to be addictive and dehumanizing, an interesting parallel to the trajectory of social media sites. [Link]

Remembrance

The Worst Day Of My Life Is Now New York’s Hottest Tourist Attraction by Steve Kandell (BuzzFeed)

An essay reflecting on the evolution of how we treat 9/11, 18 years after the tragedy. Detachment, tchotchkes, and tourist intrusions on the most personal of events. [Link]

Gambling

Billion Dollar Fantasy: Inside the War Between FanDuel and DraftKings that Rocked the Gambling Industry by Albert Chen (Sports Illustrated)

An excerpt of a pending book that peels back the history of the FanDuel-Draft Kings weekly fantasy battle which eventually led to FBI and DoJ investigations. [Link; auto-playing video]

Old Asteroids

Scientists Discover New Evidence of the Asteroid That Killed Off the Dinosaurs by Robert Lee Hotz (WSJ)

Drilling on the floor of the Gulf of Mexico has provided new evidence of the asteroid 100-mile wide crater, 12 miles deep. [Link; paywall]

Indexing

JPMorgan Creates ‘Volfefe’ Index to Track Trump Tweet Impact by Tracy Alloway (Bloomberg)

An exhaustive analysis of the President’s tweets has showed a rising likelihood of having a market-moving impact in recent months. [Link; soft paywall, auto-playing video]

Old Is New

Vinyl set to outsell CDs for first time since 1986 by Will Richards (NME)

33 years ago, CD sales volumes rose above those of vinyl – already in decline thanks to 8-tracks and cassettes – but thanks to MP3s and audiophiles, that’s now reversed. [Link]

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Have a great weekend!

Outside of equities, we saw a massive move higher in Treasury yields this week and a massive drop in Treasury bond prices.  For the 20+ year Treasury ETF (TLT), this week’s 6.34% drop was its second worst week on record since it began trading back in 2002.

Below is a look at TLT’s historical weekly percentage change, and we also show how TLT has performed in the weeks and months following one-week drops of more than 5% like we saw this week.  As shown in the table, TLT has normally continued lower for a while following big down weeks.  Start a two-week free trial to one of our three membership levels to receive Bespoke’s most actionable ideas.

The past week has been a solid run for the US equity market as a whole. The S&P 500 continues to edge ever closer to prior all-time highs; opening today within half a percent of this level. As shown in the chart below, on average across all sectors, though, it is a little bit less optimistic. The average sector is still 6.5% below record highs.  Excluding energy, which is by far the furthest (in terms of price and time) from its all-time high, the average across sectors jumps up to 3.6%.  Consumer Staples and Utilities are the only sectors within 1% of their highs while the Tech sector is not far behind only 1.5% away.  Start a two-week free trial to one of Bespoke’s three membership levels to receive our most actionable research.

One way to keep track of the evolving Presidential primaries and general election news is the website electionbettingodds.com which shows what the betting market is predicting for upcoming election outcomes. In the charts below, we show the current probabilities of a primary and general election win for each of the various candidates (officially announced and otherwise) with a 1% or higher chance of winning.  Elizabeth Warren now has a commanding lead in the Democrats’ primary with a 34.9% chance of victory with Biden and Sanders in second and third.

Where things get more interesting is to figure out which candidates have the best chance of winning the general election assuming they win their primary. For example, President Trump’s odds of winning his primary are 88.1%, but his odds of winning the general election for the Presidency are priced at 43.7%.

By dividing that 43.7% by the 88.1% chance of primary victory we can get to a 49.6% general election pricing assuming the candidate wins their primary.  This conditional probability probably shouldn’t be taken too seriously, but it’s got some interesting results. Among candidates polling over 5%, Beto O’Rourke has the highest odds (80%) of a general election win if he takes the primary while other Democratic hopefuls Andrew Yang and Bernie Sanders are priced at 60%+ odds.  Biden’s general election odds are at 55% if he wins the primary, while Warren — the current front runner — is at 49.9%. Notably, although Trump is close at 49.6%, no Republican has a conditional priced probability over 50% to win the general.

All of that said, these conditional relationships can be very unstable and are complicated to arbitrage, so we probably shouldn’t place too much faith in the detail of their message, but it’s still interesting to see that markets are implicitly optimistic about the electability of a candidate like Sanders or Yang relative to more mainstream candidates like Warren, Harris, or Biden.  Start a two-week free trial to one of our three membership levels to receive Bespoke’s most actionable ideas.

In last night’s Closer, we noted the recent price action of copper.  Over the past several months, copper had been consistently moving lower in a solid downtrend, but that downtrend has been broken this week.  Finishing up about 1% in yesterday’s session, copper had its first close above resistance which would suggest a further move higher.  We’re seeing additional gains today as the commodity continues to break out.  Over the next few weeks, copper bulls will look for a series of higher highs and higher lows that would eventually form a new uptrend.  Start a two-week free trial to one of our three membership levels for Bespoke’s most actionable research.