Here’s a quick question.  Take a look at the chart below.  From a purely technical perspective, what do you think?  It doesn’t look very good, does it?  After reaching a peak in May, whatever this chart is has done nothing but drift lower, putting in a series of lower highs and lower lows, and it has now erased all of its gains from its April break out.

Now, look at the next chart.  This one looks a lot healthier, doesn’t it?  This chart just recently hit a new high after a two-month consolidation period and remains right near its highs.  Looking at both charts, most technicians would say the chart below is the more attractive of the two.

So, what are the two securities shown in the charts above?  Believe it or not, they are actually both charts of the STOXX 600, which is an index comprised of large, mid and small cap stocks spread across 17 countries of the European region.  The only difference is that the top one shows the STOXX 600 denominated in euros, while the second chart shows the STOXX 600 denominated in US dollars.  Because of the decline in the dollar this year, the difference in performance between the two indices is close to 12 percentage points (STOXX 600 YTD return in local currency = 4.7%, STOXX 600 YTD return in USD = 16.5%).  It just goes to show that when looking at returns, perspective (especially in currency terms) is everything. So far this year, US investors who are long Europe are feeling a lot more flush than their European counterparts.

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.

See this week’s just-published Bespoke Report newsletter by starting a no-obligation two-week free trial to our premium research platform.

Macro Long Reads

Clearing up some misconceptions about how the stock market works by Matthew C Klein (FTAV)

Contrary to popular opinion, companies don’t use the stock market to raise capital, and households are net equity sellers relative to market value. [Link; registration required]

Quantitative Easing and Long‐Term Yields in Small Open Economies by Antonio Diez de los Rios and Maral Shamloo (Bank of Canada Staff Working Papers)

This quantitative analysis of 4 central bank QE programs (Fed, BoE, Riksbank, and SNB) suggests that QE from smaller central banks does not have an impact on global risk premiums and therefore have a limited impact on domestic financial markets. [Link; 46 page PDF]

Corporate News

GE’s Jeffrey Immelt Is on Uber’s CEO Shortlist by Eric Newcomer (Bloomberg)

Immelt is departing from GE, but he’s reportedly high on the very short list of people the ride hailing company’s targets for the CEO job. [Link; auto-playing video]

Researchers have a new theory for why companies are sitting on ungodly piles of cash by Max Ehrenfreund (WaPo)

Two professors at NYU argue that the reason corporate cash is piling up is that a few dominant companies don’t need to invest to stay ahead, accruing huge profits that don’t go anywhere. [Link; soft paywall]

Investing

Trend Is Not Your Only Friend By Dr Ewan Kirk and Dr Chris Longworth (Cantab Capital)

A step-by-step walk through of the construction of a portfolio of assets which exhibit both trend and carry, creating larger risk-adjusted returns. [Link]

Would You Invest with Steven Cohen? by Julie Segal (Institutional Investor)

With the former head of SAC Capital Advisors soon to emerge from an industry ban following insider trading accusations, Steve Cohen is planning the launch of a hedge fund controlling $20bn of capital. [Link]

The Death of Equity Research Hasn’t Been Greatly Exaggerated by James Valentine (Integrity Research Associates)

A review of the challenges facing equity research, which are legion. That said, the author identifies areas where equity research can deliver value. [Link]

Communication

Why I tweet by Beatrice Cherrier (The Undercover Historian)

A long, sprawling essay on the value that Twitter can add for knowledge workers, through the prism of an economic historian. [Link]

What The Enron E-mails Say About Us by Nathan Heller (NYer)

An opportunity to review linguistics and data science in the context of a massive archive of digital communication, specifically the Enron email archives released as part of the investigation into that company’s collapse. [Link]

Are influencers turning away from Snapchat? by Eileen Brown (ZDNet)

A new survey of widely-followed “influencers” on social media suggest that Snapchat is on the way out, especially when coupled with a 22 percent drop in downloads over the last couple of months. [Link]

People

Origins by Blair Reeves

A very helpful review of recent data, research, and discovery into the origin of the human species over the last several hundred thousand years. [Link]

First Human Embryos Edited in U.S. by Steve Connor (MIT Technology Review)

Following similar efforts in other countries, US researchers have successfully edited human embryo genes in a lab. [Link]

110 N.F.L. Brains by Joe Ward, Josh Williams, and Sam Manchester (NYT)

A new study of donated brains from football players reveal pervasive chronic traumatic encephalopathy, a degenerative disease that attacks brain tissue and is tied to concussions and other head trauma. [Link; soft paywall]

Places

Grave Concerns by Jennifer Crossley Howard (Bitter Southerner)

A history of the Southern tradition of visiting the dead, eating a family meal and visiting the resting places of the dearly departed. [Link]

we’re still here by Anne Helen Petersen (Tinyletter)

A review of the very interesting question “Why does Montana have so few people and so many counties”? [Link]

I trained an A.I. to generate British placenames by Dan Hon (Medium)

A hilarious application of machine learning gives some amusing results. Some of our favorites: Brotters Common, Topswick End, Boll of Binclestead, Farton Green Pear End, Capton Briins Forehouint Eftte Green, Crocken-on’s Clow, Prrighstock Tabergate, and Stote S’ster. [Link]

Policy

Bannon Calls for 44% Tax on Incomes Above $5 Million by Margaret Telev (Bloomberg)

Standing in stark contrast to the Republican Congress, which has advocated the opposite sort of policy, White House Chief Strategist Steve Bannon wants a more populist bent. [Link]

Foxconn could get up to $200 million in cash a year from state residents for up to 15 years by Jason Stein and Patrick Marley (Journal Sentinel)

Foxconn (a major supplier of Apple’s iPhone value chain) is opening a new manufacturing facility in Wisconsin. While this is good news for Wisconsin manufacturing workers, it’s going to cost the state’s taxpayers dearly. [Link]

France nationalises shipyard to thwart Italian majority, angering Rome by Leigh Thomas and Crispian Balmer (Reuters)

While newly-elected President Macron has liberal, pro-market credentials, France is still France and will nationalize a shipyard instead of letting an Italian company take control of it. [Link]

EU explores account freezes to prevent runs at failing banks by Francesco Guarascio (Reuters)

In a remarkable pivot, EU policymakers are considering measures that would prevent depositors from withdrawing their cash if a bank is facing funding challenges. [Link]

Video Gaming

A video game you’ve never heard of has turned three teens into multimillionaires — and it’s just getting started by Matt Weinberger (Business Insider)

A review of the ecosystem that Roblox has built around its simplistic but extremely popular platform, where young coders can see huge revenue sharing numbers. [Link]

Education

A teacher’s solution to buy school supplies for her classroom: Panhandling by Amy B Wang and Emma Brown (WaPo)

A tragic comment on how we choose to fund schools: an Oklahoma woman was reduced to panhandling to provide basic school supplies for her class. [Link; soft paywall]

Miscellaneous

‘Phelps vs. Shark,’ Reviewed by a Shark by Fred the Shark (WSJ)

An important coda to the widely televised shark race earlier this week. [Link; paywall]

WWII pilots used North Carolina waters for target practice. Now their bombs are washing ashore. By Thomas Gibbons-Neff (WaPo)

70 year old munitions are emerging from the sea on the shores of North Carolina. [Link; soft paywall]

Have a great Sunday!

Below is an updated look at our trading range screen for the 30 largest Nasdaq 100 stocks.  We’ve highlighted the “FAANG” stocks in yellow.

Facebook (FB), Charter (CHTR) and Baidu (BIDU) are currently the most overbought names in this group, while Starbucks (SBUX) and Qualcomm (QCOM) are the most oversold.

Apple (AAPL) is currently sitting right on support at its 50-day moving average ahead of earnings next Tuesday.

Below is a list of the 40 largest companies set to report earnings this week.  Next to each company, we provide its historical beat rates (% of time beating analyst estimates) and its average one-day change on its earnings reaction days.

Sanofi (SNY) kicks things off on Monday morning, and then Apple (AAPL) will get all of the attention on Tuesday after the close.  Tesla (TSLA) and Time Warner (TWX) are the two key names to watch on Wednesday, and then there really aren’t any mega-cap companies reporting on Thursday or Friday that will draw a significant amount of coverage.

Of the names shown, Sanofi (SNY), Apple (AAPL), Pfizer (PFE), Cognizant (CTSH), Activision (ATVI), and Berkshire (BRK/B) have historically beaten EPS estimates the most often.  In terms of price change on earnings, Sanofi (SNY), Tesla (TSLA), Regeneron (REGN), Shire (SHPG), and Activision (ATVI) have historically averaged the biggest gains on their report days.