Ever since the strong upside reaction to President Trump’s address to Congress at the start of the month, the S&P 500 has been trading in a bit of a sideways range with no new highs since the first trading day of the month.  While the broader market has been treading water, FANG stocks have continued to claw their way higher.  In fact, just last Friday alone, both Facebook and Alphabet (formerly Google) hit 52-week highs, while Amazon.com and Netflix finished the week just shy of new highs.

The recent strength of the FANG stocks has really helped the group to widen its lead over the rest of the market.  The chart below shows the performance of the four FANG stocks on an equal-weighted basis versus the S&P 500 equal-weighted index, which includes every stock in the index.  Over the last six months, stocks in the S&P 500 are up an average of just under 11%, which is impressive under just about any scenario.  When you compare this performance to the average rally of 18% for the FANG stocks, however, the gains seem rather modest.

The lower chart shows the spread in performance between the FANG stocks and the S&P 500 equal-weight index over the last six months.  While the FANG stocks saw a wider performance spread last October (following strong earnings from Netflix), their lead over the broader market is the widest it has been since the election.  What’s even more impressive about this outperformance is that it comes after a period immediately following the election where the group lagged the market as investors rotated into groups more associated with the “Trump trade.”  Investors have a way of quickly changing their minds!

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.

Europe

The Quiet German by George Packer (The New Yorker)

Not a recent story, but given the focus on European politics in 2017 (the ongoing Brexit process, last week’s Dutch elections, French elections in April, and Germany’s own elections this fall) we think this profile of der kanzler. [Link]

EU could sue US over border tax, Germany warns by Guy Chazan (FT)

While international trade law may seem like a trivial matter for the current administration, the use of WTO-sanctioned countervailing tariffs as a possible response to a border-adjusted tax is something worth keeping an eye on. [Link, paywall]

Why Populists Can’t Win in Europe’s Heartland by John Follain and Simon Dawson (Bloomberg)

An anecdotal survey (with less clear conclusions than the rather misleading title) of working people and voters across Europe’s multinational industrial heartland. [Link]

‘London Bridge is down’: the secret plan for the days after the Queen’s death by Sam Knight (The Guardian)

Morbid though it may be, a fascinating investigation of the public relations and national pride disaster plan that will be deployed when beloved UK monarch Queen Elizabeth II passes. [Link]

Mobile Matters

Do YOU hear ‘phantom phone buzzing’? 80% of college students admit they experience major sign of phone addiction by Daniel J. Kruger (Daily Mail)

One of the symptoms of psychological dependence on our “external brains” (cellphones) is an imagined buzzing notification. [Link]

Health Care

Tanning Salons See Ray of Hope in ACA Tax Repeal by Katy Stech and Richard Rubin (WSJ)

A fascinating example of both obscure passages in large legislation and Pigouvian taxes, the tanning industry is hoping that passage of the AHCA (the House Republicans’ proposed replacement) will end the 10% levy applied to their revenue by the ACA. [Link, paywall]

‘Stunning’ gap: Canadians with cystic fibrosis outlive Americans by a decade by Eric Boodman (Stat News)

One highly specific example of the astounding differences in health care outcomes across countries, which can be driven by numerous factors including but not limited to centralized guidelines for disease treatment, transplant prioritization, access to care and/or medication, demographics, and others. [Link]

Investors

Great Groveling, Guys: Counting All the Ways Analysts Fawn Over Management by Jason Zweig (WSJ)

Thanks to the efforts of two Florida International University researchers, we now have quantitative proof that analysts are sycophants. [Link]

Hedge funds close at faster pace in 2016 than 2009 recession by Carleton English (NYP)

Over 1,000 funds closed their doors this year, the most since 2008 (1,471). It wasn’t all bad news, with 729 hedge funds launched, though launches were down from 968 in 2015. [Link]

Homebrew Quanting

Big Data for Little Kids: A New Approach to Coaching Youth Lacrosse by Ryan Floyd and Joe Rosenbaum (Inside Lacrosse)

Some may consider this approach over the top, but it turns out that data digging is making its way into youth sports. The authors’ U-13 lacrosse team was helped by correlations and averages, which they also note helped focus their efforts and reduce micromanagement of their young players. [Link]

“Spreadsheets Are Dope”: The Allure Of DIY College Basketball Fantasy League (Vice Sports)

First off, let’s be clear: we agree spreadsheets are dope, we use them constantly. This is a fun look at the nascent college basketball fantasy world, which relies on similar techniques as the original Rotisserie baseball leagues that were the first iteration of the now enormous fantasy sports world. [Link]

Weird But True

Humpback whales are organizing in huge numbers, and no one knows why by Sara Chodosh (Popular Science)

We’re either living in one of the Star Trek movies or we don’t understand whale behavior very well. In either case, the super-pods of humpbacks currently frolicking off the coast of South Africa are pretty odd. [Link]

The Extra-Large Omelet of Death… by Brad DeLong (Grasping Reality with All Tentacles)

A French aristocrat found his end during the French revolution thanks to his desire for obscenely large quantities of eggs. [Link]

Portland Anarchists Are Rebelling Against the Lazy Government by Fixing Roads Eve Peyser (Vice)

In a hilariously normcore act of rebellion, anarchists in the admittedly quirky city of Portland have taken to random acts of infrastructure repair. [Link]

Advertising

Duopoly watch: Google and Facebook gobble up even more ad dollars by Sara Fischer (Axios)

Google and Facebook continue to devour egregious shares of new dollars flowing into digital advertising. [Link]

Rise of the Machines

Rogue factory robot blamed for death of human colleague by Mark Molloy (The Telegraph)

A Michigan woman lost her life in tragic accident at an auto parts factory when an industrial robot strayed into an area it was programmed to avoid. [Link]

Steve Cohen Ramping Up Effort To Replace Idiot Humans With Machines by Bess Levin (Vanity Fair)

Famous for once trading the performance of traders, family office operator Steve Cohen (who will be able to take outside money again at the start of next year) is considering betting on algorithms instead. [Link]

Fast Food

Domino’s Atoned For Its Crimes Against Pizza And Built A $9 Billion Empire by Susan Berfield (Bloomberg)

Mobile ordering has been a key plank in the recovery of ubiquitous pizza chain Domino’s, where menu improvements have also helped fuel huge gains in market share and massive revenue growth. [Link]

U.S. Soldiers Heading to Poland Face a Grim Ordeal: No Burger King by Julian E. Barnes (WSJ)

Did you know the term “expeditionary fast food restaurants” existed? We did not, but they’re apparently a key to morale for service men and women far from home. [Link; paywall]

Have a great Sunday!

Remember when shares of Amazon.com (AMZN) used to be volatile?  It used to be that if you wanted to try and catch a big move in a stock over a short period of time, shares of Amazon.com (AMZN) were a go to name.  Over the years, fortunes have been made and lost in short periods of time by traders going long or short AMZN stock.  When it first came public, it wasn’t uncommon for AMZN to trade in a 100% range over a two-week period.  Even ten years after AMZN IPO’d, its average ten trading day range was just under 15%.  That’s practically unheard of for a large cap stock!  Just like a hyper puppy eventually turns into a lazy dog, though, AMZN’s stock has really entered a period of decreased volatility.

The chart below shows the rolling ten trading day range in AMZN’s share price from the time it came public up until now.  We have also included red dots to show each time the ten trading day range dropped below 5%.  In AMZN’s first decade as a public company, there were only three clusters of time where the stock traded in a sub-5% trading range and that accounted for just 1% of all trading days.  In the company’s second decade as a public company, however, the frequency of sub 5% readings in the stock’s ten trading day range has increased ten-fold to more than 11% off all occurrences. More recently, AMZN has become even less volatile.  Last August, the stock traded in its narrowest two-week trading range on record (1.92%), and just this week traded in its second narrowest range ever to 1.93%.  Additionally, provided the stock doesn’t trade above $859.80 or below $843.75 between now and Monday’s close, this will go down as AMZN’s narrowest ten trading range on record.