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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mRNA

How to make a messenger RNA vaccine: inside the RNA manufacturing process (GreenLight Biosciences)

A quick read on how vaccines which rely on messenger RNA (mRNA) are manufactured. This is the core technology behind both Pfizer (PFE) and Moderna (MRNA) vaccines. [Link]

Why Moderna’s Vaccine Win Is a Giant Leap Against Pandemics by Max Nisen (Bloomberg)

New mRNA technology offers the promise for very rapid and scaled vaccine development as new pandemics emerge, and offers a series of key advantages over traditional vaccine manufacturing processes. [Link; soft paywall]

Immunity to the Coronavirus May Last Years, New Data Hint by Apoorva Mandavilli (NYT)

While there have been some isolated cases of reinfections, clinical data from blood samples of post-infection COVID patients suggests that the immune response to infection provides antibodies which are likely to last for years. [Link; soft paywall]

Social Media

Twitter rolls out Stories, aka ‘Fleets,’ to all users; will also test a Clubhouse rival by Sarah Perez (TechCrunch)

This week Twitter introduced a copycat feature that has been a part of Snapchat for years, and is considering a feature that works like audio-based social space Clubhouse. [Link]

Parler Makes Play for Conservatives Mad at Facebook, Twitter by Jeff Horwitz and Keach Hagey (WSJ)

A social media company supported by the financial backers of Breitbart News is making a play to draw disaffected conservatives from more traditional social media networks. [Link; paywall]

Thanksgiving

GasBuddy Study Finds 45% Fewer Travelers on the Road This Thanksgiving, Gas Prices Projected to Be Lowest Since 2016 (GasBuddy)

With the threat of the pandemic, many Americans are forgoing their traditional Thanksgiving gatherings, and that’s going to mean a lot less gasoline demand than normal. For those who do drive to see family, gas prices are set to come in much lower than historically normal. [Link]

38% of Americans planning a big Thanksgiving despite COVID-19: survey by Jesse O’Neil (NYP)

While there are major risks to large group gatherings amidst a global pandemic, COVID isn’t stopping about a third of the company from getting together for turkey this year. [Link]

Pressured Business Models

A Covid Baby Bust Is Bad News for These Businesses by Saabira Chaudhuri (WSJ)

The coronavirus pandemic is driving birthrates down dramatically, putting fresh pressure on demand for products designed for babies. [Link; paywall]

Retail Chains Shed Stores, but It Isn’t Good for Business by Suzanne Kapner (WSJ)

With so many stores empty, retailers are shuttering locations en masse, and as a result may have a hard time capturing demand when consumers feel safe walking the aisles again. [Link; paywall]

Rent Seeking

New York’s 4-Year-Olds Are Mastering Zoom to Get Into Elite Kindergartens by Amanda L. Gordon and Janet Lorin (Bloomberg)

The traditional interview process for elite kindergartens in New York City (yes, seriously) has moved to online meetings. Best of luck to the parents that need to keep kids under 5 focused for a Zoom call. [Link; soft paywall]

The Weekly Planet: What Donald Trump Taught the Electric-Car Industry by Robinson Meyer (The Atlantic)

With the auto industry pursuing its inevitable transition away from fossil fuels, Big Car and Big Oil are no longer playing on the same team when it comes to lobbying in Washington DC. [Link; soft paywall]

Finding Homes

Seoul converts hotels into studios to ease housing crunch by Song Jung-a (FT)

The South Korean government is purchasing 114,000 units of hotels and offices which are standing mostly empty thanks to COVID, aiming to ease a housing crunch. [Link; paywall]

Semis

Steve Jobs’s last gambit: Apple’s M1 Chip (Om)

A technical walk-through and deep dive into the implications of Apple’s new M1 chip, which packs graphics, basic processing, RAM, and other aspects of system architecture into a single, extremely efficient package. [Link]

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Have a great weekend!

US COVID cases continue to rise sharply. Testing has also risen, but an increase to 10% positive test rates show that this is not simply about more testing. While there’s been a slow down in the percentage growth of confirmed positives that could be a leading indicator of a peak in daily new cases, Thursday’s numbers put a wrench in what had been a promising trend. A peak for daily new cases in the wake of Thanksgiving is still possible, but in the meantime millions of new cases will emerge. At a lag, hospitalizations will follow. Adjusted for the population of states reporting hospitalizations, hospitalization rates have reached new records. Like clockwork, deaths are following. Almost 2,000 Americans died yesterday, and at a lag to cases and then hospitalizations, the trend is accelerating. We update these charts and the analysis that goes with them every morning in our pre-market report The Morning Lineup.  Click here to start a free trial to Bespoke Institutional and receive our daily Morning Lineup for the next two weeks, featuring more commentary and data on macro markets.

Switching to a granular look at states, below we show a table of state deaths, cases, tests, and positive test rate. We adjust for population on the right side of the table to make comparisons across states like-for-like. One note on positive test rates and test counts: some states under-report the actual number of tests run, so not all of these numbers can be taken at strictly face value. This table is still quite useful in seeing where testing, cases, positive test rate, and deaths sit across the country for the period ending on November 19th.

Another way to look at state performance is to compare tests over time. In the table below we show state 7 day average daily positive tests indexed to their peak (which in most cases is the current level). This allows a view of where the pandemic is currently worst versus the last six months. This helps to illustrate the national breadth of this massive increase in new cases currently underway.

We have a similar chart for hospitalization rates. Hospitalization rates are not subject to vagaries of test counts, and while they tend to lag new positive tests as an indicator of COVID’s spread, they are closer to real-time than deaths, which lag hospitalization rates. As shown, a number of states have over 400 people hospitalized per million population, and in all but a very few cases, hospitalization is rising, mostly quite quickly. Anything under a few hundred hospitalizations per million population isn’t a sign of stress on health care systems, but above 300-400 hospitalizations per million, states generally start running out of beds. Surging resources can help, but there are practical limits on how many people can be hospitalized at once. With new cases continuing to accelerate, this is a bad sign, because hospitalizations tend to lag new case counts.

Below we show charts of new cases relative to population for a variety of regions and countries across the world at large. European cases spiked just ahead of the US. That includes Sweden, which introduced restrictions for the first time this fall amidst rising hospitalizations. We update these charts and the analysis that goes with them every morning in our pre-market report The Morning Lineup.  Click here to start a free trial to Bespoke Institutional and receive our daily Morning Lineup for the next two weeks, featuring more commentary and data on macro markets.

Below we update weekly economic growth trackers that we produce internally as well as the New York Fed’s Weekly Economic Index which is updated on a regular basis. Over the last five weeks, our index has reported negative YoY growth in output in four weeks, including a modest drop for the most recent week of data. For its part, the Weekly Economic Index has continued to rebound from the April lows and is at its highest levels since the March economic data collapse. That index still shows output down almost 3% YoY, but its ongoing rebound is suggesting a much stronger Q4 than what our index is tracking. Our data suggests output will be up a modest 3.8% QoQ SAAR in Q4, versus more than 10% QoQ SAAR forecasted by the WEI data. For context, Atlanta Fed GDPNow data suggests something more in-between, with their data tracking 5.6% QoQ SAAR.  This analysis is published regularly in our post-market daily note The Closer.  Click here to start a free trial to Bespoke Institutional and receive our daily Closer report for the next two weeks, featuring more commentary and data on macro markets.

The housing market continues to blow the doors off, with total annualized existing home sales coming in at a rate of 6.85mm in October, including 6.12mm single family units. Those numbers are only 5.7% and 3.5% respectively below the record levels from the housing bubble of the mid-2000s.  Check out the enormous numbers recently in the chart below:

Unlike during the prior housing bubble, inventories are extremely low now both on an absolute basis (down 20% YoY for all homes and 23% YoY for single family) and relative to demand; both total existing and single family home inventories are below 2.4 months of demand. Inventories relative to demand are half of what they were at the last housing market peak on a months’ supply basis.

With so much demand for homes and so little supply, prices have exploded higher in the past few months. After adjusting for seasonality, prices are up a staggering 15% since the May lows, driven by both strong demand and a shift in mix towards higher-priced homes.  This analysis was initially published in our post-market daily note The Closer.  Click here to start a free trial to Bespoke Institutional and receive our Closer report and much more for the next two weeks, featuring more commentary and data on macro markets.