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

Consumer Appetite for Cars, Homes Bolsters U.S. Economy by Sarah Chaney (WSJ)

Recent data has suggested strong demand for items that are typically financed thanks to rock-bottom interest rates like 30 year mortgages, which fell below 3% for the first time ever this week. [Link; paywall]

As Europe’s Economies Reopen, Consumers Go on a Spending Spree by Liz Alderman (NYT)

Payroll subsidy programs in Europe designed to function similarly to – though typically more comprehensively than – the US PPP program have helped keep consumers primed for a recovery in spending. [Link; soft paywall]

Booze

Teens are dressing up as mask-wearing grandmas to try to score alcohol by Marisa Dellatto (NY Post)

With masks making it harder to identify each other, underage drinkers have kitted themselves out as the elderly in an effort to obtain drink. [Link; auto-playing video]

Diageo to launch Johnnie Walker whisky in paper bottles in 2021 (Reuters)

Paper bags are out, paper bottles are in. Diageo will ship plastic-free whiskey bottles starting next year as the company tries to cut down on plastic waste; the bottles are fully recyclable. [Link]

Media

You’re Doomscrolling Again. Here’s How to Snap Out of It. by Brian X. Chen (NYT)

Bad news related to politics, COVID, or other negative events can be a semi-addictive pursuit, but there are ways to break out of the parade of darkness that so easily dominates social media feeds. [Link; soft paywall]

Newsroom or PAC? Liberal group muddies online information wars by Alex Thompson (Politico)

A new initiative is working to push liberal perspectives into social media feeds via targeted advertising, giving the appearance of being an unbiased news source. [Link]

Amenities

Desperate for a pool? You can now rent a private one by the hour by Diana Olick (CNBC)

A new app offers users the opportunity to rent out backyard pools for a price, giving families the opportunity for a little fun in the sun without laying out five figures to re-make their backyard permanently. [Link]

Connecticut Bet Big on the Suburbs. That Might Finally Pay Off. by Joseph De Avila and Jon Kamp (WSJ)

Connecticut faced years of challenges as residents opted not to live in suburbs near New York, but the COVID shock is putting new life in the leafy greenery of and spacious living that were shirked in the post-crisis years. [Link; paywall]

Regional Affairs

Why North Carolina Is the Most Linguistically Diverse U.S. State by Dan Nosowitz (Pocket/Atlas Obscura)

North Carolina’s geography has driven a unique milieu of regional English dialects which are in the process of flattening towards more standard regional or national accents. [Link]

Chance of big San Andreas earthquake increased by Ridgecrest temblors, study suggests by Rong-Gong Lin II (LAT)

Recent earthquakes in Ridgecrest may be dangerous signs about the chance of further earthquakes around the San Andreas fault, specifically the Garlock fault which runs along the Mojave Desert. [Link]

Investing

The False Bargain of Passive Investing (Applied Finance Capital Management)

An argument that passive indices generate negative alpha compared to other options, which may hold water but ignores the problem of identifying outperformance ex-ante as opposed to via backtest. [Link]

COVID

Universal Masking to Prevent SARS-CoV-2 Transmission—The Time Is Now by John T. Brook, Jay C. Butler, and Robert R. Redfield (JAMA Network)

The authors use mask orders for health care workers and later all persons in-hospital to identify changes in transmission rate thanks to masks. Simply put, universal masking makes a huge difference for transmission rates even in environments with high viral load. [Link]

Weird News

155-Acre College Campus (Maltz Auctions)

Ever thought of owning your own college? For the low price of $3mm (minimum bid), you can have a 155 acres in rural Vermont complete with library, solar panels for power, a biofuel heating system, and more! [Link]

Comedy

Desus And Mero Have Conquered Comedy by Carrie Battan (The NYer)

A profile of the dynamic Bronx duo whose unique brand of rapid-fire, familiar, and self-conscious comedy has achieved legendary status. [Link; soft paywall]

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Have a great weekend!

Earnings season began at the start of this week with Pepsi (PEP) and the first of the major US banks and brokers reporting Q2 numbers.  It was a light week with only 32 companies reporting through Thursday, but in the coming weeks, we’ll see 100+ reports on multiple trading days.

From our Earnings Explorer tool, below is a recap of the results from this week’s earnings reports.  78% of companies that reported this week beat consensus analyst EPS estimates, while 72% topped consensus sales estimates.  Those are both strong numbers.  In terms of future projections, 16% of companies raised guidance, and not one company lowered guidance.  That’s rare even with the very low number of reports so far.

While guidance and beat rates were strong, investors still used earnings reports as an opportunity to sell.  The average one-day share price change this week for companies in reaction to their earnings reports was a decline of 0.57%.  All of those declines came on the initial gap down at the open, however.  After averaging a gap down of 0.76% at the open of trading following the earnings release, the average stock that reported gained 0.21% from the open to the close.  (The gap down of 0.76% and the open to close gain of 0.21% adds up to the full-day decline of 0.57% mentioned earlier.)

Below is a table showing all 32 companies that reported Q2 numbers this week (through Thursday).  The list is sorted by one-day share price reaction from best to worst.  Alcoa (AA) had the best price reaction to earnings this week with a gain of 6.39% yesterday.  WNS Global (WNS) put up the second-biggest gain at 6.36%.  The next best-performing stocks in reaction to earnings this week only gained 3%+ — USB and HOMB.  Other stocks that reported this week that gained in response to their earnings reports include Morgan Stanley (MS), Goldman Sachs (GS), Taiwan Semi (TSM), Johnson & Johnson (JNJ), and JP Morgan (JPM).

On the downside, AngioDynamics (ANGO) saw the worst share price reaction to earnings this week when it fell 11.51% on Thursday.  Sleep Number (SNBR) was second-worst with a one-day drop of 9.19% yesterday as well.

While MS, GS, and JPM all posted gains in reaction to earnings this week, other banks like Citi (C), Wells Fargo (WFC), and Bank of America (BAC) reacted negatively with each falling 4% or more.  Click here to view Bespoke’s premium membership options for our best research available.  Our Earnings Explorer tool that gives you access to the information in this post is available fully at the Bespoke Institutional level.

Sentiment changes were relatively uneventful this week.  Bullish sentiment rose 3.68 percentage points to 30.84%. That is a second straight weekly increase for bullish sentiment and the first time that it has risen above 30% since June 11th.  That is still below the historical average of ~38%, but for the first time in four weeks, bullish sentiment came within one standard deviation of its long-term average.

The gains in bullish sentiment were met with a smaller gain in bearish sentiment which rose from 42.67% to 45.37%.  Although higher, that is right in the middle of the past month’s range and not any sort of significant uptick week over week. But unlike bullish sentiment which is finally back within a standard deviation of its historical average, bearish sentiment remains elevated above its historical average of 30.5% by one standard deviation for a fifth consecutive week. That has now been the case for 17 of the past 20 weeks.

The gains to bulls and bears borrowed from those formerly reporting as neutral. Neutral sentiment fell 6.38 percentage points this week. That was the largest week over week decline since the first week of March. Now at 23.79%, neutral sentiment has reversed all of its gains of the past month and a half as it sits at its lowest level since May 7th. Click here to view Bespoke’s premium membership options for our best research available.