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.

While you’re here, join Bespoke Premium for 3 months for just $95 with our 2020 Annual Outlook special offer.

COVID

US bets on untested company to deliver COVID-19 vaccine by Martha Mendoza and Juliet Linderman (AP)

In an effort to secure the material for rapid distribution of COVID vaccine doses, the government has invested more than half a billion dollars in a company that doesn’t have an approved device, doesn’t have a manufacturing facility, and is largely unproven. [Link]

Cause of Wuhan’s mysterious pneumonia cases still unknown, Chinese officials say by Helen Branswell (Stat News)

This article is a throwback to the very start of the COVID-19 outbreak Hubei, when a mysterious outbreak of pneumonia led to almost 60 hospitalizations by the first week of January. [Link]

Costs of COVID

The Toll That Isolation Takes on Kids During the Coronavirus Era by Andrea Patterson (WSJ)

While everyone feels the effects of isolation, they can have an especially extreme effect on children, adding concerns about childhood development to the public health calculation COVID is forcing governments to make. [Link; paywall]

Fearful and Frugal: Coronavirus Wreaks Havoc on America’s Psyche by Tiffany Kary (Bloomberg)

Survey data is suggesting a huge psychic toll on Americans as a result of the virus and the resulting economic impact. Austerity in the form of stockpiling, delayed purchases of durable goods, and less interest in public spaces are all warning signs for the viability of the economic recovery more generally. [Link; soft paywall]

Covid-19 Is Turning San Francisco’s Inequality Gap Into a Chasm by Olivia Rockeman and Gerrit De Vynck (Bloomberg)

COVID is hitting the more vulnerable workers in the service economy in a way that hasn’t had any salience for office workers in tech and other industries. [Link; soft paywall]

Carsyn Leigh Davis (Florida COVID Victims)

The horrifying story of an immunocomprised Florida teen who was exposed to COVID at a large youth event at her church. Her mother tried to treat her for the disease with totally ineffective anti-bacterials and hydroxychloroquine. Carsyn succumbed to the disease 12 days after the event at which she was exposed. [Link]

New York City

I’ve Seen a Future Without Cars, and It’s Amazing by Farhad Manjoo (NYT)

An argument and imagination of what a major city without cars looks like: less crowded, more vibrant, and faster-moving. [Link; soft paywall]

NYC Rental Market Pushed to Breaking Point by Tenant Debts by Prashant Gopal (Bloomberg)

With mass job loss in the hospitality industry, New York renters are completely incapable of covering their rent, and the result is a total inability for landlords to cover the cost of their debts, let alone property taxes and similar costs. [Link; soft paywall]

Heavier Reading

How to Fight Without Rules: On Civilized Violence in “De-Civilized” Spaces by Neil Gong (Social Problems)

This sociology paper is a bit off the wall, but is absolutely fascinating. The author sought to understand how “de-civilized” spaces without rules established new ways of ordering themselves. To do so, he participated in a no-holds-barred underground fight club that included weapons like sticks, chains, and dull knives as well as group battles. [Link; 18 page PDF]

The Dēmos In Dēmokratia by Daniela Cammack (The Classical Quarterly)

A novel reading of classical Greek sources which challenges our notion of democracy: not rule by all the people, but rule by the mass of people outside of the elite. The implications of that early political arrangement and our modern systems of representative government mediated by technocrats are profound: democracy in its original Greek forms was not a process of empowering elites (as it is today, via election of representatives) but was in fact a process of empowering everyone else over elites. [Link; 20 page PDF]

A tale of two wage subsidies: The American and Australian fiscal responses to COVID-19 by Steven Hamilton (National Tax Journal)

A comparative analysis of the different approaches to subsidizing wages taken by the US and Australia, arguing that a lack of infrastructure in the US led to a far less effective Paycheck Protection Program) that underperformed the Australian solution which relied on its tax payment systems instead of private lenders. [Link; 20 page PDF]

Eras Ending

Brooks Brothers files for bankruptcy by Jordan Valinsky (CNN)

The venerable American menswear brand survived the Civil War, two World Wars, and everything else since 1818, but COVID has ended its run. [Link]

Grim Day for Pipelines Shows They’re Almost Impossible to Build by Rachel Adams-Heard and Ellen M. Gilmer (Bloomberg)

Earlier this week a federal judge ordered the shutdown of the Dakota Access pipeline, followed by the cancellation of a planned pipeline by Dominion and Duke Energy. Well-funded and litigious environmental groups have proven incredibly effective at raising the costs of new pipeline projects beyond the point of viability. [Link; soft paywall]

Long Reads

The Hero of Goodall Park: Inside a true-crime drama 50 years in the making by Tom Junod (ESPN)

An incredible yarn focused on cars, baseball, the ephemerality of life, and history in a giant interconnected narrative. [Link; auto-playing video]

Markets

75 Years of American Finance: A Graphic Presentation 1861-1935 (St. Louis Fed FRASER)

A hand-drawn and annotated history of American financial markets and economic activity stretching from the start of the Civil War to the depths of the Great Depression. [Link]

Are Stock Investors ‘Irrationally Exuberant’ Again? by Mark Hulbert (WSJ)

An argument that basically unremarkable performance for IPOs, normal equity issuance, valuations of dividend-paying stocks versus those without a dividend, and closed-end fund discounts are all pointing to an unremarkable market relative to the late-1990s tech bubble. [Link; paywall]

Read Bespoke’s most actionable market research by joining Bespoke Premium today!  Get started here.

Have a great weekend!

While the past week’s gains are mostly being erased today, for the most part, the S&P 500 has been trading firmly higher which has lifted sentiment.  AAII’s weekly reading on bullish sentiment was lifted as a result, rising from 22.15% to 27.16%.  That is the highest level of bullish sentiment since June 11th, and the 5 percentage point week over week increase was the biggest jump since the end of May. Not only was it the largest single-week increase in over a month, but this week snapped a four-week long streak in which bullish sentiment has declined. With the streak now over, it was the longest streak of consecutive declines in bullish sentiment since April of 2018 when sentiment also fell for four weeks. While higher this week, bullish sentiment is still below its historical average of 38% by at least one standard deviation as it has been for four straight weeks now.  That is the first such streak since August of last year.

Meanwhile, bearish sentiment has come back down reaching 42.67%.  Mirroring bullish sentiment, that is the lowest reading for bearish sentiment since June 11th, but it remains above its historical average by at least one standard deviation as has been the case for the past four weeks.

Bearish sentiment was not the only one to fall this week.  Neutral sentiment also slightly pulled back falling to 30.17% from 31.96%. Although lower this week, neutral sentiment is still at a much more normal reading than the past few months’ extreme lows.  In fact, this week marked the first time that neutral sentiment was above 30% for back to back weeks since February. Click here to view Bespoke’s premium membership options for our best research available.

During the market turmoil in February and March, the US dollar dropped 4.81% from its high on February 20th to its low on March 9th. That was followed up with a massive run up of 8.26% over the next ten days as the dollar index rose to its highest levels since the final days of 2016/first days of 2017.  Since peaking on March 19th, however, the dollar has faced constant selling as it now sits at the lower end of the past couple of year’s range.  A weaker dollar, all else equal, would make the price point of US products more attractive to foreign buyers and as a result, should theoretically bode well for companies that base a larger share of their revenues from outside the US.

In the chart below, we show the average performance of Russell 1000 stocks since the dollar’s high on March 19th based on deciles of international revenue exposure using data from our International Revenue Database. The 1st decile represents the stocks that have the highest share of total revenues derived from abroad while the 10th decile includes all stocks who’s revenues entirely come from within US borders.  As shown, those with the most international exposure—which includes many semiconductors and some travel-related and Consumer Staples names— have generally outperformed most other deciles in that time. Granted, this was not the strongest decile. The 8th and 9th deciles were the strongest performers since March. These deciles are generally stocks with less than a fifth of revenues coming from abroad, and they actually saw even stronger returns on average since March 19th.  Meanwhile, those with no international exposure are only up 34.5% on average since March 19th.  Click here to view Bespoke’s premium membership options for our best research available.