The US equity market’s rally off the March lows has spawned moves over a few weeks in individual stocks that would normally take years to play out.  Within the Russell 3000 as a whole, approximately 4% of the stocks in the index (125) have more than doubled from their closing levels on 3/23.  At face value, that’s an extremely impressive reading.  However, if you dig a little, you would also find that more than half of those stocks that have doubled are still down YTD. Amusement parks may still be closed, but who needs them when you have a roller coaster ride like the stock market.

There’s not enough space to list each of the stocks that have doubled from their closing levels on 3/23, so in the interest of space, the table below lists the 25 stocks in the Russell 3000 with market caps of $2.5 billion or more that have doubled since 3/23 sorted by market cap.  The largest of the ‘doublers’ listed is Valero (VLO) which just barely made the cut gaining ‘only’ 102.9%.  Behind Valero (VLO), the only other doublers with market caps of more than $10 billion are Twilio (TWLO), Moderna (MRNA), Wayfair (W), and Carvana (CVNA).  Wayfair is also the top-performing stock on the list with a gain of over 500%!  We’re not sure which, but at some point in the last two months, the market’s valuation of W was way off the mark. To put Wayfair’s YTD move in perspective, though, even with a 500%+ rally, the stock is still up only 112% YTD.

Just as we pointed out with regards to the entire universe of stocks that have doubled since 3/23, a large number of stocks listed below are also down YTD.  Even the largest of the doublers – Valero – is still down 29.3% YTD.  Looking through the list, most of the other stocks listed that are still down YTD are from the Energy sector.  Below the table, we have also included charts of each stock (except Bill.com which hasn’t been public for six months).  As shown, many of the stocks listed are trading at extremely overbought levels after their significant rallies, and investors would probably be best served to not chase these names from here.  For clients with access, we have also created a custom portfolio, so you can track these names over time to see how they digest and consolidate the recent surges.  Start a two-week free trial to Bespoke Institutional to access our Custom Portfolios, interactive tools, and full library of research.

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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Changing Patterns

Coronavirus Escape: To the Suburbs by C.J. Hughes (NYT)

New Yorkers who have spent their adult lives in apartments across the Five Burroughs are making a bid for suburban living, nudged into a new environment by changing behavior and re-evaluated risk. [Link; soft paywall]

The Small-Business Die-Off Is Here by Annie Lowery (The Atlantic)

Low cash balances and tight margins made small businesses more vulnerable to the COVID collapse in spending, and it’s going to drive massive consolidation for a long time to come. [Link]

Travel From New York City Seeded Wave of U.S. Outbreaks by Benedict Carey and James Glanz (NYT)

COVID-19 ran wild through New York City in early March, which led visitors to carry the virus from the city to the far-flung hinterlands of Louisiana, Texas, and Arizona. New York wasn’t the only major community spread event, but it was the most severe. [Link; soft paywall]

Market Mavens

Ken Griffin’s Shutdown Playbook Kept Him on Top of Markets by Liz McCormick (Bloomberg)

Some quick thinking and infrastructure building means Citadel was able to quickly shift employees into a sequestered environment with all its necessary infrastructure. [Link; soft paywall]

Buffett’s Chance for a Blockbuster Deal Faded When Fed Stepped In by Katherine Chiglinsky (Bloomberg)

When the Fed stepped in to ease the credit and markets logjam in March, it allowed companies to find financing on much more generous terms than Berkishire was willing to give. [Link; soft paywall]

Life Down The Rabbit Hole

There Are No Hours or Days in Coronatime by Arielle Pardes (Wired)

Perceptions of time are not consistent amidst a lockdown that removes both the every day routines an the bigger events we reference to keep track of time’s passing. [Link]

Can we escape from information overload? by Tom Lamont (The Economist 1843)

What happens when we eliminate all light? A London artist did so and his experience in the dark for a month is instructive about the challenges of a world constantly demanding our attention. [Link]

This Week In Tech

Health Officials Say ‘No Thanks’ to Contact-Tracing Tech by Fred Vogelstein (Wired)

Tech giants tried to step in and develop rapid contract tracing solutions, but their efforts haven’t gotten much love from governments, who prefer tried and true methods of figuring out where people have been and who they might have exposed. [Link]

How Politicians Spend Their Money on the World’s Largest Social Media Platforms by Nicoló (Medium)

Various social media platforms offer detailed sources of information on how politicians around the world spend campaign dollars to reach voters. [Link]

The U.S. Labor Market During the Beginning of the Pandemic Recession by Tomaz Cajner, Leland D. Crane, Ryan A. Decker, John Grigsby, Adrian Hamins-Puertolas, Erik Hurst, Christopher Kurz, and Ahu Yildirmaz (UChicago Working Papers)

Using ADP data, the authors find a 22% decline in private sector employment, a 4.5% decline in hours worked by those who didn’t lose their jobs, much larger impacts for lower-paid workers, and most concerningly large declines in the number of going concerns. [Link; 52 page PDF]

Is the 1918 Influenza Pandemic Over? LongTerm Effects of In Utero Influenza Exposure in the Post-1940 U.S. Population by Doughlas Almond (Journal of Political Economy)

Babies of mothers pregnant during the 1918 flu pandemic had lower educational attainment, higher disability, lower income, and lower socioeconomic status than the birth cohorts close to them. [Link; 41 page PDF]

Pandemic Sports

The Dolphins have a plan to start letting fans attend NFL games, and it’s wild by James Dator (SBNation)

One-quarter of planned capacity attendance, six foot separations in lines at doors, pre-booked arrival times, online orders for stadium food, and more details feature in proposed plans for Miami’s stadium during football season. [Link]

How the Internet Created a Sports-Card Boom—and Why the Pandemic Is Fueling It by Emma Baccellieri (SI)

While attending sports events is still generally not safe, opening a pack of cards and rooting through the contents is a very different animal. [Link]

UFC Comes Out Punching for Pandemic Embattled ESPN by Ira Boudway, Eben Novy-Williams, and Lucas Shaw (Bloomberg Quint)

Pre-fight testing and antibody screenings will be conducted before a May 9^th lineup of bouts. This will be the first live sports broadcast in the US since mid-March. [Link; soft paywall]

Weird News

A Hair-Raising History of the Flowbee by Jake Rossen (Mental Floss)

With millions unable to head to the barber, the appeal of the informercial-ready Flowbee is very, very real: no muss, no fuss! [Link]

Scientists discover evidence of ancient, nitrogen-rich Martian groundwater hiding in Antarctica by Rafi Letzter (Live Science)

Advances in technology and technique have allowed scientists to confirm that ancient meteors carrying debris from Mars included nitrogen rich deposits which indicate the presence of seas conducive to life on the Red Planet. [Link]

Education

When Schools Reopen, Don’t Ditch Online Learning by Aly Kassam-Remtulla (Wired)

Entirely-remote curricula are almost certainly not going to fly, but the COVID-19 outbreak has proven that some of the venues for remote learning can help students by improving flexibility. [Link]

Stories

LeVar Burton still loves reading aloud. His storytelling might be what you need right now. by Caitlin Gibson (WaPo)

The host of the “Reading Rainbow” is still reading stories: to children, to listeners on his podcast, and to his followers on Twitter. [Link; soft paywall]

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Have a great weekend!

If you’ve been paying attention over the last few weeks, all you’ve heard is how the large mega-cap tech stocks have been keeping the market afloat. The five largest stocks in the US (Microsoft, Apple, Amazon, Alphabet, and Facebook) have done extraordinarily well this year and since the March lows, but to say they’ve been doing all the lifting would be inaccurate.  Take for example the fact that of the 2,052 US stocks with market caps above $500 million, 101 (4.9%) have hit 52-week highs so far in May and none of them are named Microsoft, Apple, Amazon, Alphabet, or Facebook.  The table below lists the 19 US stocks with market caps above $20 billion that have hit 52-week highs so far this month.  Looking at the list, only one of the names listed (PayPal) has a market cap above $100 billion and just four others have market caps above $50 billion.  Not only are these names not mega-caps, but many of them are also stocks that most people have probably never heard of.

While mega-cap stocks may not be the ones hitting 52-week highs this month, one part of the argument behind which factors are driving the market that is partially accurate is that tech stocks are leading.  Breaking out the table below by sectors 8 of the 19 names listed are from the Technology sector.  Behind Technology, the next most heavily represented sector is Health Care with 6.  However, when we expand the universe to all stocks hitting 52-week highs with market caps above $500 million, Technology doesn’t even top the list.  With 49 stocks from the Health Care sector hitting 52-week highs this month, it tops the list followed by Technology with 26.  Behind these two, no other sector accounts for even 10 names.  These days, if you’re a company that’s not involved in Health Care or Technology, you’re dead to investors. Start a two-week free trial to Bespoke Institutional for full access to our research and interactive tools.

Roughly 1,300 companies have reported since the start of earnings season on 4/13 when the first of the big banks kicked things off.  For those stocks that have beaten EPS estimates, the reaction has not been as strong as past years with just a 9 bps difference between this earnings season and all seasons since 2001. On the other hand, those that have missed EPS have not been as badly punished dropping 0.86% compared to an average drop of 3.56% since 2001. For all stocks, the average gain of 0.79% this earnings season is much stronger than the 0.06% gain of all other seasons.

With stock price reactions being generally positive this season, most of the gain has come at the open. Stocks reporting earnings have gapped up an average of 1.24%. But intraday they have tended to sell-off, averaging a 0.44% decline from open to close.   Start a two-week free trial to Bespoke Institutional to access our interactive Earnings Explorer and much more.

After a disastrous late February and early March period, breadth among S&P 500 groups cratered to the point where not a single one of the S&P 500’s 24 industry groups were above their 50-day moving average.  Before the most recent occurrence, that’s something we hadn’t seen since early 2019.

While there have been numerous instances in the last few years where every industry group was below its 50-DMA, the most recent period was unique in that it lasted more than four full weeks (21 trading days).  Going all the way back to 1990, there has only been one other period where every industry group was below its 50-day moving average for as long as it just was.  That was during the depths of the financial crisis in the 21-day stretch ending 11/3/08. It took a bear market of more than a year to finally reach that level back then, but this time around, it took less than two months.  Besides that period, there has never been another four-week stretch where every industry group was below its 50-day moving average.

Overall breadth readings have already improved in terms of industry groups above their 50-day moving averages, but at this point, the number of industry groups with rising 50-day moving averages remains extremely depressed at just 8.3% as of midday Friday.  Similar to the streak above, during the most recent period every group had a declining 50-day moving average for 26 straight days, and that was also the longest such streak since 2008.  Granted, this is a lagging indicator and should improve the longer equities remain around current levels, but it once again serves as a reminder of how steep the declines actually were. Start a two-week free trial to Bespoke Institutional for full access to our research and interactive tools.

In Tuesday’s Closer, we covered the New York Fed’s quarterly consumer credit data. While less expansive, also out earlier this week was the higher frequency monthly mortgage data from data and analytics company Black Knight. Similar to the NY Fed’s data, Black Knight’s monthly mortgage monitor for March showed that despite record jobless claims and all-around slower economic activity on behalf of the coronavirus, there had not been any sharp rise in foreclosures.  In fact, total foreclosures as a percentage of all mortgage loans were at their lowest levels since at least 2012 at only 0.41%. Additionally, most of those foreclosures were older. Only 11.7% of foreclosures were new as of March which is the lowest share since May of 2016. Although foreclosures remain historically low at the moment, some weakness does appear to be bubbling up as delinquencies are on the rise. As of March, 3.62% of all loans were delinquent up from 3.13% in February.  That is the highest level for delinquencies since last June and the first increase since March of last year. That 49 bps rise was also the largest one month increase since at least 2012.

That rise in delinquencies could filter through to a higher number of foreclosures in the future, but at the moment most non-current loans (those that are delinquent and in foreclosure) have only been delinquent for 30+ days.  Of all non-current loans, the majority (53.5%) are at least 30 days late from the payment due date which is the most since at least 2012. Another 15.4% were more than 60 days late and 20.2% are over 90 days late.  The remaining 10.9% of non-current loans are in foreclosure which is again a historically small share. Start a two-week free trial to Bespoke Institutional to access our Closer and much more.