FSI Macro

• The Wall Street Debrief

May 7

The S&P 500 closed at an ATH of 4,232.60 which was up from 4,181.17 last Friday. The big news on Friday was a pretty massive miss on non-farm payrolls. It came it significantly below expectations but markets shrugged it off and understandably so given that it takes a lot of pressure off the Fed to begin ‘thinking about thinking about’ Tapering. Jay Powell’s life was probably made significantly easier by this morning’s miss, particularly after Janet Yellen talked out of school on rates recently. Source: Page Six That being said, we think this number is usually prone to noise in normal circumstances and even more so in the anomalous times we live in. Normal markets are like the blues; steady, relatively repeatable, and predictable progressions. If you’re a musician you know that you can jam with anyone as long as you both know the 12 bar blues and your scales. This is not the case with jazz. In environments like this (blues-like or markets dominated by endogenous cycles) Wall Street that has a special advantage in a more normal environment as computing power and math are particularly valuable in these tamer cycles in making sense of data. The markets we’re living in today in the hopefully soon-to-be post-COVID-19 reality are much more like jazz. Staggered, changing tempos and things just happening when you might not expect it. The smooth consonance and steady back-beat of the blues stands in stark contrast to the sometimes dissonance or some might even say shrillness that can instantly grab your attention in an unexpected and pleasant way as the more erratic and random character of Jazz tunes are prone to rapid, sometimes uneven changes. We see this as an imperfect but useful metaphor in today’s markets. It should come as know surprise that dislocations in the labor market are occurring. Labor dislocations have happened in the wake of plagues since before the Black Death. Similarly, inflation in commodities has regularly occurred. The prices of lumber, steel, and many food items are surging. Another unique event where the Entertainment Industry and Wall Street are converging this week is the much-anticipated episode of Saturday Night Live which is featuring Tesla and Space-X CEO Elon Musk as the host along with Miley Cyrus as the musical guest and will air on May 8th. The price of some more speculative crypto assets may partially be surging in anticipation that Mr. Musk may give some shout out to the legions of retail investors who idolize him. The initial ad featured him and Miley Cyrus capitalizing on their somewhat mutually shared image as rebels and iconoclasts. However, as this video demonstrates of Ms. Cyrus, beyond all the hype and image she is an incredibly talented singer. You can take the girl out of Nashville but you can’t take the Nashville out of the girl. We think despite the hype of this Episode it will likely be two very talented people putting on an entertaining episode. We certainly don’t see it as anything more or less. This earnings season has been incredibly strong, so why have there been such lackluster performance in so many names that shatter expectations? My colleague Tom Lee will answer this delicate question below. Despite some stocks not moving as investors might like, strong earnings are strong earnings. Sell-side analysts are repeatedly upgrading earnings for the S&P 500. 87% of companies outperformed expectations which is significantly above the historical average of 65%. Energy lead in sales outperformance and was the only sector to have double digit surprise in the area. We held a webinar this week in which Tom Lee and Tom Block discussed how the re-opening of the world’s largest economy should affect stocks and which sectors should benefit most. The replay is available here. We want to thank our family of loyal and inquisitive subscribers for tuning into this event in droves. The whole team is honored by your support. The re-opening is here. Hilton’s CEO noted that “April bookings for the summer are exceeding 2019 peak levels by 10% in the US.” Folks are beginning to offices and retail properties are filling up again. This SNL episode is not a shoeshine boy moment but it does suggest Lorne Michaels might also being paying attention to on of our favorite investing themes which is the economic rise of millennials. Like Mr. Michael’s ratings, we are the stock market benefits from this rise and from the looks of it that is already occurring. Stock holdings are now 41% of household levels, the highest level on record. We think this is the beginning of a longer-term bullish trend for equities. Millennials don’t like bonds. They like crypto and stocks and as they inherit trillions of dollars they will increase holdings. Of 431 companies that have reported so far (88% of the S&P 500), 85% are beating earnings estimates by a median of 16%. On the top line, 77% are beating by an average of 7%.

• Signal from Noise

May 7

What was your first experience with valuation and markets? Was it a college finance class? Perhaps if you're a millennial, the Global Financial Crisis aroused your interest. Some may have grown up in the shadow of the world's financial center, and this industry has been at the core of their parents’ or grandparents’ livelihood. However, suppose you think back as far as you can. In that case, there's probably a decent chance that the very first 'market activity,' and we're being philosophical, not literal,  you might have experienced was haggling over baseball cards. Generations of people grew up coveting, trading, and purchasing baseball cards. They were initially given out accompanying cigarettes. When children began flocking smokers for the cards, a perennial trend was born. Topps Chewing Gum sold the first modern baseball cards with packs of gum in 1952. Their popularity grew with baseball and has since blossomed into a virtual alternative asset class. Our Signal From Noise column is predicated on finding alpha for our subscribers, and given the changing composition in methods by which companies  float their equity, we thought it was time to highlight a SPAC. Some of these deals have deserved notoriety due to aggressive forecasting, concept-driven rather than cashflow-driven investment, and more imagination than financial soundness. The name we found is not one of these SPACs. Source: Topps Investor Presentation The Topps deal with Mudrick Capital mixes a very traditional, conservative asset with exciting blockchain technology in  a way that is game-changing for profitability, yet this is not the lynchpin on which being a viable investment depends. Growth assumptions are not fantastical like some SPACs have become known for. An example would be that many EV SPACs predict to be worth $10 bn on a timeline that not even Google, one of the most successful companies in human history, could pull off. We urge you to reserve your pre-conceived notions (as is always desirable when evaluating a potential investment) of SPACs derived from facts like this to evaluate the idiosyncratic case for this particular investment. Source: Topps Investor Presentation An Iconic Brand With Valuable Consumer Connection Meets The Blockchain We have stumbled across a deal that meets many modern themes that we like while also having some very conservative aspects that reliably produce steady cash flow.  It pairs what might get a reputation as an entirely speculative element by some assessments or an indispensable tool for monetizing digital scarcity depending on who you talk to, Non-Fungible Tokens (NFTs), with a brand that can evoke emotion in the hearts of millions of consumers on par with Disney in their former CEO Michael Eisner's words. At the 30,000 feet, this deal is reminiscent of Barry Diller’s efforts with $MGM in capitalizing on a strong and well-established physical business’s transition from the analog world to the digital one. Source: Topps Investor Presentation This is a particularly special opportunity if you love baseball or grew up collecting cards. Still, even if you didn't, we try to demonstrate why we think this is a reasonably priced investment with significant upside and multiple growth opportunities that aren’t over modeled on or required to attain solvency like many SPACs. The underlying business of selling physical cards is in a definite upswing. In the first quarter EBAY saw the market for trading cards eclipse $1 billion and even more importantly active users doubled. This bodes very well for this SPAC. Also, there’s no bubble in selling  bubble gum. The company has a respectable confectionary business with margins and brand recognition that are pretty appealing. This accounts for over a third of revenue. An accretive merger here is another potential sweet surprise for shareholders and could materially contribute to growth. All the businesses are at least competitive and in many cases exceed peers by many metrics. Source: Topps Investor Presentation Despite Reputation of Aggressive SPACs, It Is An Important Trend In The Equity Asset Class Special Purpose Acquisition Companies have grown in popularity recently. They are a less cumbersome way than Initial Public Offerings (IPOs) of taking firms public, resulting in publicly traded equity shares. Some could describe the process as the result of a squabble between Wall Street and Silicon Valley, the latter of the two quite sick of paying steep fees. So far, in 2021, 84 companies have announced they will float using SPAC mergers, and 123 are using IPOs, so this is becoming more consequential for the equity asset class. On the bright side they give retail investors access to businesses they might not otherwise be able to invest in and have lower fees, which can in turn lower Weighted Average Cost of Capital (WACC). The other side of the coin is the reckless techniques in promotion and valuation that have been seen in some SPAC deals sometimes to the detriment of investors. The company’s established and defensible position and unique niche in Sports and Entertainment significantly mitigates risk in our view. Also, we believe there’s no way a ‘shakeout’ in the high-growth area of NFTs topples Topps. Not going to happen. It’s all upside, in our opinion. Source: Topps Investor Presentation SPACs tend to involve two types of candidates; strong companies with established businesses that have traded in private markets for years and exciting companies that could often more reasonably be called concepts whose valuation is dependent on the realization of pretty aggressive growth assumptions. The company being taken public via merger, in this case, makes real money selling chewing gum, ring pops, and sports collectibles/trading cards. The brand is synonymous with baseball cards in the American psyche but its sources of revenue and brand partners are diverse and steady. Source: Topps Investor Presentation  It posted sales of $567 million in 2020, which was up 23% YoY. This was the third consecutive year of growth. This was all before the firm started expanding its prowess in physical products into the digital world by offering NFT cards. The success so far has been pretty incredible after only weeks of being live. While some may consider NFT the epitome of hype, others like Michael Eisner see serious opportunity. The success of NBA Top Shots is an example of consumers developing an organic market. The same is already occurring with Topp’s NFT efforts. What is pretty cool about this opportunity is that this management team has managed to get you some pretty impressive upside in the NFT space in an incredibly lucrative and capital-light fashion. Source: Topps Investor Presentation Collectibles Boom When Consumer Balance Sheets Do (80s and 90s) The initial numbers on collectibles and trading cards are suggesting we are in the biggest bull market for these alternative assets since the boom in the 80s and 90s. If you are to purchase share in $MUDS, they will eventually trade on a share-for-share basis under the new $TOPP ticker when the deal is complete in a few months. The thing we like about this investment is that without the exciting upside and growth areas in its Digital Sports & Entertainment, Gift Cards, and upside potential in NFTs, it would still be a robust and steady business with desirable cash flow. CAPEX is next to nothing (about the cost of a decent house in California per annum), and this company has a fortress of content that it regularly monetizes and a significantly durable advantage in exclusive partnerships and contracts. Source: Topps Investor Presentation This company’s proverbial fortress of content is paired with eight decades worth of experience in monetizing it. Though best known for its physical baseball cards, it offers a vast spectrum of content to a very internationally diverse audience through partnerships and licensing. In addition to everything else this company is, it is a nuts and bolts content and licensing entertainment play with very credible plans for international expansion and the clout, relationships, and experience to implement a plan that rewards shareholders. Remember this is not in the high-growth side, it has profitable existing business growing in its own rite separate from grand plans.  There are more intangible assets than trust-building exercises or whatever happens on the Google campus. The old-fashioned kind comes with having an irreplaceable brand and a direct connection to the heartstrings of dedicated consumers. Topps is chock-full of that kind of intangible value and we think when a conservative asset like this is mixed with a high-risk, high-reward one the risk/reward profile becomes appealing. One of the benefits of this deal is also that unlike many SPACs, the financial success and interest of shareholders is not solely dependent on NFTs taking off. In fact, these things are so new that they are not included in the forecasts in a meaningful way despite their game-changing implications for the business. So, you’re getting this upside basically for free. The Topps NFTs have only been available for less than a month and the volume and amount of users so far indicates their foray will be immensely successful. This is probably why Michael Eisner has decided to keep all his shares despite nearly tripling his 2007 investment. Let us explain why it is so consequential. Right now when they release physical baseball cards, all in after all costs they are getting about a 20% profit margin. The cards they sell then go on to sell for multiples of the original price on the secondary market. In the physical market, they do not get a piece of this side of the business that has remained elusive to them but where prices are significantly higher. With NFT’s they will get perpetual royalties from every subsequent secondary market transaction. Their revenue literally just grows as the market does and it’s a much higher margin segment. With the additional revenue and reduced costs the profit margin triples and goes to 60% when selling NFTs. This is game changing even if it takes a while to successfully migrate the physical business to NFT. When you think of it that way and pair the exciting growth opportunities, this seems relatively cheap. The most similar recent play would be PLBY and look at how it has performed. We're thinking for monetization purposes, particularly since PLBY completely abandoned its legacy business, the Topps brand is just as compelling if not more so since its existing business segments are profitable and growing. Also, virtually no CAPEX is required, which means this name is trading at only around 13x un-levered FCF and about 14x the adjusted 2021 EBITDA target. Topps Recent History and Michael Eisner’s Involvement The year 2007 was pretty instrumental for the investing world. Far away were the days of SPACs and NFTs. A little-known saga of this year was that hedge funds on Wall Street were besieging a true American darling, baseball card, and confectionary making Topps. A mighty white knight organized a way to save the beloved company. A private equity firm called Madison Dearborn Partners LLC partnered with freshly former Walt Disney CEO Michael Eisner to purchase the iconic baseball card maker Topps for $385 million. Many have never been in the position of tripling an investment of such a prodigious size, but it stands to reason that not cashing in would require great confidence in the plan going forward. Their partner is required by covenant to exit, but as we noted Eisner isn’t selling a share. Even more impressive is that his partner Mudrick Capital is voluntarily committing an additional $100 million of its own money to the investment, a rarity for SPAC deals in which partners usually want to take the money and run! The insider enthusiasm bodes well for this fixture of Americana. Risks And Where We Could Be Wrong It is possible that the upside in NFTs never materializes and that it proves to be a passing fad. However, we and our very experienced crypto team think is unlikely. Scarcity is scarcity and it is the same thing that makes one nearly identical glossy baseball card printed on cardboard worth significantly more than the other. Its application in the digital realm is important and nascent and we think the model that Topps and Mudrick Capital have developed going forward is incredibly lucrative and will likely be beneficial to shareholders. As we stated, we think downside risk is significantly mitigated by the entrenched position of the legacy businesses and powerful brand value and recognition. Even more so, like many Epicenter names this company has a special relationship with its consumers that has persisted through all the turmoil the 20th century could muster. We think it will last well into the 21st in a reinvigorated, and more profitable fashion as well. There is of course also the risk that the height of interest in trading cards and sports collectibles has for some reason passed and the company’s revenue will slowly fade. We find this unlikely. We think there are definitely risks to the cycles of valuation in what can be a wild market. As Topps begins to get more revenue from secondary market transactions it will become more exposed to the underlying cyclicality of the pricing of the digital collectibles.

• First Word

May 7

Click HERE to access the FSInsight COVID-19 Daily Chartbook. We are shifting to a 4-day a week publication schedule: MondayTuesdayWednesdaySKIP THURSDAYFriday STRATEGY:  1Q2021 Earnings don't matter as 1Q2020 not realistic comp -- 2Q2021, 3Q2021 matter way moreCDC projecting a surge in COVID-19 cases through June 2021 and then a collapseThe CDC has provided updated projections for COVID-19 cases and it is an interesting forecast:- CDC sees a surge in US cases, nearly doubling vs today's level from May to June- this is due to the spread of more contagious variants- then July to Sep, an utter collapse in COVID-19 to near zero levels- this is due to the cumulative impact of the vaccination effort Source: /health/cdc-projects-sharp-decline-coronavirus-cases-by-julyThe forecast from the CDC report is below.  And the most eye catching is the forecasted double of USA cases from today to early June.- do we think this could happen?- maybe, but this is an out of left field projection- is the CDC trying to scare people into compliance? Whatever the case, if the CDC forecast is right, this will be a headwind for equity markets.   But do we think this is credible?  The following is my opinion, and only my opinion --> No and it seems almost borderline ludicrous.- CDC has been slow to lift recommendations- CDC is restricting cruises, but allowing sports and indoor dining- CDC was ignoring science around outdoor transmission and requiring masks, until Dr. Scott Gottlieb commented Source: /mmwr/volumes/70/wr/mm7019e3. htm?s_cid=mm7019e3_wFor a sanity check, the IHME, which is one of the principal forecasters for the White House sees no future surge in infections.  In fact:- the IHME baseline is a continuing collapse in USA cases- if IHME is right, Epicenter will continue to rally Source:  1Q2021 Earnings don't matter as 1Q2020 not realistic comp -- 2Q2021, 3Q2021 matter way moreMany clients are concerned that stocks are peaking, because stocks are not reacting to strong EPS results, and in fact, selling off.  I can think of at least 7 reasons that stocks do not have to react to great results -- of which, only 2 are actually bad signs. But in my opinion, the main reason stocks are not reacting to 1Q2021 results is that the year ago comparison is to March 2020.  That was 6 weeks into the economic shutdown:- do comparisons vs the first stage of pandemic collapse matter?- like do we think EPS beats/growth vs that horrific period matter? Realistically, I think the YoY vs 1Q2020 is just simply going to look mental.  So I would not place much weight on the results.  And to me, it seems like equity markets are reacting as such. - 2Q2020 and 3Q2020 are more important year ago periods- thus, 2Q2021 and 3Q2021 are more important EPS comparisonAnd if you are wondering what the fuller list of possible reasons of why stocks do not react to EPS, this is the list below:On earnings, it could mean a few things:1. bad —> good news priced in2. bad —> no shorts have to cover3. medium —> incremental buyer doesn’t care for earnings thus no reaction4. medium —> market trying to process hairs of inflation5. good —> people aren’t chasing earnings6. good —> retail getting smarter and not chasing earnings7. good --> Nobody cares about comparisons to March 2020...1Q2021 EPS has beating by +19%, which any other time period, is considered extraordinary1Q2021 EPS results have come in +19% above Street consensus -- clearly strong results.  And the upside has been strongest in the Cyclicals:- Defensives         +8% - Near-Cyclicals  +41%- Cyclicals           +27%In any other year, the beats, even by Defensives would be considered extraordinary.  But as many know, stocks have not necessarily outperformed despite these strong beats. ... since 1Q2021 EPS season started, Epicenter has been leadingFor us, earnings season really starts with JPMorgan, which reported on 4/13/2021 -- might just be tradition, since I worked at JPMorgan for >15 years.  And the performance of sectors is shown below since 4/13/2021:- Leading have been Energy, Materials and Financials +9%/+8%/+7%, respectively- Worst are Technology/Discretionary down -4%/-2%, respectivelySo, there have been strong responses by stocks to EPS results, but it has been the Epicenter groups. STRATEGY:  Structural tailwind for Energy.  Per Rystad, $300 billion of Oil capex taken out since 2020 = 4mbpd deficit by 2022So Epicenter is leading and performing very strongly.  In fact, for the first time in nearly 6 months, we are also finding institutional investors becoming incrementally curious about Energy stocks.  And as many of our clients know, energy is a sector investors have largely ignored for the past decade and this was especially true since the pandemic started.   But the building structural tailwinds are simply too hard to ignore. Rystad Energy --> Oil sector cut $300 billion in capex since COVID-19Rystad Energy (rystadenergy. com), and independent Energy research boutique, headed by Jarand Rystad, published a report today that points out the E&P sector has cut investment (capex) by $300 billion since the start of COVID-19.  And in their words, this cut in capex will have lasting impact There is quite a lot of good material in this report and we hope to do a joint webinar with Rystad in coming weeks, so we can more fully explore their views and analysis.  But among the key charts, it is this capex model below:- post-COVID-19, global E&P capex was but by $145 billion in 2020 and $140 billion in 2021- this level set lower is creating a long-term structural gap of lower spendingThis has not been reversed -- and thus, the structural deficit is set to cumulatively increase over the next several years.  This will only reverse when capex spending is level set higher. ... North American oil production is set to fall by 3.0mbpd by 2022 = one OPEC producerThe global impact on production will become staggering over time.  Take a look at the impact on North America production alone.  By Rystad's estimates, the decline in 2021 production could be 3.0mbpd.- this exceeds the production of OPEC members Iran and Kuwait- and is roughly equal to the production of Brazil, UAE and Iran The top 10 largest oil producers is shown below (2020 figures, per EIA.  And you can see, the 3.0mbpd drop forecast is equal to losing a top 10 producer. - let's not dismiss this- this is a huge structural deficit forming ... who benefits from higher Capex? Oilfield Services (ETF proxy OIH)So this is a sizable gap being created in 2022 and beyond.  The only fix to this is a jump in capex.  By the way, what companies benefit from a rise in capex?  It is pretty much the entire Energy complex:- Integrated --> higher oil prices + higher expected return on capex- E&P --> benefit from higher capex- Oilfield services --> benefit from higher capexSo, this is an obvious statement.  But if this structural deficit is correct, the entire Energy sector is a buy.  This is the first real alignment of supply and demand for the sector in more than 20 years:- for past 10 years, US production ramped up --> supply excess- now capex deficit since 2020 creating deficit --> and existing production facing declines- White House make expanded production heading --> less supply- financial capital dwindling for sector --> private equity bailed out sector in 2016 and lost their shirtsBut we know that the equilibrium is a rising oil price and higher value capture of existing companies. This is an environment for Energy stocks to continue to surge.  We have shown the comparative price of oil (WTI) vs OIH:- at $70 oil, OIH never <$450- at $80 oil, OIH never <$600 In fact, if OIH were simply to reset to end of 2019 levels, OIH would be $269, or ~30% upside.  In other words, OIH risk/reward, to us, seems very attractive.- stay overweight $OIH and $XLE ADDENDUM: We are attaching the stock lists for our 3 portfolios:We get several requests to give the updated list for our stock portfolios.  We are including the links here: - Granny Shots  -->       core stocks, based on 6 thematic/tactical portfolios- Trifecta epicenter  --> based on the convergence of Quant (tireless Ken), Rauscher (Global strategy), Technicals- Violence in USA --> companies that are involved in some aspect of home or personal security. We are not recommending these stocks, but rather, bringing these stocks to your attention. Granny Shots:Full stock list here --> Click here Trifecta Epicenter (*):Full stock list here --> Click here Power Epicenter Trifecta 35 (*): Full stock list here --> Click here Violence in USA:Full stock list here --> Click here(*) Please note that the stocks rated OW on this list meet the requirements of our investment theme as of the publication date. We do not monitor this list day by day. A stock taken off this list means it no longer meets our investment criteria, but not necessarily that it is neutral rated or should be sold. Please consult your financial advisor to discuss your risk tolerance and other factors that characterize your unique investment profile. POINT 1: Daily COVID-19 cases 42,014, -12,347 vs 7D ago... 7D delta start to accelerate to the downside again..._____________________________Current Trends -- COVID-19 cases: - Daily cases    42,014 vs 54,361 7D ago, down -12,347- 7D positivity rate   3.7% vs 4.1% 7D ago- Hospitalized patients   34,056  down -9.5% vs 7D ago- Daily deaths    670,  up +1.5% vs 7D ago_____________________________- The latest COVID-19 daily cases came in at 42,014, down -12,347 vs 7D ago.- The US continues to see a steady decline in daily cases. The 7D delta has been negative in the past 23 days. In the past few days, the 7D delta has been accelerating to the downside again. If this speed of decline persists, we could see the daily cases drop sub-20k by mid-May.- As we wrote before, at this stage of pandemic, as long as vaccinations work, eventually the rollout of the vaccines will lead to a decline in the pervasiveness of the COVID pandemic. And according to the recent data, this decline seems to finally arrive. 7D delta in daily cases has turned negative in the past 23 days... The US continues to see a steady decline in daily cases. The 7D delta has been negative in the past 23 days. In the past few days, the 7D delta has been accelerating to the downside again. If this speed of decline persists, we could see the daily cases drop sub-20k by mid-May.   US hospitalization still rolling over ... and even US deaths seem to be rolling over... Below we show the aggregate patients who are currently hospitalized due to COVID. After a mini-surge in March, the number of patients currently hospitalized starts to roll over again. Compared to the wave 3 peak, it has fallen significantly.    POINT 2: VACCINE: all states reached ~60% infected + vaccinated... Nearly one-third of Americans have been fully vaccinated..._____________________________Current Trends -- Vaccinations: Vaccinations ramping steadily- avg 2.1 million this past week vs 2.6 million last week- overall, 32.6% fully vaccinated, 44.7% 1-dose+ received_____________________________Vaccination frontier update --> all states now near or above 60% combined penetration (vaccines + infections)Below we sorted the states by the combined penetration (vaccinations + infections).  As we commented in the past, the key figure is the combined value >60%, which is presumably near herd immunity.  That is, the combined value of infections + vaccinations as % population > 60%.- Currently, all states are at this level- RI, SD, MA, ND, CT, NJ, DE, NY, IL and NM  are now above 90% combined penetration (vaccines + infections)- So gradually, the US is getting to that threshold of presumable herd immunity All states have reached 60% combined vaccination + infection. Besides, 92.7% of US states (based on state population) have seen combined infection and vaccination >70% and 60.7% of US states have seen combined infection and vaccination >80%.  As the chart below highlights, the US is seeing steady forward progress and this figure continues to rise steadily. There were a total of 2,391,083 doses administered on Thursday. The 7D moving average has been trending downward since mid-April. It could be caused by the pause of JNJ vaccines or/and the vaccine hesitancy resulted from the JNJ vaccines. As both CDC and FDA lifted the recommended pause of JNJ vaccines, the vaccination pace could re-accelerate again in the near future. 95.5% of the US has seen 1-dose penetration >35%... To better illustrate the actual footprint of the US vaccination effort, we have a time series showing the percent of the US with at least 25%/30%/35% of its residents fully vaccinated, displayed as the orange line on the chart. Currently, 97.6% of US states have seen 25% of their residents fully vaccinated.   However, when looking at the percentage of the US with at least 30% of its residents fully vaccinated, this figure is 72.3%. And only 25.3% of US (by state population) have seen 35% of its residents fully vaccinated.- While 95.5% of US states have seen vaccine penetration >35%, 73.2% of them have seen 1 dose penetration >40% and 48.6% of them have seen 1 dose penetration > 45%.- 97.6% of the US has at least 25% of its residents fully vaccinated, However, only 72.3% of US has fully vaccinated >30% and 25.3% of US has fully vaccinated >35%.- This is still a small figure but this figure is rising sharply now. This is the state by state data below, showing information for states with one dose and for those with two doses. The ratio of vaccinations/ daily confirmed cases is generally trending higher (red line is 7D moving avg) and this is the most encouraging statistic. - the 7D moving average is about ~40 for the past few days- this means 40 vaccines dosed for every 1 confirmed caseThis figure is rising nicely and likely surges in the coming weeks In total, about 148 million Americans have received at least 1 dose of a vaccine.  This is a good pace and as we noted previously, implies 50% of the population by mid-May.   POINT 3: Tracking un-restricted and restriction-lifted statesWe are changing Point #3 to focus primarily on tracking the lifting of restrictions, as states begin to ease various mandates.  Keep in mind, easing/lifting restrictions can take multiple forms:- easing indoor capacity- opening theaters, gyms, salons, saloons- eliminating capacity restrictions- eliminating mask mandatesSo there is a spectrum of approaches.  Our team is listing 3 tiers of states and these are shown below.  - states that eased in 2020: AK, OK, MO, FL, TN- states that eased start 2021 to now: SD, ND, NB, ID, MT, IA, NC, MS, SC, AZ, TX, MD- states that announced future easing dates: GA, NY, WI, AR, CA, AL, CTGROUP 1:  States that eased restrictions in 2020... The daily case trends in these states is impressive and it is difficult to say that lifting restrictions has actually caused a new wave of cases.  Rather, the case trends in these states look like other states. GROUP 2: States that have eased all restrictions in 2021 to now... Similar to the list of states above, the daily case trends in these states are impressive and it is difficult to say that lifting restrictions has actually caused a new wave of cases.  - we have previously written about how ND and SD, in particular, have seen an utter obliteration of COVID-19 cases in those states- that seems to be a function of vaccine penetration + infection penetration, leading to something akin to herd immunity GROUP 3: States that are still easing restrictions in 2021... These states have upcoming dates to ease restrictions.  The dates are indicated on each chart.  The cases trends in these states have been mostly positive, with perhaps the exception of NY state:- NY state case levels seem awfully stubborn at these high levels- weather is improving in NY area, so if weather has any effect on virus transmission, it should slow cases

• Earnings Daily

May 7

Click HERE for a full copy of this report in PDF format. •  136 companies are reporting this week.•  Of the 431 companies that have reported so far (88% of the S&P 500), 85% are beating earnings estimates by a median of 16%.•  On the top line, 77% are beating by an average of 7%.