Articles tagged as
FSI Pro
- BitDigest
Coinbase lists on Nasdaq closing with a $85 billion valuationPowell calls crypto speculative assets while questioning value of goldBrazil making progress on CBDC Weekly Stock Update COIN Ends First Day with $85.7 Billion ValuationI spent most of yesterday morning sitting at my desk, waiting for Coinbase (NASDAQ: COIN) to start trading. At 1:25 PM, COIN posted its first trade at $381, 52% above the pre-announced reference price, and I watched with excitement as prices began to post on my screen.$385, $390, $395 within minutes COIN was gaining. It broke $400 and continued its upward trend. $410, $420, $425. COIN finally hit $429, hitting a first day high of $429.54 but that’s when the declines began suddenly falling below $400. The rest of the day saw a gradual decline, hitting a low of $310 just after 3 PM, before recovering and ending the day at $328.28.I’ll admit, my initial exuberance turned into disappoint as I watch COIN fall from the early morning highs, but as I think about this this morning, COIN’s first day performance was really a great success and milestone to my crypto journey. A cryptocurrency exchange, a trading service for a new digital money that only a few years early was being attacked and criticized by almost everyone on Wall Street (and many looking to get their names in the news) had ended its first day with a valuation above $85 billion – an incredible success! Looking through yesterday’s trading picture, I came away with several thoughts: Although a direct listing appears to be a more complicated process – at least due to the order matching on opening day – I truly believe this is the future of public listings. It maintains greater control over the valuation with the company during the final funding rounds and eliminates the risk that of a sale at a more conservative price that escalates benefiting traders and not the company during the first session. Ahead of COIN’s opening, publicly traded crypto stocks were down, signaling that these public alternatives to bitcoin are potentially being replaced by a better market proxy.I was reminded of the impact that liquidity brings to capital markets. All morning, FTX’s COIN stock-token was trading above $500, but as ‘Mr. Market’ entered the picture, the true price was immediately discovered. Although Coinbase received 96% of its 2020 revenue from transaction fees, CEO Brian Armstrong says the company has not seen any margin compression and does not “expect to see it in the short and the mid term;” in the long-term he says fee compression is likely, but explains that within 5 – 10 years, 50% or more of revenue could be derived from other offerings like debit cards and yield providing products. Lots of friends and industry colleagues were on TV and in the news speaking about this great moment in crypto’s history, but with every positive cheer and clanging of champagne glasses was the recognition that regulation is coming and will be the future topic of discussion. Opinions change. The idea originating by a group of ‘cypherpunks’ in the 90’s has revolutionized the financial world. My past several years of advocating for a new digital currency backed financial system is really gaining acceptance. One last point on COIN, in celebration of yesterday’s listing and as a nod to Satoshi Nakamoto’s decision to add a message into bitcoin’s Genesis block, Coinbase had a message embedded in the bitcoin blockchain yesterday, adding “NYTimes 10/Mar/2021 House Gives Final Approval to Biden’s $1.9T Pandemic Relief Bill” into block height 679187. The Headlines Thoughts on the Ecosystem
- Earnings Daily
FSInsight 1Q21 Daily Earnings Update – 04/15/2021
Click HERE for a full copy of this report in PDF format. • 24 companies are reporting this week.• Of the 27 companies that have reported so far (5% of the S&P 500), 88% are beating earnings estimates by a median of 14%.• On the top line, 74% are beating by an average of 7%.
- BitDigest
April 14 · Issue #880
Bitcoin and ether hit new highs driving crypto marketcao above $2.2 trillion as the market awaits Coinbase’s Nasdaq listingCrypto Mom issues update to proposed Token Safe Harbor Proposal Republican House Leader says idea that you can ignore digital currencies and they will go away has not worked Happy Coinbase Listing Day! Having spent the majority of my time (including many early mornings) over the past several years focusing on the digital currency ecosystem has been an incredible experience. It has been both exciting and gut wrenching, but as many of us remember, the first years were the hardest. We had already fallen down the proverbial rabbit hole and believed we were working to help drive a financial and technological breakthrough but we encountered constant resistance along the way. Last night I was thinking about a story about my Father (my apologies if I have written about this before.) In 1958, my Father was one of the first people to receive an American Express card. Back then it was actually a paper card but he has recounted his experience of showing a piece of paper with his name and a multi-digit account number printed on it to his Father and explaining how this card would allow him to pay for dinners and travel without the use of cash. My Grandfather could not understand what my father was trying to explain and kept telling him that no one would accept his paper card and that he would always need to pay with real money. This was probably a similar conversation to what I encountered with my Father when I told him I was interested in a digital money that had been developed by an unknown man called Satoshi Nakamoto and was not backed by any government or company. How will people use and accept it if you cannot actually touch it and how does it get its value he asked. Digital Currency Group CEO Barry Silbert often speaks about the 5 phases people go through when learning about cryptocurrencies: dismissive, skeptical, curious, believer and evangelist. As a reader of BitDigest, it is difficult to see how people can still be dismissive about digital currencies. Look no further than the ongoing developments in China, the EU and the US, digital currencies are here. Many people are still skeptical, but I think the curiosity stage is gaining the most support today especially as bitcoin reaches a new milestone with Coinbase’s direct listing. What started as a way for crypto investors to buy and sell digital currencies has evolved into a globally regulated exchange that is expected to open with a greater marketcap than Nasdaq, the Deutsche Bourse, London Stock Exchange, or Intercontinental Exchange. Over the past 9 years, Coinbase CEO Brian Armstong and the team have gone from an idea to building a multi-billion dollar financial services company allowing investors to trade and custody digital currencies in a manner similar to online trading of stocks. Congratulations and thanks to the team at Coinbase. Not only will today provide a great financial reward to management, investors and employees of the company, today is bringing further credibility to the crypto cause and will held drive us into the next ‘believer’ stage. We should all celebrate today! If you would like to learn about the history Coinbase, I recommend reading “King of Crypto: One Startup’s Quest to Take Cryptocurrency out of Silicon Valley and onto Wall Street” by Jeff John Roberts. By the way it took American Express another 19 years after issuing the first credit card to my Father for the company to go public. Pre Market Opening Update: COIN Ahead of the direct listing Coinbase provided an update regarding the total number of shares to be listed (130.7 million) and that the 68.5 million shares of Class B common stock would be “convertible, at any time, at the option of the holder, into one share of Class A common stock.”Nasdaq released notice that the reference price for Coinbase’s direct listing (COIN) is $250. As the notice states “the reference price is NOT an offering price and nobody has purchased or sold shares at that price. The opening public price will be determined based on buy and sell orders in the opening auction on Nasdaq.”Given the establishment of the reference price, everyone is asking where COIN will open. This is the billion dollar question. CNBC is reporting that the opening price on the five most significant direct listings –( Spotify (NYSE:SPOT), Slack (NYSE: WORK), Palantir (NYSE: PLTR), Asana (NYSE: ASAN) and Roblox (NYSE: RBLX)—was on average about 37% above the reference price signifying an opening price around $343, very close to the average private market price in the first quarter of $343.58Several people I spoke with suggested an opening price closer to $600 and FTX pricing for Coinbase future contracts is trading at $581 this morning (6:51 AM) so this figure may be more accurate. The market will be watching and I can assure you the COIN listing will be a leading headline in this afternoon and evenings newscasts. I am excited to watch and celebrate. The Headlines Market Data Exchange, Custody and Product News Thoughts on the Ecosystem
- First Word
COVID-19 UPDATE: Multiple reasons J&J vaccine "pause" not a recovery setback. Epicenter stocks significantly underperformed since mid-March, but EPS revisions = good and Technicals, while damaged, are still positive
Click HERE to access the FSInsight COVID-19 Daily Chartbook. We are shifting to a 4-day a week publication schedule: MondayTuesdayWednesdaySKIP THURSDAYFriday STRATEGY: Equities yesterday show fire, ready, aim still default reaction in pandemicGlobal markets were roiled yesterday by the FDA's announcement to pause the J&J vaccine, out of an abundance of caution stemming from a rare blood clot side effect detected in 6 women administered the J&J COVID-19 vaccine. This is a pretty serious blood clot called Cerebral Venous Sinus Thrombosis and is a type of stroke (Hopkins article on CVST). - overall, the media and news coverage of yesterday's events were very useful to meBut I was surprised that Street analyst commentary seemed to focus on explaining the mechanisms of how the drug might contribute to clotting, but provided little context whether these incidences are outside of normal chances, and also whether COVID-19 side effects itself were worse. Source: /2021/04/13/health/blood-clots-johnson-vaccine. html... Equities went full stay at home yesterday, selling Epicenter stocks againGiven the prospect for a delay in vaccine deployment, plus added fear by those vaccine scared and just general uncertainty around COVID-19, equity markets reacted sharply initially and even through the close:- Nasdaq 100 rallied +1.2% as stay at home and Growth became safe havens- Russell 2000 fell as much as 2.5% before closing flat, reflecting its status as an Epicenter proxy tradeIn other words, financial markets viewed the FDA pause as a setback for the Epicenter/re-opening window. I have learned not to stay too long in a fight with the tape but to me, this strikes me as a massive over-reaction. Source: Fundstrat and Bloomberg... Some reasons to view the FDA pause as really a short-term pauseWhy? There are 3 things I want to highlight. And if these prove to be correct, the J&J vaccine will likely be re-introduced to the market shortly. I am not a scientist, and I am clearly out of my area of expertise. But let me share some perspective that seemed to be overlooked yesterday:1. According to Johns Hopkins, in any year, CVST is seen in 1 in 1 million adults and 3 in 300,000 individuals under age 18 (thanks NT for the heads up) /health/conditions-and-diseases/cerebral-venous-sinus-thrombosis2. Pfizer CEO, Albert Bourla, yesterday announced PFE will deliver to USA 20 million additional doses by May and the full 300 million two weeks early, offsetting any supply shock Source: also, COVID-19 disease side effects show even more severe risk of blood clots with 7.8% pulmonary embolism, 11.2% get deep-vein thrombosis and 1.6% have a stroke Source: other words, it almost seems the risks identified with the J&J vaccine are far less than the disease itself. And perhaps more importantly, CVST is found in the US annually. I realize the pause yesterday is also an invitation for doctors to provide additional case information, so the actual incidence rate might be more than 6 of the 6.8 million vaccinated with J&J. STRATEGY: Epicenter stocks significantly underperformed since mid-March, but EPS revisions = good and Technicals, while damaged, are still positiveFor the past two to three weeks, Epicenter stocks, and the proxies IWM (Russell 2000 ETF) and XLE and OIH (Energy) have been struggling. Part of this is equity markets have become somewhat defensive, favoring stay at home and Growth stocks and yesterday's fire ready aim to the J&J vaccine pause amplified this trend. But in some ways, yesterday could be viewed as maximum negative pain for the Epicenter trend. While headlines could certainly get worse, a US vaccine getting paused is certainly optically as bad as one can imagine. And the 2.5% intraday crash of IWM is evident of this. And despite the rough two to three weeks for small-caps (IWM), the technical picture is still solid. The IWM is sitting just underneath the 50D moving average and still solidly above the 200D. So the technical picture, while damaged, is not broken. And I am sort of ignoring the potential head and shoulders pattern, simply because this is a pretty obvious pattern. Source: Fundstrat and BloombergAnd the bigger more important milestone in the coming weeks is 1Q2021 EPS season. In some ways, investors view it as officially starting with banks, which report Wednesday. And this is the first real quarter we can see operating leverage at work. - topline revenues are forecast to rise 6.5% YoY, the first real increase in revenues since the pandemic started- Granted, 1Q2020 is an easy comp because there were only two months of business during that quarter, and March 2020 was a lost monthBut companies will also talk about visibility and re-opening plans. So there will be a lot of useful information coming over the next few weeks. Source: Fundstrat and Bloomberg STRATEGY: Updating our Power Trifecta, adding net 10 stocks, now Power Trifecta 35 (*)We are updating our Power Trifecta list. In this rebalance, 3 stocks are deleted and 13 stocks are added. Thus, the total number of stocks has risen by 10 to 35. This makes sense given the recent pullback in the Epicenter names (more stocks are attractive). 3 Deletions:$PBCT, $NVT, $VNO 13 Additions:$AZO, $HOG, $GRMN, $MGM, $WH, $GPS, $LB, $VIRT, $AGCO, $OC, $UBER. $EXP, $NUE 35 Power Trifecta Stocks Ideas:Consumer Discretionary:$AZO, $HOG, $GRMN, $RL, $MGM, $NCLH, $RCL, $WH, $GPS, $LB Financials:$NYCB, $VIRT Industrials:$AGCO, $OC, $DAL, $KEX, $UBER Energy:$XOM, $HP, $NOV, $SLB, $COP, $EOG, $MRO, $MUR, $HFC, $PSX Materials:$EXP, $NUE Real Estate:$BXP, $HIW, $JBGS, $UDR, $KIM, $WRI Source: Fundstrat, Bloomberg (*) the 35 Power Epicenter Trifecta stock ideas are the subset of the original 108 Epicenter Trifecta stock list. For the full list of our original Epicenter Trifecta stock list, please click the link below. 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. For the full list of the 108 Epicenter Trifecta stock ideas, please click here 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 hereTickers: AAPL, CSCO, INTC, MXIM, NVDA, EBAY, KLAC, GRMN, GOOG, MNST, MSFT, AMZN, QCOM, TSLA, PYPL, AXP, BF/B, PM, XLNX, TGT, PG, XOM, VLO, GL, RF, ATVI, BBY, GE, AMAT, LRCX, MU, HPQ Trifecta Epicenter (*):Full stock list here --> Click hereTickers: AAP, AN, AZO, F, GM, HOG, BBY, GRMN, GPC, LEG, TPX, PHM, NWL, MAT, PII, RL, MGM, HLT, MAR, NCLH, RCL, WH, TNL, SIX, FL, GPS, KSS, LB, VFC, WTFC, ASB, FNB, PB, TFC, WBS, PACW, NYCB, MTG, EVR, IBKR, VIRT, BK, STT, BHF, AGCO, OC, ACM, WAB, GNRC, CSL, GE, GGG, IEX, PNR, CFX, DOV, MIDD, SNA, XYL, FLS, EAF, ITT, ALK, DAL, JBLU, LUV, MIC, KEX, JBHT, R, UBER, UHAL, MAN, XOM, HP, BKR, HAL, NOV, SLB, COP, EOG, FANG, HES, MRO, MUR, PXD, XEC, HFC, MPC, PSX, EXP, CF, NEU, NUE, RS, SON, IP, ARE, BXP, HIW, JBGS, ESS, UDR, KIM, NNN, O, WRI, PSA 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 72,417, +16,547 vs 7D ago..._____________________________Current Trends -- COVID-19 cases: - Daily cases 72,417 vs 55,870 7D ago, up +16,547- 7D positivity rate 5.4% vs 4.7% 7D ago- Hospitalized patients 40,902 up +5.1% vs 7D ago- Daily deaths 726, down -4.1% vs 7D ago_____________________________- The latest COVID-19 daily cases came in at 72,417, up +16,547 vs 7D ago. - 7D delta in daily cases has been fluctuated in the past few days. And yesterday this figure jumped to 16,547, the highest level since January. Looking at the state level data, Michigan is still the biggest contributor of the 7D delta jump. Michigan reported near 8,867 new cases yesterday, nearly 4,000 more than 7 days ago. Other than Michigan, Florida also reported large amount of new cases yesterday. However, the surge of daily cases in Florida is primarily due to the low number of tests reported yesterday. Hence, yesterday's surge in Florida is just a true-up.- At this stage of pandemic, vaccinations might matter more than daily case trends. As long as vaccinations work, eventually the rollout of the vaccines will lead to a decline in the pervasiveness of the COVID pandemic. Source: Fundstrat and state health departments7D delta in daily cases have been fluctuated in the past few days...- 7D delta in daily cases has been fluctuated in the past few days. And yesterday this figure jumped to 16,547, the highest level since January.- Looking at the state level data, Michigan is still the biggest contributor of the 7D delta jump. Michigan reported near 8,867 new cases yesterday, nearly 4,000 more than 7 days ago.- Other than Michigan, Florida also reported large amount of new cases yesterday. However, the surge of daily cases in Florida is primarily due to the low number of tests reported 2 days ago. Hence, yesterday's surge in Florida is just a true-up. Source: Fundstrat and state health departments 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. It has fallen significantly from the wave 3 peak. Source: Fundstrat and state health departments Source: Fundstrat and state health departments Source: Fundstrat and state health departments Source: Fundstrat and state health departmentsPOINT 2: VACCINE: 48 states near ~60% infected + vaccinated..._____________________________Current Trends -- Vaccinations: Vaccinations ramping steadily- avg 3.4 million this past week vs 3.0 million last week- overall, 22.5% fully vaccinated, 36.6% 1-dose+ received_____________________________Vaccination frontier update --> 48 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, 48 states (see below) are basically all at this level- SD, ND and RI are now above 90% combined penetration (vaccines + infections)- So slowly, the US is getting to that threshold of presumable herd immunity Source: CDC and Fundstrat Collectively, these 48 states represent about 94.8% of the US population. In fact, 66% of US states (based on state population) have seen combined infection and vaccination >70% and 14.0% 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. Source: CDC and Fundstrat There were a total of 2,580,028 doses administered on Tuesday, up from 7D ago. Overall, the pace is steadily rising, as evidenced by the 7D moving average (see blue line). In fact, the vaccination path (measured by 7D average to eliminate seasonality) has reached its all time high, on average, ~3,370,000 doses were administered on each day in the past 7 days. Source: CDC and Fundstrat ~68.6% 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 20%/25%/30% of its residents fully vaccinated, displayed as the orange line on the chart. Currently, 89.5% of US states have seen 20% of their residents fully vaccinated. However, when looking at the percentage of the US with at least 25% of its residents fully vaccinated, this figure is 20.1%. And currently only Alaska has seen 30% of its residents fully vaccinated.- While 95.2% of US states have seen vaccine penetration >30%, 68.6% of them have seen 1 dose penetration >35% and only 12.0% of them have seen 1 dose penetration > 40%.- 89.5% of the US has at least 20% of its residents fully vaccinated, However, only 20.1% of US has fully vaccinated >25%- This is still a small figure but this figure is rising sharply now. This figure could rise even more rapidly after the JNJ's 1-dose vaccines roll out. Source: CDC and Fundstrat This is the state by state data below, showing information for states with one dose and for those with two doses. Source: CDC and Fundstrat 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 ~50 for the past few days- this means 50 vaccines dosed for every 1 confirmed caseThis figure is rising nicely and likely surges in the coming weeks Source: CD and Fundstrat In total, about 121 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 May. Source: CDC and Fundstrat 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, CT GROUP 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 eased 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 announced plans ease 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
FSInsight 1Q21 Daily Earnings Update – 04/14/2021
Click HERE for a full copy of this report in PDF format. • 24 companies are reporting this week.• Of the 23 companies that have reported so far (5% of the S&P 500), 70% are beating earnings estimates by a median of 8%.• On the top line, 70% are beating by an average of 4%.
- Alpha City
Wall Street Whispers - What Our Clients Are Talking About Behind The Scenes
Introduction to Wall Street WhispersEvery week I do over twenty idea conference calls with institutional clients from all over the world. They range from tactical traders to strategic long only portfolio managers. I literally speak and interact with the best and the brightest that the money management profession has to offer, and it is one of the aspects of my job that I love the most. During these discussions, the clients are certainly interested in what my research is showing and what my views are on a host of different topics. Importantly, however, I do not just present to my clients where they passively listen to my conclusions and best ideas. The time spent is usually more of an active discussion and debate where investors are also sharing with me things they are thinking, worried about, what they own, and what they are thinking about buying and selling. Sometimes clients agree with my views and at others there is significant pushback. Because I have so much client engagement, the aggregation of the meetings can provide valuable information back to me about where the dominant thoughts and positioning of the institutional investing crowd are at that moment. I remember back when I was in graduate school and just a regular retail investor. I would wonder what it would be like to get a glimpse into what the “pros” were doing and thinking. Well, going forward, I intend to share on Tuesdays what the professional investors that I speak with are thinking and doing with their portfolios to give our FSI subscribers a peak behind the so-called institutional curtain to help our retail clients. I hope that you enjoy our new weekly note and would love to hear from you if you are finding it useful in your investment returns. So, below is this week’s comment and within it you may see some terminology that might be unknown or confusing to you. Over time, FSI will be creating a glossary of terms/vocabulary areas and some teaching sections, but for now they are still a work in progress. As we enter into the 1Q21 earnings reporting season with the S&P 500 making new all-time highs above 4100, there are a lot of concerns that are on the minds of institutional investors. Based on our work, the anxiety is unwarranted, but we will always keep alert for something that may change the immediate to medium-term direction of the overall equity market and the positioning for investors. We continue to remind subscribers that when one does not have a disciplined process to depend on, an investor can become a flag during a windy day being impacted by the direction of the day’s directional gust. At FSI, we use disciplined, objective, and data driven approaches to our research and idea generation to help our subscribers not let their emotions or the news story of the day lead to less-than-optimal decision making. With that being said, this week’s comments are below, which include the questions and issues that were brought up the most often in my institutional client meetings, and I will then follow with my responses. ISSUES The rise in interest rates has nearly disappeared from client discussions over the past. It has been our observation over the last couple of months that there was NOT excessive optimism by investors, but there was a constructive tone about the forward outlook. In my view, there has been a shift towards worry and less confidence in buying dips. The leadership in March and early-April has left investors to question their reopening and recovery positioning. As the yield on the 10-yr treasury has pulled back, there was some anxiety by clients about a potential growth disappointment. Similar to the last couple of weeks, I was pressed harder on my conviction level regarding my ongoing bullish views and my favorable outlooks for Value/Cyclicals over Secular Growth/FAANG, and SMid over Large had run their course and were over, which again seem to be coming from other forecasters and fears that others are fearful. SPECIFIC QUESTIONS What are your thoughts on the upcoming 1Q21 Earnings season that will be beginning in earnest over the next couple of weeks? Interest rates have come down in early April as your forecasted. Are you worried that there may an undershoot by the U.S. economy and a bigger growth scare? Are you still medium-term bullish? Has there been any changes in your key indicators to suggest your main themes are finished? Value/Cyclicals over Secular Growth/FAANGSMid over Large Based on your single stock earnings revision model what jumps out the most at the moment? MY ANSWERS What are your thoughts on the upcoming 1Q21 Earnings season that will be beginning in earnest over the next couple of weeks? The current consensus expectation for 1Q21 S&P 500 yr/yr growth is nearly 22%, which is impacted by the low base from last year resulting from the early COVID lockdowns. Not surprisingly, the best results are forecasted to come from more cyclicals sectors (CD, Financials, and Materials). Our work suggests that the final results will be quite robust and could end up as high as 30%. Forward guidance may not be fully optimistic, but we expect there will be a lot of commentary about less bad, clear signs of bottoming and early recovery, as well as the positive impacts of all the improved cost structures that will create significant operating leverage benefits for Corporate America. Although, there may be a handful of high-profile misses or overly conservative guidance, our research is portending final results will be quite good and help provide fuel for equity markets to keep moving higher. Interest rates have come down in early April as your forecasted. Are you worried that there may an undershoot by the U.S. economy and a bigger growth scare? NO. It has been our view that interest rates went up a bit too far too fast in March because of few specific macro reasons and that they would be flat to down during the early parts of April. Just as we did not think the rise in March was the beginning of runaway upward move in interest rates based on surging inflation, our view that the drift down in rates is not reflecting an impending growth disappointment. In my view, rates are heading higher from the abnormally low levels that accompanied the forced Pandemic economic lockdowns and will be normalizing during 2021, and possibly beyond. This expected rise in interest rates will not likely be in straight line, but stair stepped higher as the economic and inflation ebb and flow for the remainder of the year. Are you still medium-term bullish? YES, as I have been stating, my work remains quite constructive on the U.S. equity market and I have been viewing the challenging March price action opportunistically. Not only has there is little to no evidence in all of my key indicators that a major market top is imminent, but my most important tools have been getting even more bullish — HALO, HALO-2, and V-squared (see explanations at the end of the note) are all flashing positive signals and are not extreme. Have there been any changes in your key indicators to suggest your main themes are finished? Value/Cyclicals over Secular Growth/FAANGSMid over Large NO, there has been zero change in my key earnings revisions data that would suggest that my main themes from above are no longer relevant and that investors should reposition. What I have seen in my more tactical indicators is that preferred positioning and ideas were tactically extended and extreme on a relative price performance basis, which suggested that pauses/consolidations/counter trend pullbacks could occur. In my view, these types of moves are healthy and provide investors with a chance to raise exposure. Importantly, my work is not overly dominated by technical analysis, the macro story of the day, or tactical price movements. Thus, during times like these when there are sharp and sudden reversals in leadership, I find having a disciplined and objective process quite value added in filtering through the noise and increase in volatility. Thus, my work strongly suggests that using weakness to raise exposure in Value/Cyclicals/Recovery Plays and moving down the cap scale will reward investors with patience and conviction to do so. Based on your single stock earnings revision model what jumps out the most at the moment? Energy — there has been no deterioration of the favorable readings that we have been commenting on the past several months. My work would suggest that the recent underperformance by Energy stocks has simply been a healthy pullback from tactically overbought conditions and not an END move, which is setting up as a buy the dip for the sector. Materials — similar to Energy, the sector continues to show strength and there are still a healthy number of interesting names in Chemicals, Industrial Metals (Copper/Steel/Aluminum), Fertilizers, and Packaging. Industrials — The number of higher quality Machinery and Capital Goods names remains quite broad based, as well as transportation related (Airlines, Air Freight, UBER/LYFT). Building products is also an area of strength (ALLE, AOS, FBHS, JCI, MAS). The work continues to like the three big “uglies” within the sector — BA, GE, and MMM. NEW this month is that the Defense names are now looking better, and despite our preference to be more economically sensitive there is no denying that GD, LMT, and NOC are now favorable. Consumer Discretionary — the work is still flagging compelling names in Auto/Related, the entire travel/vacation space (Cruise Lines/Casinos/Hotels/Travel companies), Restaurants, and many Retailers. NEW this month is that the Automotive Retailers have improved (AAP, AZO, KMX, and ORLY). Technology — despite the recent price volatility, the sector still shows broad based strength that is dominated by more cyclical areas including the Semi-cap equip and Chips, as well as Hardware, Electronic Equip & Instruments, Electronic Components, Electronic Manufacturing Svcs, and Tech Distributors. There were some new signs of warning that did show up in several names in Application Software for the first time that definitely caught our attention and will closely monitor. Two names that our work is strongly suggesting will start to act better are MA and V. For the LC Growth/FAANG investors, MSFT and AAPL within Tech still look quite favorable, as well as GOOGL and FB with Comm Services. Financials — the sector’s favorable names are quite broad based including the Banks (both money center and regionals), Investment Banks/Brokers, Credit Cards (AXP, COF, DFS), and NEW this month is that there has been some improvement in the insurance sub-industries. We have been commenting that it was our view that interest rates would be flat to down during April relative to the highs seen in March, and that this would likely lead to the sector underperforming. Similar to my comments on Energy, I am viewing this weakness simply as a healthy pullback from tactically overbought conditions and not an END move, which is setting up a buy the dip for the sector. The areas that have the least number of favorable names remains Health Care, Staples, Utilities, legacy Telecom, and Real Estate as I have been highlighting since April 2020. If one is looking for exposure within these sectors, there are some single stock ideas that do look like interesting opportunities, but it does take some digging. Bottom line: Stay the course. Our main themes of higher markets, Value/Cyclicals over Growth/FAANG, and SMid over large are still intact. There may be some volatility and headline risk over the next couple of weeks as Corporate America starts reporting their 1Q21 results. We will look to buy relative weakness in the sectors/stocks that my work continues to flag as favorable and avoid the areas that have unfavorable indicators. As we shift into Spring/Summer and the likelihood that the broad country-wide vaccination deployment accelerates, the odds of moving more towards recovery rise each day. Let’s be ready to seize the opportunity to achieve superior market beating returns.
- BitDigest
April 13 · Issue #879
Interest around Coinbase listing drives bitcoin to new highsEIB looking to issue and settle bonds on blockchainBinance begins to offer fractionalized stock-token trading Crypto Fear & Greed IndexThe Fear & Greed Index for bitcoin and other large cryptocurrencies is down 1 point this week signify no real change in the crypto sentiment metric. Throughout the month of April, the Index has remained in a stable 70 – 76 “greed” range even though several top traded digital currencies have hit new highs. I am expecting the index to increase over the next 48 hours especially given the excitement about Wednesday’s Coinbase direct listing. Are You Being Paid in Bitcoin? In light of Jim Cramer’s threat to ‘demand’ his salary in bitcoin (see below), I am looking for a payment service that allows employers to pay a percentage of an employee’s salary in cryptocurrencies. If anyone knows of a company offering this service, please tell me. The Headlines Exchange, Custody and Product News Thoughts on the Ecosystem
- First Word
COVID-19 UPDATE: Global cases within 8% of all-time highs, even as USA down 80%. Energy down 8 of the last 10 days, in past 20 years >8 of last 10 days point to strong 3M gains
Click HERE to access the FSInsight COVID-19 Daily Chartbook. We are shifting to a 4-day a week publication schedule: MondayTuesdayWednesdaySKIP THURSDAYFriday STRATEGY: Energy down 8 of the last 10 days, in past 20 years >8 of last 10 days point to strong 3M gainsDaily vaccinations hit an all-time high again in the US at 3,200,732 (based on 7D average). If there is anything we have learned over the past year, forecasting COVID-19 has been virtually impossible, in part because of the multiple effects of population behavior, plus weather (seasonal effects) plus mutations. On the other hand, research continues to support that those infected and those vaccinated are less likely to: spread and catch the disease. And if one does catch it, while vaccinated or re-infected (rare), severity can be reduced. Thus, the cumulative impact of infections and vaccinations should be reducing the overall impact of COVID-19 in terms of hospitalizations. Michigan is of particular focus at the moment because cases and hospitalizations are surging and likely to take out prior all-time highs. The rare state that is seeing this happen.- But Michigan is also among the states with the lowest combined infections + vaccinations at ~60%- States with higher combined ratios have an exponentially lower rate of hospitalizations- ND, SD and RI have the highest combined ratio and only 93 hospitalized per million- states with 60%-65% combined are 1,689 per 1mm. Huge difference. So again, it appears vaccinations are having a positive impact. ... do restrictions make a difference? Again, Michigan is an outlier because the state has in place some of the strictest restrictions, and yet, daily cases are surging to new highs. While the CDC today called for Michigan to shut down and not get extra vaccines.- shutting down is a blunt instrument- and other states have not pursued shutdowns and yet have managed to contain the virus Source: NY TimesAnd we realize that guidance from trusted advisors is important to heed. However, not all the advice given by these advisors has been necessarily correct. Today, Dr Fauci reiterated his view that indoor dining is not safe. Below is a link to an interview he did on MSNBC. His rationale is reasonable, that since daily cases are high, Americans should not be taking unnecessary risks.- but the key question is whether indoor dining is actually a source of infection spread- there have not been any recent studies that have made this evident one way or another Source: fact, recall the White House and advisors all expected Texas to have a massive new surge after lifting restrictions on March 14th, 2021. Even Dr. Fauci called it risky and potentially dangerous.- yet, a month later, Dr. Fauci is not sure why Texas doesn't have a COVID-19 uptickI am not disagreeing with Dr. Fauci and his advice. He has been offering sage advice. However, I am not very comfortable with the idea that US policy makers’ solution to an outbreak is shut things down again -- ala Europe. That has caused fits and starts in Europe, lots of protests and ultimately, a mixed outcome in terms of the disease. Source:/news-fauci-texas-covid-surge-trigger/ COVID-19 looks to be approaching an all-time high in cases again... US has managed to stem the surge in cases, via vaccinations. While cases are not down to zero in the US, the mitigation has been enough for the US to pursue largely opening the economy by mid-June. Asia has been largely able to contain COVID-19, using their restrictive measures. Similarly, Australia. - this chart shows US is among the highest globally in terms of % of adults vaccinated (>1 dose)- Israel, Chile and UK are higher But as the global case count below shows, COVID-19 is still spreading wildly and prolifically across the World. In fact, the 7-day avg cases of 670,000 (and rising rapidly) is not that far from the all-time high of 728,000 seen in December 2020.- the difference is Latin America and India+Pakistan are accounting for this recent surge As shown below, India is now #2 in the world for daily cases. And just edging out Latin America. Both places are reporting >150,000 cases per day. This is about 3X the US average. STRATEGY: Energy has been down 8 of the last 10 days, something only seen 3.5% of trading sessions in past 20 yearsEnergy has fallen in 8 of the last 10 trading sessions as shown below. The total decline has been 4.5% but the streak of 8 of 10 days is notable. Overall, Energy has been acting heavy and the sector still does not have broad acceptance by institutional investors, despite being the best performing sector YTD and the sector with the strongest EPS revisions YTD (see note from yesterday). Multiple headwinds can be cited by investors from:- oil has stalled- COVID-19 outbreak could resurge, hurting re-opening- EV and ESG is going to eliminate the sector- Oil companies are bad businesses- stocks are too small to be part of the benchmarkEnergy (ETF XLE) is hovering near the 50-day moving average at $47.81 vs $48.07, so we are at this important decision point for XLE. - The last such decision point was in late January, and at that time, XLE then surged 40%We might be able to discern a clue to Energy's next move, based upon the fact it is down 8 of last 10 days. Looking at the last 20 years, whenever XLE is down 8 of last 10 days, or more, the forward returns for XLE are quite strong:- down 8 of last 10 days, 3M forward 2.7% (3.5% instances)- down 9 of last 10 days, 3M forward 7.1% (0.5% instances)- down 10 of last 10 days, 3M forward 10.8% (only 2 times in 20 years)So you can see, we are reaching a point where Energy is extremely oversold. And this, coupled:- with positive EPS revisions- positive fundamental upside (demand)- supply constraints- negative sentiment And we think Energy is worth enduring, despite the recent material decline in the stocks. Source: Fundstrat and BloombergThe bigger picture, in our view, remains supportive of Energy. As we discussed in our 2021 outlook, Energy has a favorable alignment of supply and demand taking place. Supply is constrained both by the White House (favors renewables) and capital markets (few projects funded) while demand could surprise later this year as the economy re-opens and jet travel resumes.- Energy (XLE) is touching its 50D moving average- This touch happened in late-Jan, and as we noted above, was followed by a strong rally- We think this touch will also play out in a similar way Source: Fundstrat and Bloomberg... Earnings season starts this week and Energy is by far the sector with the best EPS revisionsEarnings season will kick off this week and we expanded the EPS trends to show all sectors below. This chart is calendar 2021 EPS and the revisions since the start of the year:- S&P 500 EPS estimates are up 6%- Energy is up 83%- Basic Materials is up 14%No other sector is even close. STRATEGY: Updating our Power Trifecta, adding net 10 stocks, now Power Trifecta 35 (*)We are updating our Power Trifecta list. In this rebalance, 3 stocks are deleted and 13 stocks are added. Thus, the total number of stocks has risen by 10 to 35. This makes sense given the recent pullback in the Epicenter names (more stocks are attractive). 3 Deletions:$PBCT, $NVT, $VNO 13 Additions:$AZO, $HOG, $GRMN, $MGM, $WH, $GPS, $LB, $VIRT, $AGCO, $OC, $UBER. $EXP, $NUE 35 Power Trifecta Stocks Ideas:Consumer Discretionary:$AZO, $HOG, $GRMN, $RL, $MGM, $NCLH, $RCL, $WH, $GPS, $LB Financials:$NYCB, $VIRT Industrials:$AGCO, $OC, $DAL, $KEX, $UBER Energy:$XOM, $HP, $NOV, $SLB, $COP, $EOG, $MRO, $MUR, $HFC, $PSX Materials:$EXP, $NUE Real Estate:$BXP, $HIW, $JBGS, $UDR, $KIM, $WRI Source: Fundstrat, Bloomberg (*) the 35 Power Epicenter Trifecta stock ideas are the subset of the original 108 Epicenter Trifecta stock list. For the full list of our original Epicenter Trifecta stock list, please click the link below. 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. For the full list of the 108 Epicenter Trifecta stock ideas, please click here 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 hereTickers: AAPL, CSCO, INTC, MXIM, NVDA, EBAY, KLAC, GRMN, GOOG, MNST, MSFT, AMZN, QCOM, TSLA, PYPL, AXP, BF/B, PM, XLNX, TGT, PG, XOM, VLO, GL, RF, ATVI, BBY, GE, AMAT, LRCX, MU, HPQ Trifecta Epicenter (*):Full stock list here --> Click hereTickers: AAP, AN, AZO, F, GM, HOG, BBY, GRMN, GPC, LEG, TPX, PHM, NWL, MAT, PII, RL, MGM, HLT, MAR, NCLH, RCL, WH, TNL, SIX, FL, GPS, KSS, LB, VFC, WTFC, ASB, FNB, PB, TFC, WBS, PACW, NYCB, MTG, EVR, IBKR, VIRT, BK, STT, BHF, AGCO, OC, ACM, WAB, GNRC, CSL, GE, GGG, IEX, PNR, CFX, DOV, MIDD, SNA, XYL, FLS, EAF, ITT, ALK, DAL, JBLU, LUV, MIC, KEX, JBHT, R, UBER, UHAL, MAN, XOM, HP, BKR, HAL, NOV, SLB, COP, EOG, FANG, HES, MRO, MUR, PXD, XEC, HFC, MPC, PSX, EXP, CF, NEU, NUE, RS, SON, IP, ARE, BXP, HIW, JBGS, ESS, UDR, KIM, NNN, O, WRI, PSA 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 61,389, -4,794 vs 7D ago... Easter is throwing off the 7D delta... case trends still stable_____________________________Current Trends -- COVID-19 cases: - Daily cases 61,389 vs 66,183 7D ago, down -4,794- 7D positivity rate 5.2% vs 4.7% 7D ago- Hospitalized patients 39,726 up +7.1% vs 7D ago- Daily deaths 717, down -5.9% vs 7D ago_____________________________- The latest COVID-19 daily cases came in at 61,389, down -4,794 vs 7D ago. - 7D delta in daily cases has been fluctuated in the past few days. This was primarily due to the data distortion 7D ago (in observance of the holidays). That said, the overall case trend is still stable. The positivity rate has been flat-lined, at ~5%, since the start of March. The number of currently hospitalized people has been up slightly, while the number of daily deaths continues to trend downward.- At this stage of pandemic, vaccinations might matter more than daily case trends. As long as vaccinations work, eventually the rollout of the vaccines will lead to a decline in the pervasiveness of the COVID pandemic. Source: Fundstrat and state health departments7D delta in daily cases have been fluctuated in the past few days- primarily due to the data distortion last week... However, the overall case trend is still stable. The positivity rate has been flat-lined, at ~5%, since the start of March. The number of currently hospitalized people has been up slightly, while the number of daily deaths continues to trend downward. Source: Fundstrat and state health departments 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. It has fallen significantly from the wave 3 peak. Source: Fundstrat and state health departments Source: Fundstrat and state health departments Source: Fundstrat and state health departments Source: Fundstrat and state health departmentsPOINT 2: VACCINE: 48 states near ~60% infected + vaccinated..._____________________________Current Trends -- Vaccinations: Vaccinations ramping steadily- avg 3.2 million this past week vs 3.0 million last week- overall, 22.2% fully vaccinated, 36.1% 1-dose+ received_____________________________Vaccination frontier update --> 48 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, 48 states (see below) are basically all at this level- SD, ND and RI are now above 90% combined penetration (vaccines + infections)- So slowly, the US is getting to that threshold of presumable herd immunity Source: CDC and Fundstrat Collectively, these 48 states represent about 94.8% of the US population. In fact, 64.5% of US states (based on state population) have seen combined infection and vaccination >70% and 9.5% 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. Source: CDC and Fundstrat There were a total of 2,634,400 doses administered on Monday, up 24% from 7D ago. Overall, the pace is steadily rising, as evidenced by the 7D moving average (see blue line). Source: CDC and Fundstrat ~92.0% of the US has seen 1-dose penetration >30%... 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 20%/25%/30% of its residents fully vaccinated, displayed as the orange line on the chart. Currently, 80.5% of US states have seen 20% of their residents fully vaccinated. However, when looking at the percentage of the US with at least 25% of its residents fully vaccinated, this figure is 18.8%. And currently no states have seen 30% of its residents fully vaccinated.- While all US states have seen vaccine penetration >25%, 92.0% of them have seen 1 dose penetration >30% and only 62.1% of them have seen 1 dose penetration > 35%.- 80.5% of the US has at least 20% of its residents fully vaccinated, However, only 18.8% of US has fully vaccinated >25%- This is still a small figure but this figure is rising sharply now. This figure could rise even more rapidly after the JNJ's 1-dose vaccines roll out. Source: CDC and Fundstrat This is the state by state data below, showing information for states with one dose and for those with two doses. Source: CDC and Fundstrat 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 ~50 for the past few days- this means 50 vaccines dosed for every 1 confirmed caseThis figure is rising nicely and likely surges in the coming weeks Source: CD and Fundstrat In total, about 120 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 May. Source: CDC and Fundstrat 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, CT GROUP 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 eased 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 announced plans ease 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
FSInsight 1Q21 Daily Earnings Update – 04/13/2021
CLICK HERE for a full copy of this report in PDF format. • 24 companies are reporting this week.• Of the 21 companies that have reported so far (4% of the S&P 500), 76% are beating earnings estimates by a median of 8%.• On the top line, 71% are beating by an average of 74%.
- BitDigest
April 12 · Issue #878
Crypto marketcap re-breaks $2 trillion levelPakistan looking at CBDC ahead of digitization explosionHSBC blocking clients from buying crypto related stocks The Headlines Thoughts on the Ecosystem
- First Word
COVID-19 UPDATE: Michigan COVID-19 hospitalizations could surge to new highs in coming weeks. S&P 500 gains YTD explained by +6.4% revisions to 2021 EPS by Street
Click HERE to access the FSInsight COVID-19 Daily Chartbook. We are shifting to a 4-day a week publication schedule: MondayTuesdayWednesdaySKIP THURSDAYFriday STRATEGY: S&P 500 gains YTD explained by +6.4% revisions to 2021 EPS by StreetFor the most part, US COVID-19 trends have been stable. Below is the 7D delta chart and while it has been choppy, the trend in cases is not necessarily accelerating to the upside. But the overall US state figures are masking the bifurcating trends in the US. The rise in cases is really attributable to 5 states: - MI- ME- MD- MN- VT Source: Fundstrat and US state healthcare websites Take a look for yourself at the 50 states here (slide from our chartbook) and you can see the rise in these 5 states versus their own timeline. There are other states seeing increases, but hardly of this magnitude. Is there a common thread to explain this? I am not entirely clear. And of these states, MI seems to be experiencing the worst of the surges. Gov Whitmer has attempted multiple explanations for this from mutations to vulnerability of population due to low prior exposure. But the reasons are not entirely clear to me: - the state's daily cases could make a new all-time high and the 7D avg seems to be there- currently hospitalizations certainly look to be making new highs- perhaps there is some solace that daily deaths are muted And Dr Scott Gottlieb weighed in on Michigan, noting that the Biden administration may need to allocate new resources to the state. While MI Gov Whitmer would like additional vaccine allocations, the Biden administration is targeting other measures. Source: And if there is some half-full view of the situation in Michigan. It appears that the older adults are accounting for a smaller rise in cases. The surge in daily cases stems from age 20-29 and by contrast, age 70-79, while higher, is considerably more muted. Thus, one might believe this could reflect the benefit of vaccinations. STRATEGY: 1Q2021 Earning seasons starts soon... S&P 500 2021 EPS revised +6.4% so far, Energy +80%... Earning season is starting in the next few weeks, and 1Q2021 will differ from the last 4 earnings season for a few reasons: - top-line growth is expected to be solidly up YoY (due to March 2020 being easy comps) - company visibility should be considerably stronger for 2021, compared to three months ago - economy should be largely open by mid-June, so companies are going to see roadmap to normalcy finally - Cyclicals are leading the upwards earnings revisions ...S&P 500 2021 EPS forecasts are up 6.4% since start of year while Energy is up +80% Earnings revisions have solidly for 2021 and in fact, have largely explained the YTD gains in equities. - S&P 500 2021 EPS is +6.4% to $174.33 - S&P 500 is up ~10% YTD - Most of the gains YTD are due to EPS revisions to 2021 EPS Source: Fundstrat and Bloomberg ... Energy 2021 EPS is +80% in 2021 and yet the stocks are only up +27%... hmmmmThe positive revisions to the Energy sector have been even stronger: - Energy has seen 2021 EPS revised +80% since the start of the year.- Energy stocks are up +27% YTD So Energy EPS is up +80%, only 3 months in 2021. And yet, investors think this sector is not attractive? To me, this is old-fashioned beat and raise for Energy. Source: Fundstrat and Bloomberg Our Head of Global Portfolio Strategy, Brian Rauscher, made a similar comment in his latest Wall Street Whispers report which was published late last week. He notes there has been no deterioration in the favorable readings for Energy stocks. Hence, he think this is simply profit taking hitting the stocks. Source: Fundstrat ... Epicenter leading positive revisions only 3 months in 2021, suggesting these stocks lead during earnings season I am going to state something potentially obvious: - Epicenter stocks have been driving the positive 2021 EPS revisions YTD - Visibility is improving as US should be fully opened by mid-June - We are only 3 months into 2021, thus, positive revisions should continue To me, this seems like a formula for Epicenter stocks to continue to lead. And as shown below, since the start of April, Epicenter stocks have been performing well, except for Energy, which is down since the start of the month. In our view, Energy is way oversold and given the potential for positive EPS surprise, we expect Energy stocks to recover over the coming weeks. Source: Fundstrat and Bloomberg STRATEGY: Updating our Power Trifecta, adding net 10 stocks, now Power Trifecta 35 (*)We are updating our Power Trifecta list. In this rebalance, 3 stocks are deleted and 13 stocks are added. Thus, the total number of stocks has risen by 10 to 35. This makes sense given the recent pullback in the Epicenter names (more stocks are attractive). 3 Deletions:$PBCT, $NVT, $VNO 13 Additions:$AZO, $HOG, $GRMN, $MGM, $WH, $GPS, $LB, $VIRT, $AGCO, $OC, $UBER. $EXP, $NUE 35 Power Trifecta Stocks Ideas:Consumer Discretionary:$AZO, $HOG, $GRMN, $RL, $MGM, $NCLH, $RCL, $WH, $GPS, $LB Financials:$NYCB, $VIRT Industrials:$AGCO, $OC, $DAL, $KEX, $UBER Energy:$XOM, $HP, $NOV, $SLB, $COP, $EOG, $MRO, $MUR, $HFC, $PSX Materials:$EXP, $NUE Real Estate:$BXP, $HIW, $JBGS, $UDR, $KIM, $WRI Source: Fundstrat, Bloomberg (*) the 35 Power Epicenter Trifecta stock ideas are the subset of the original 108 Epicenter Trifecta stock list. For the full list of our original Epicenter Trifecta stock list, please click the link below. 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. For the full list of the 108 Epicenter Trifecta stock ideas, please click here 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 hereTickers: AAPL, CSCO, INTC, MXIM, NVDA, EBAY, KLAC, GRMN, GOOG, MNST, MSFT, AMZN, QCOM, TSLA, PYPL, AXP, BF/B, PM, XLNX, TGT, PG, XOM, VLO, GL, RF, ATVI, BBY, GE, AMAT, LRCX, MU, HPQ Trifecta Epicenter (*):Full stock list here --> Click hereTickers: AAP, AN, AZO, F, GM, HOG, BBY, GRMN, GPC, LEG, TPX, PHM, NWL, MAT, PII, RL, MGM, HLT, MAR, NCLH, RCL, WH, TNL, SIX, FL, GPS, KSS, LB, VFC, WTFC, ASB, FNB, PB, TFC, WBS, PACW, NYCB, MTG, EVR, IBKR, VIRT, BK, STT, BHF, AGCO, OC, ACM, WAB, GNRC, CSL, GE, GGG, IEX, PNR, CFX, DOV, MIDD, SNA, XYL, FLS, EAF, ITT, ALK, DAL, JBLU, LUV, MIC, KEX, JBHT, R, UBER, UHAL, MAN, XOM, HP, BKR, HAL, NOV, SLB, COP, EOG, FANG, HES, MRO, MUR, PXD, XEC, HFC, MPC, PSX, EXP, CF, NEU, NUE, RS, SON, IP, ARE, BXP, HIW, JBGS, ESS, UDR, KIM, NNN, O, WRI, PSA 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 46,821, +9,265 vs 7D ago... Easter is throwing off the 7D delta... case trends still stable _____________________________ Current Trends -- COVID-19 cases:- Daily cases 46,821 vs 37,556 7D ago, up +9,265- 7D positivity rate 5.1% vs 4.8% 7D ago- Hospitalized patients 39,171 up +6.4% vs 7D ago- Daily deaths 716, down -8.9% vs 7D ago_____________________________ - The latest COVID-19 daily cases came in at 46,821, up +9,265 vs 7D ago.- 7D delta in daily cases surged last Friday and today. This was primarily due to the underreport 7D ago (in observance of the holidays). That said, the overall case trend is still stable. The positivity rate has been flat-lined, at ~5%, since the start of March. The number of currently hospitalized people has been up slightly, while the number of daily deaths continues to trend downward.- At this stage of pandemic, vaccinations might matter more than daily case trends. As long as vaccinations work, eventually the rollout of the vaccines will lead to a decline in the pervasiveness of the COVID pandemic. Source: Fundstrat and state health departments 7D delta in daily cases surged last Friday and today - primarily due to the data distortion last week... 7D delta in daily cases surged last Friday and today. This was primarily due to the underreport 7D ago (in observance of the holidays). That said, the overall case trend is still stable. The positivity rate has been flat-lined, at ~5%, since the start of March. The number of currently hospitalized people has been up slightly, while the number of daily deaths continues to trend downward. Source: Fundstrat and state health departments 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. It has fallen significantly from the wave 3 peak. Source: Fundstrat and state health departments Source: Fundstrat and state health departments Source: Fundstrat and state health departments Source: Fundstrat and state health departments POINT 2: VACCINE: 48 states (+2 from last Thursday) near ~60% infected + vaccinated... _____________________________ Current Trends -- Vaccinations: Vaccinations ramping steadily - avg 3.1 million this past week vs 3.1million last week - overall, 21.7% fully vaccinated, 35.7% 1-dose+ received _____________________________ Vaccination frontier update --> 48 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, 48 states (see below) are basically all at this level - SD, ND and RI are now above 90% combined penetration (vaccines + infections) - So slowly, the US is getting to that threshold of presumable herd immunity Source: CDC and Fundstrat Collectively, these 48 states represent about 94.8% of the US population. As the chart below highlights, the US is seeing steady forward progress and this figure continues to rise steadily. Source: CDC and Fundstrat There were a total of 3,555,818 doses administered on Sunday, up 6.1% from 7D ago. Overall, the pace is steadily rising, as evidenced by the 7D moving average (see blue line). Source: CDC and Fundstrat ~92.0% of the US has seen 1-dose penetration >30%... 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 20%/25%/30% of its residents fully vaccinated, displayed as the orange line on the chart. Currently, 80.5% of US states have seen 20% of their residents fully vaccinated. However, when looking at the percentage of the US with at least 25% of its residents fully vaccinated, this figure is 11.6%. And currently no states have seen 30% of its residents fully vaccinated. - While all US states have seen vaccine penetration >25%, 92.0% of them have seen 1 dose penetration >30% and only 52.1% of them have seen 1 dose penetration > 35%. - 80.5% of the US has at least 20% of its residents fully vaccinated, However, only 11.6% of US has fully vaccinated >25% - This is still a small figure but this figure is rising sharply now. This figure could rise even more rapidly after the JNJ's 1-dose vaccines roll out. Source: CDC and Fundstrat This is the state by state data below, showing information for states with one dose and for those with two doses. Source: CDC and Fundstrat 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 ~50 for the past few days - this means 50 vaccines dosed for every 1 confirmed case This figure is rising nicely and likely surges in the coming weeks Source: CD and Fundstrat In total, about 118 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 May. Source: CDC and Fundstrat POINT 3:Tracking un-restricted and restriction-lifted states We 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 mandates So 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, CT GROUP 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 eased 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 announced plans ease 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