Q3 2020 Earnings Calendar
Posted by Eddy Elfenbein on November 12th, 2020 at 4:02 pm

Twenty-one of our 25 Buy List stocks have reported Q3 earnings this earnings season. Here’s a list of reporting dates, Wall Street’s consensus estimates and actual reported results.

Initial Claims and Inflation
Posted by Eddy Elfenbein on November 12th, 2020 at 2:54 pm

I wanted to remark on this morning’s economic reports.

The initial jobless claims report fell to 709,000. We’re finally not that far from the highest readings of the financial crisis. Last week’s report was revised up to 757,000. This report is another eight-month low. We’re moving in the right direction, but very slowly.

The CPI report showed that inflation was unchanged last month. The core rate was flat as well. Over the past year, inflation is up 1.2% and core inflation is up 1.6%.

Here’s a chart of the year-over-change change in consumer prices (black) and core prices (red). Notice how much more stable the red line is which is why it’s easier to track.

Morning News: November 12, 2020
Posted by Eddy Elfenbein on November 12th, 2020 at 7:02 am

Group of 165 Google Critics Calls For Swift EU Antitrust Action

China Won the Cold War. Here’s What That Means for Free Markets

Alibaba, JD.com Say U.S. Was Top Seller to China During Singles’ Day Event

Biden’s Transition Teams Sideline Industries Trump Put in Charge

Pfizer’s Vaccine Read-Out: What Will Happen To Value Stocks

After a Long Ride, Harley-Davidson Is Leaving India

New PlayStation and Xbox Arrive During a Pandemic Gold Rush

China’s Tencent Profit Surges 89% As It Rides Gaming Boom

Trump Blew Up Tiktok And Now Nobody Knows What’s Going On & ByteDance Desperate for Extension as TikTok Sale Deadline Hits

Putting the Sport Back in S.U.V.s, 2 Jeep Rivals Sell the Off-Grid Life

Hollywood Gets Back To Work As Film Permits Rise 24%

The Evolving Travel ‘Experience’: Virtual, Actual and In Between

Howard Lindzon: Stocks Do Go Down…

Joshua Brown: Why There’s A Shortage Of My Book, Breaking The Top 10 Worldwide On Amazon, How To Get A Signed Copy

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Morning News: November 11, 2020
Posted by Eddy Elfenbein on November 11th, 2020 at 7:07 am

Wall Street to Trump: It’s Over. This Isn’t A Repeat Of 2000

Why Losing The Election Should Be Good For Trump’s Business

More Tech Executives Than Tech Critics On Biden’s Transition Team

Lael Brainard’s Steady Rise Could Culminate in Treasury Secretary Post

The Husband-and-Wife Team Behind the Leading Vaccine to Solve Covid-19

Federal Judge Dismisses Some Claims By Apple In Fight Against Epic Games

China’s Tech Giants Have Lost More Than $280 Billion In Market Value As Regulatory Concerns Mount

Quibi Founders’ $1.7 Billion Failure Is a Story of Self-Sabotage

Amazon Lures Food-Stamp Shoppers as Online Buying Surges 50-Fold

Pandemic Firings Lead to Wave of Bias Claims From Parents

Joshua Brown: 9 out of 10 Investors Expect a Stock Market Crash in the Next 6 Months

Ben Carlson: Could the Bond Market Derail the Stock Market?

Howard Lindzon: Modern Gospel and Moats and Networks in Financial Services

Nick Maggiulli: What a Biden Presidency Means for Your Finances

Michael Batnick: An Uneven Recovery, Animal Spirits: The Vaccine & The First Time In A Long Time

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The Day After
Posted by Eddy Elfenbein on November 10th, 2020 at 11:39 am

Today is the day after. I’m still reeling from yesterday’s drama, but Wall Street seems much tamer.

The S&P 500 is currently down about 0.5% and the Nasdaq is down 2.3%, while the Dow is up slightly. Today is a little more defensive than yesterday. Staples and Utilities are doing well while Tech is down the most.

In our portfolio, Trex (TREX) is down again while Eagle Bank (EGBN) continues to gain steam. Disney’s (DIS) earnings are due out on Thursday.

Morning News: November 10, 2020
Posted by Eddy Elfenbein on November 10th, 2020 at 7:04 am

Central Bankers Seek New Role in Brave New World

Federal Reserve’s Emergency Loan Programs at Center of Political Fight

Business Leaders, Drawn Into Fray by Trump, See Chance to Step Back

Record Low Mortgage Rates Widen Historic U.S. Economic Divides

Pfizer, Eli Lilly Breakthroughs Provide Hope for Ending Pandemic

U.S. to See More Chinese Listings As Biden Will Make Art of Deal Easier, Advisors Say

Alibaba and China’s “Black Friday” Event Are Set to Boost Online Shopping. What Investors Need to Know.

Huawei to Sell Smartphone Unit for $15 Billion to Shenzhen Government, Digital China, Others

McDonald’s Unveils McPlant Line, Which Includes Meatless Patty Co-Created By Beyond Meat

The Man Who Could Explain the $2 Billion Wirecard Mystery Is Missing

Apple Temporarily Drops Supplier Over Student Worker Violations

Joshua Brown: 90% Effective

Howard Lindzon: Momentum Monday…Weed Won…One in 3 Americans Now Lives in a State Where Recreational Marijuana is Now Legal

Michael Batnick: When the Dust Settles

Ben Carlson: The Post-Pandemic Trade

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CWS Market Review – November 9, 2020
Posted by Eddy Elfenbein on November 9th, 2020 at 10:08 pm

I wanted to send you an update due to today’s dramatic stock market action. I’ve been at this game a long time and I’ve only seen a few days like today.

This morning, Pfizer said that its Covid-19 vaccine appears to be 90% successful.

From the New York Times:

If the results hold up, that level of protection would put it on par with highly effective childhood vaccines for diseases such as measles. No serious safety concerns have been observed, the company said.

Wall Street went bonkers. Some sectors exploded higher for gains of 10%, 20% or even more. Other areas fell sharply.

Let’s start with the indexes. The S&P 500 opened higher by 2.1%. It eventually ran up to a gain of 3.9% and touched a new all-time intra-day high. By the end of trading, the index had fallen back to close higher on the day by 1.17%.

Here’s a ten-day minute-by-minute chart of the S&P 500:

You can see how volatile today was. The gap between sectors was astounding. The Nasdaq Composite actually closed lower today by 1.53%.

At one point, the Dow was up over 1,700 points for a gain of 5.7%. It also made a new all-time intra-day high. The index closed off its high for a gain of 834 points, or 2.95%. The Dow did nearly three times better than the S&P 500. The indexes generally track each other pretty closely, but you rarely see divergences quite like this.

There was so much going on that it’s hard to summarize but I’ll give it a shot. Many of the sectors that were hit hard by the lockdowns soared. For example, Cinemark (CNK), the movie theater chain and former Buy List stock, was up over 45% today. Carnival (CCL), the cruise operator, soared 39%. Even Denny’s (DENN) gained 36%. Malls and airlines were also strong. United Airlines (UAL) was up 19%.

We saw evidence of this on our Buy List as Disney (DIS) jumped nearly 12% and Ross Stores (ROST) gained more than 15% today.

Banks and financials also had an outstanding day. AFLAC (AFL) rose 12% and Eagle Bancorp (EGBN) rallied over 16%.

The energy sector also had a strong day (we don’t have any energy stocks on our Buy List, which has largely served us well). The thinking seems to be that the world will get back to normal, and that will lead to a stronger economy. Therefore, that’s good for banks and energy stocks.

However, this also contends that interest rates may rise, and that led to a lot of weakness among housing stocks. It’s also a reminder that housing touches many different industries.

On our Buy List, Trex (TREX) fell by 14.5% and Sherwin-Williams (SHW) lost over 6%. Bear in mind, there was no news on these stocks. Traders are merely playing the assumed economic impact.

The S&P 500 High Beta Index rose 11.7% today while the S&P 500 Low Volatility was down 0.9%. I don’t even know what to say. That’s gigantic gap. The Russell 2000 Index of small-cap stocks gained 3.7% today. That index is usually skewed towards cyclicals.

Zoom (ZM), the superstar of the lockdown, was down 17% today. Peloton (PTON) was off 20%. Clorox (CLX) lost over 10%. On our Buy List, Church & Dwight (CHD) is in the cleaning biz. CHD fell 6% today.

The bond market got hit hard today. Remember, with rates so low, even a small move in rates can be a big loss in bonds. The 30-year Treasury yield rose by 15 basis points, up to 1.75%. The main Long-Term Treasury Bond ETF (TLT) lost 2.1% today. The average duration of that ETF is 19 years.

In the last five days, the S&P 500 has gained 7.3%. The S&P 500 Equal Weight Index (meaning if every stock was 0.2% of the index) was up 4.25%. The S&P 500 High Dividend Index rose over 10% and the S&P 500 Interest-Rate Sensitive Index rallied by 7.4%. S&P 500 Value gained 3.98% today while S&P 500 Growth fell 0.58%.

These moves are just incredible.

What to do now? For one, relax. Today is very good news, but we’re a long way from beating Covid. Markets are designed to react strongly in the near-term, and that’s what’s happening. While the news is encouraging, it will take several months before any vaccine is widely available.

Stick to our investment strategy and don’t do anything rash. We have good stocks. If you have free money to invest, look at our Buy List stocks and pay attention to our Buy Below prices. They’re there for your protection.

I’ll have the next regular issue for you later this week. Until then, let’s celebrate the good news and keep wearing your mask!

-Eddy

Sector Breakdown
Posted by Eddy Elfenbein on November 9th, 2020 at 11:28 am

Here’s the performance of each sector in the S&P 500. I’ve never seen a spread quite like this:

Energy 12.17%
Financial 7.09%
The Real Estate 4.60%
Utilities 3.74%
Industrial 3.71%
Materials 2.41%
Technology 2.38%
Health Care 1.72%
Consumer Discretionary 1.41%
Consumer Staples 1.38%
Communication Services 1.31%

The areas that had been suffering are up the most.

Stocks Soar on Vaccine News
Posted by Eddy Elfenbein on November 9th, 2020 at 10:51 am

Is there a vaccine miracle? Could be! Pfizer says its vaccine is proving to be 90% effective.

Dr. Anthony Fauci, the government’s top-infectious disease expert, said the results suggesting 90% effectiveness are “just extraordinary,” adding: “Not very many people expected it would be as high as that.”

The market is celebrating. The Dow is up over 1,200 points, or more than 4.3%. The Russell 2000 is up more than 5%. The laggard is the Nasdaq which is up “only” 1.6%.

The Dow hit an intra-day high:

Disney, Ross Stores and Eagle Bank are all up more than 10%. Disney is up 9%.

I’ve never seen a market this divided. All the sectors that had suffered are soaring. Banks and Energy stocks are up 10%, 12%, or even more. Biogen, on the other hand, is down 30%. So are some other “pandemic stocks.” For example, the housing sector isn’t doing so well today.

The cruise stocks are very happy. Carnival is up 36% while Royal Caribbean is up 29%.

Morning News: November 9, 2020
Posted by Eddy Elfenbein on November 9th, 2020 at 7:03 am

China Has a Clever Plan to Keep Its Citizens Spending at Home

Turkish Finance Minister Resigns In Second Surprise Departure After Lira Slide

Germany Considers Delaying a $4 Billion Tariff Strike on the U.S.

Why the Biden Economy Could Be the Same Long Slog as the Obama Economy

In a Divided Washington, Biden Could Still Exert Economic Power

A Low Fed Funds Rate Is A Sign That Credit Is Very Tight

Wall Street Set to Jump as Pfizer Says Vaccine Effective & Pfizer’s Covid Vaccine Prevents 90% of Infections in Study

McDonald’s Beats Profit Estimates on U.S. Drive-Thru Demand

SoftBank’s Vision Fund Back To Black Even As Some of Son’s Tech Bets Sting

Jeff Miller: Weighing the Week Ahead: The Elusive Logic of Mr. Market

Michael Batnick: Don’t Sell America Short

Cullen Roche: The Markets and the Economy Don’t Care About Your Politics & The Other Side of the Trade

Joshua Brown: Invest In You: How I Invest My Money, The Most Powerful Man in Washington Stays Put, How to Buy a Correction (with Tony Dwyer) & Normal

Ben Carlson: My Biggest Post-Election Market Questions & What Happens When Investors See People Dumber Than They Are Getting Rich

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