Stocks Rise on Housing Data

Catch Up Quick

• There have been over 10M confirmed global cases of COVID-19

• Airbnb CEO says “travel may never be the same”

• Boeing shares jump +10% as FAA starts 737 Max test flights

• Amazon’s video site Twitch bans Trump for "hateful conduct"

• Americans' personal income fell 4.2% last month

• Mississippi’s legislature drops confederate imagery on its flag

• The Rolling Stones threaten to sue the Trump after their song was played at his rally

My Monday Opinions

• The WHO warns the coronavirus pandemic is speeding up, saying "the worst has yet to come" as U.S. states rescind reopening plans— with U.S. stocks rising on better than expected homes sales, it is important to note that this driving economic data is historical and bears lag, while virus concerns are more current & forward looking

• Republican politicians and conservatives are flocking to the app Parler, in large part to protest what they say is unfair censorship by Twitter— this exodus proves the encroachment of hyperpartisanism within consumer technology, which could further exacerbate both political and societal division

• Between data relating to the economy and the pandemic, the market may very well be overlooking the upcoming presidential election, which, historically, has been a huge mover of stocks— as Biden moves up in the polls, political views aside, a democratic victory bears a higher likelihood of tax code changes that could cut into earnings per share, inducing additional pressure on stocks

Thought(s) of the Day

• Nvidia ($NVDA)— 1) its new autonomous vehicle partnership with Mercedes indicates that its chip specs are best suited for the data-intensive nature of machine & deep learning applications such as image recognition, which presents a huge long-term runway in itself

• DocuSign ($DOCU)— 1) customers will never revert to old workflows once adopted, pushing churn towards zero 2) with unemployment volatility, a flurry of rapid new hires and fires could very well drive the need for efficient documentation 3) recent listing on the NASDAQ 100 implies incoming volume via passive investment mechanisms

• MasterCard ($MA) & Visa ($V)— 1) previously, I have pointed out heavy momentum flowing away from cold, hard cash payments in efforts to reduce virus spread 2) these incumbents have still yet to reach their pre-pandemic levels, in which the demand for contactless payment had yet to expedite credit card usage, hinting at undervaluation 3) ATM usage is down 32%

• Teladoc Health ($TDOC) — 1) COVID-19 has normalized the adoption of telehealth, now likely to stick even after the pandemic subsides 2) if unemployment rises from extended lockdowns, more laid off workers will lose their corporate healthcare insurance plans, presenting a huge opportunity for quick, convenient, non-traditional and cheap providers

The Bottom Lines(s)

• Proceed with great caution— all stocks are exposed to systematic risk in the event of another broad market correction which I opine is very possible

• From an idiosyncratic perspective, don’t avoid a stock solely because of intrinsic or relative overvaluation— it can still be profitable if it becomes even more overvalued (i.e. TSLA around the $500 mark)

• Regardless of allocation, strategy, etc, cash and conviction should generally share a negative correlation

• Sometimes the best investment theses are short, sweet, and to the point!

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