Daily Briefing – August 5, 2020

Published on
August 5th, 2020
Duration
35 minutes


Daily Briefing – August 5, 2020

Daily Briefing ·
Featuring Ash Bennington and Ed Harrison

Published on: August 5th, 2020 • Duration: 35 minutes

Senior editor, Ash Bennington, joins managing editor, Ed Harrison, to discuss some of the latest data coming out, revealing the health of the US economy. They go over the July ADP Nonfarm Payroll number, what the disappointing results say about where the economy stands, and why the pandemic really is something to seriously consider as a market driver. They also talk about the uptick of coronavirus cases globally, the Swedish outcome, and how the world would get closer to a new normal. They wrap up their discussion by exploring bifurcation, the divide between the real economy and the financial economy, and when that reality becomes important to markets as well as the bifurcation between the market winners and losers during the pandemic.

Comments

Transcript

  • mL
    matt L.
    6 August 2020 @ 00:22
    Man, it's every day on this thing. COVID DOES NOT MATTER to markets.
    • ES
      Edward S.
      6 August 2020 @ 19:23
      Pull up literally any chart and it will tell you otherwise.
  • AW
    Angela W.
    6 August 2020 @ 09:45
    Guys, with the USD Index at 92.83 now, where is Raoul on his dollar thesis now please? Is he coming back to do Fridays at any point please?
    • ST
      Simon T.
      6 August 2020 @ 11:28
      Perhaps when USD is at 75 ... this is the end of the Dollar sole reserve currency - Gold will play part in a probable SDR system where CNY also will be part
    • ES
      Edward S.
      6 August 2020 @ 19:19
      Yes it would be great to get an update on the dollar from Raoul.
  • DL
    Dan L.
    6 August 2020 @ 17:28
    Re. Ash’s comments on FB’s vulnerability to better tech; This is true except for the fact that FB’s network share makes it virtually indestructible (i.e. self-reinforcing network effects). I believe historians are more likely to look back on FB and Twitter in terms of politics than their place in markets or the economy. Excluding some jobs, neither company has added much, if anything, in terms of economic value.
  • RA
    Ralph A.
    6 August 2020 @ 16:39
    Yes, please bring on Damodaran! He was a great professor. Scott Galloway would also be a great person to chat with about the tech companies
  • CL
    Chad L.
    6 August 2020 @ 16:01
    Two comments: 1) This is the first RV discussion that I can recall on technology that had some meat. Ash's comments on Microsoft hinted (correctly) at a deeper understanding that I think should be explored more here on RV. A lot of folks are wondering WTF is going on in equity markets and while other factors have been explored in depth, this platform has largely ignored this topic. As someone running a business technology consultancy that's *up* 42% YoY, I can vouch that the tech forces reshaping US corporates are massive and that tech's impact on indexes, valuations and indeed corporate P&L's needs to be understood by investors. Even the simple cloud spending shift from CapEx to OpEx isn't well understood. RV has done themed series on various topics that have been excellent. Tech might be a good one to add. 1) I like the DB format and look forward to it every day, despite some topics becoming repetitive. Keep it up - I'm sure it will evolve for the better. Ed & Ash - Thanks for doing what you do.
  • CT
    Chris T.
    6 August 2020 @ 08:45
    Sweden- what can we take away? Lockdown was wrong and should be ended in every country. End of.
    • CS
      Christos S.
      6 August 2020 @ 13:47
      the same population with Greece but much more sparsely populated. Grece had c200 deaths Sweden c4000. Extrapolating any results at this point is meaningless due (a) to the statistical inference (this is not a normal distribution and should be analyzed with Extrem Value Theory and (b) we are still not clear if any meaningful immunity has occurred and what the secondary effects of illness are (i.e. what damage it leaves behind which is ultimately born by the economy as a whole). It is frustrating but, to be fair, no real conclusion can be drawn yet.
  • Jv
    Joël v.
    6 August 2020 @ 12:07
    On comparing Sweden's GDP number, 8.6% down for Q2, vs the EU's: The European number is an average made up of rather bad performers like IT, ES ( - 18.5%) and FR and relative better performers like DE ( - 10.1%), GR, NL and the Nordics. Swedish unemployment now stands at 9.2%. Is Sweden a template? There's now preliminary research that shows the possibility that 50% of any population could be immune to covid19. This is not because earlier exposure (and the creation of anti-bodies) but has to do with our T-cells. If further research confirms this, a herd immunity strategy which is doubtful anyway since immunity seems to subside quite fast, seems even more like an experiment. About the T cell theory, from a Dutch fin paper: 'The research in Cell showed that people who are not infected with Sars-Cov-2 also have T cells that respond to proteins from the virus. Rijkers (professor Immunology): "That is the observation in the lab, but it is a matter of interpretation what exactly this means and opinions differ." One interpretation is that people who have many of these T cells have some protection against Covid-19. That would be about half of the population. 'That could be, but there are no indications for that yet. We don't yet know exactly what the function of these T cells is, so it is far too premature to conclude that half would be protected.' The study in Cell Targets of T Cell Responses to SARS-CoV-2 Coronavirus in Humans with COVID-19 Disease and Unexposed Individuals https://www.cell.com/action/showPdf?pii=S0092-8674%2820%2930610-3
  • GB
    Germain B.
    6 August 2020 @ 01:06
    Why does the Apple 4/1 split still matter? is it purely psychological bc as you mention fractional shares is a thing.
    • KC
      Kronos C.
      6 August 2020 @ 11:43
      more liquidity and contracts and short options are cheaper under assignment
  • CM
    Cory M.
    6 August 2020 @ 05:07
    Yes to Aswath D; great idea! Also, the AAPL split is not an entire wash (no pun intended). It makes the options contracts more affordable. Great to hear the varied conversation, Billy Ray and Lewis. Thank you as always.
    • ST
      Simon T.
      6 August 2020 @ 11:30
      Why using MSFT when you can get free open office ? Still don’t get it
  • JS
    Jon S.
    6 August 2020 @ 10:05
    One thing more for me Ed (I do not know is because he can speak german and reads the German newspapers I am pretty sure), but he has one of the best understandings about Europe I have ever seen outside Europe and even within Europe. Congratulations for your insights in Europe. I am telling you this as European.
  • AB
    Alastair B.
    6 August 2020 @ 06:36
    Facebook belongs in the dustbin of history. You are absolutely correct about them being the weakest link, their moat is non-existent. Few teenagers use Facebook nowadays - and not just because there are better options for the way they want to interact. Privacy concerns and threats to democracy are mentioned frequently, even by teenagers.
  • TL
    Tom L.
    6 August 2020 @ 06:34
    Personally I would put Facebook below Google for being dependent on ad revenue, Google does make some hardware like Wifi and phones.
  • MJ
    Marc J.
    6 August 2020 @ 06:19
    Ed, it"s not for me to argue with your September time frame but, I'm starting to hear people say "the Fed is losing control". Of course Jeff Snider et al insist the Fed never had control. The average Joe thinks they do and when that opinion shifts it's game over. Coupled with lack of congress agreement - I think retail exodus is upon us.
  • ER
    Eoin R.
    6 August 2020 @ 05:57
    Ash - Gates no longer biggest holder of Microsoft. Ballmer is. Good stuff as always!
  • SM
    Shawn M.
    6 August 2020 @ 04:00
    TYG , for the audio response equal to Youtube now on all devices. Love the content and stay safe to all!
  • AI
    Andras I.
    6 August 2020 @ 03:21
    Ash and Ed, Looking good, as always! What you guys are doing in DB in general is great and I for one appreciate the time it takes to prepare for it every day. But, if you accept some criticism (I know you do): Covid now is a known factor that's been playing out for a long time and is (very) slowly evolving. Also, those who are interested in tracking the details have found their sources, built their systems. And we also have the weekly updates that Remi puts out to summarize developments. Unavoidably, in unscripted communications there is lower signal/noise (data to opinion) ratio and since the opinion doesn't change/expands that fast on a slow data stream, eventually it becomes repetitive (even if it feels challenging for thr speaker to think through it). To put it short and join the chorus: virus coverage has become a bit tiresome. There is so much happening in the markets that would interest the viewers. How about dedicating a day (maybe when the reports are released here on RV) and only quickly mention it if there are some important developments? I know I recommended him to Ash already: If you can keep in the style of Prof. Damodaran's blog, that's a great balance - he always adds some interesting factor to the covid coverage that's still strongly market related (and/or at least has larger educational context rather than opinion). Thank you!
  • JS
    Jon S.
    6 August 2020 @ 02:35
    I came to RV for Raoul‘s insights but I stay for the rest of the team and no doubt Ed is one of them. He has the fundamental view which is a real advantage to the perspective of the world he conveys, I agree with mostly, but he explains why and understanding the logical rationale behind the opinions is what makes his interview so interesting. Thank you Ed.
  • RY
    Roger Y.
    5 August 2020 @ 22:29
    Please also forward to Raoul..... Exxon to suspend company match to employee retirement plans in October: sources
    • NP
      Nga P.
      6 August 2020 @ 02:31
      Exxon is not alone. I work for a large health care company. It suspended 401k match starting July 1. 😒. I am happy I am still gainfully employ.
  • RC
    Reese C.
    6 August 2020 @ 02:24
    I just need to say that these daily briefings are fantastic. I look forward to these each day. Even though times are bleak, this helps us get a clear picture and take things day by day.
  • DR
    Derrick R.
    6 August 2020 @ 02:08
    Ed, per your comment on Europe coming out of covid stronger than USA... do you think this could be one of the main reasons EURUSD has been on an uptrend as of late?
  • KL
    Kunal L.
    6 August 2020 @ 01:52
    Ed - would your timeframe for a September/October reckoning be affected if Congress reach a new stimulus bill?
  • JE
    J E.
    6 August 2020 @ 01:20
    +1 on Aswath Demodaran !
  • RY
    Roger Y.
    5 August 2020 @ 22:41
    Also please forward to Mike Green.... Exxon to suspend company match to employee retirement plans in October: sources
    • JB
      Joshua B.
      6 August 2020 @ 00:03
      Start of a trend or one off? Passive flows beware.
    • DR
      Derrick R.
      6 August 2020 @ 01:11
      Is the data on the percentage of inflows from 401k investors available somewhere?
  • RR
    Ryan R.
    6 August 2020 @ 01:01
    What about salary cuts? Are there data about how widespread and severe they are? Or is it not being discussed because it is too insignificant vs unemployment? If it is significant, then they would contribute to a slowdown, no?
  • DR
    Danilo R.
    6 August 2020 @ 00:01
    It’s simple. Beating the coronavirus depends on three things, three only. Use a mask, social distancing and making all businesses essential like Sweden has. Unfortunately, with Fauci and certain governors leading the charge it’s all about a power grab. Report relevant numbers like the number of under 18 or under 25 deaths or infection rate. We are destroying children, school towns. It sad that most Real Vision users are making highs on big tech, bonds, gold, and Consumer staples.while the social fabric of America is destroyed by politicians. It is hubris to think the market is always wrong.
    • PB
      PHILLIP B.
      6 August 2020 @ 00:28
      Maybe it's not all about a power grab. What about incompetence? What about ignorance? What about good people doing the very best they can, who are sincere, intelligent, accomplished, and making sacrifices, e.g., death threats to their family, and who are doing the best they can in an adversarial environment? I came to RV because the social fabric was fraying, because the social contract was fraying, because the safety of hegemony was fraying, because we are all screwed. Hell, I wish I didn't have to worry about being old AND poor. Believe me. It's not sad that RV subscribers are making highs on these assets. Who is going to look out for us? No one. No one. Full stop. Many here are retail investor. So what, 10 years from now some of us have an extra $100k in our saving accounts because of actions we took and because of things we learned here? So what. Please don't look down or admonish RV subscribers.
    • pk
      philip k.
      6 August 2020 @ 00:47
      I think it’s attitudes like that, that people with degrees and PhDs are grabbing power from you. That is tearing this country apart, just go with Trump, the pandemic is under control do whatever man
  • RT
    Richard T.
    6 August 2020 @ 00:19
    Edward, History doesn't support your speculation regarding likely antitrust enforcement in whatever next administration. Being sensitive to the shibboleth of being the "Party of Big Business," Republicans administration have been more aggressive antitrust prosecutors. Albeit, Ramsey Clark filed the the case against IBM, the occurred on spitefully the 11th hour the LBJ term. Indeed, it was in the Nixon years that the Antitrust Division asserted antitrust policy analysis to regulatory agencies. Meanwhile, Nixon allowed anticompetitive mergers of banks. '
  • DS
    David S.
    6 August 2020 @ 00:03
    Looking good Billy Ray.....feeling good Louis
  • NL
    Nikola L.
    5 August 2020 @ 23:49
    thanks boys.
  • TB
    Tobin B.
    5 August 2020 @ 23:42
    Hey guys good talk, Ed I like your take on the annualized numbers it's good to hear the analysis you've been doing. Hang in there, this covid thing will be gone as soon as people let it. It's already happening here where I live.
  • EH
    Espen H.
    5 August 2020 @ 22:31
    “Norway uptick”, yes. As a native Norwegian, I think we are in good position. It is a very small country, but interesting to compare Norway/Nordics vs US, on different scales/markets. There is a lot of gain here..
    • NL
      Nikola L.
      5 August 2020 @ 23:16
      Norway is what Australia could have been if we only had 1/4 brains of an average Norwegian. Would be interesting if RV runs a segment compering the two.