Our weekly outlook on culture, ingenuity, and markets.
It’s election week! In an already crazy year, let us add some gasoline to the fire.
Stuff I read that gets stuck in my head
My dear Reverend Fathers, my letters did not use to follow each other so closely, nor did they use to be so extended. The little time that I have had has been the cause of both these things. I only made this letter longer because I had not the leisure to make it shorter. Pascal, B. 1656. Lettres Provinciales
Human Tribe & Ingenuity
People working better together and inspiring each other
Harley-Davidson already jumped into the electric motorcycle market, now they are returning to their roots (sort of) by making an electric bicycle. https://electrek.co/2020/10/27/harley-davidson-spins-off-new-electric-bicycle-company-serial-1-cycle-company/
Telemedicine for humans? Forget that, how about telemedicine for your pets? Chewy.com continues to innovate. https://www.cnbc.com/2020/10/28/chewy.html
Black Swans & Other Market Tidbits
What is on the horizon that could trip us up, or lead us up
Election watch – Who knows what is going to happen, however, there are several states that should be able to have a definite call on who their state voted for President on election night: OH, NC, or FL. If Trump loses any of these states, it is very unlikely he can win the Electoral College.
Election watch II - The week before the election the markets traded down more than 5%. In the 23 Presidential elections since 1928, there have only been four times when the S&P declined more than 1% in the week before Election Day, and in all four the Presidency flipped from one party to another.
President – Whoever wins, they are going to face strong headwinds. We added $1 trillion to the deficit through the tax cuts and jobs act, over $2 trillion through the CARES act (and potentially another $2 trillion on the way), and COVID is still there. The next President will find most of their time being spent battling the virus, repairing the economy, and figuring out how we’re going to pay for all of this
COVID – Trends in positive test rates and hospitalization have been rising across the US. On a positive note: deaths have not seen a meaningful increase and have actually been flattening. We have figured out how to treat this virus without a vaccine. If we get a viable vaccine in the near future, the economy should continue to roar back.
Warning signs. For the past three weeks, corporate executives, directors and beneficial owners have been selling their companies’ shares at a higher rate than normal. This is not at a level yet of insiders running for the exits, but it is an indicator of a cautious mood amongst insiders.
Strong fences, strong neighbors. We expect strong home demand to continue. Homes with yards and space are preferred to apartments with elevators.
Tech risk? Tech companies are increasingly coming under anti-trust scrutiny. It is odd that a sector branded as disruptive and innovative is represented by extremely large, dominant companies. Investors would be wise to consider potential anti-trust risks in this sector.
A bowl of chips. Wall Street is now roofed in chips, microchips. As this sector goes, so goes the market. We think as 5-G is rolled out, the need for updated 5-G chips in cars, phones, and other end-user devices (refrigerators, pool equipment, etc.) will drive the microchip market.
Speaking of disruptive technology: A friend sent me this report. ARK has had a tear this year with their investments. I don’t necessarily agree with all of their insight, but their forward thinking guidance on industries and sectors is a fascinating read (click to open pdf):Bad Ideas Report
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