Biden Up +9% in Pioneering Poll

USC-Dornsife daily poll: 51.6% (B) vs 42.1% (T)

Biden has led consistently throughout by 8%-10% since the start of the poll on 8/17. Biggest lead was on 8/25 at +14%. Poll methodology here. 

What Shape is the Recovery: V, U, W, L, K, Swoosh, Inverted Square Root?

There has been much speculation about the strength and 'shape' of the economic recovery after the national shutdown in April. A good description of the different shapes/ narratives (from the last crisis) is here, but an even better discussion is here. 

While the stock market has rallied back in the form of a Swoosh or check mark, the real economy has been slower to get going. ADP's private sector job growth numbers for Aug was well below expectations. The Aug jobs report is out tomorrow and even if it meets expectations of 1.4mm job growth, it would still be a sharp deceleration from May and June. So far, only 50% of the 20mm jobs lost between March and April have been recovered.

So the best description of this recovery seems to be:

   The mirror-image/inverted square root.

Batman Waylaid by Covid

The Corona virus ups the Joker, Penguin, Bane, Ra's al Ghul, etc. 

Showtimes' Comey Rule looks good.

The new Bond trailer is out.

U.S. Election Most Expensive Event Risk Ever

Hedging against potentially volatility from contested US election results is very, very expensive. Based on VIX futures price, it's currently the most expensive event risk on record. 

Even though most polls show Biden still holding on to a healthy lead, markets are pricing in inconclusive results---across rates, credit and equity...certainly more so than any previous election. That means a clear victory (either by Biden or Trump) should spur a sharp rally on Nov 4.

If not, add Nancy Pelosi as acting President to the mix!

Zoom!

Zoom founder/ CEO Eric Yuan'a net worth increased by $5.2B today as the stock shot up 41% after smashing quarterly earnings estimates. He was worth $16.4B at the market close. 

Tech billionaires have seen their wealth grow by ~$500B during this pandemic. A list of all the richest people is here.

Walmart+ Not Quite Prime

Walmart was up 6% today as it announced the Sep 15 launch of Walmart+, its Amazon-rival membership program. For $98/ year you get unlimited free delivery for orders over $35. Prime, by comparison, charges $119/ year for free deliveries with no minimums and a bunch of extra goodies, like Amazon Video and Amazon Music. So, not quite the same value. MS predicts there may be 20mm subscribers, mainly in the heartland...mostly it's a bet that consumers will pay $8/ month to have Walmart deliver their groceries instead of picking it up curbside.

Stocks Have Best August in 34 Years, Post Record Highs

Stocks had a fantastic August--the best since 1984--with the Dow, the S&P 500 and the NASDAQ up 7.6%, 7% and 9.6%, respectively. Stocks have now erased all Covid-19 losses.

But beneath the surface, the rally worryingly lacks breadth. The five biggest stocks Alphabet, Apple, Amazon, Facebook and Microsoft make up 22% of the S&P 500. They were up over 35% through July. Take away the FAAAM stocks and the market is flat. At current valuations, FAAAM a 10% drop in FAAAM would require a 90% increase in the rest of the market to keep the S&P 500 level.

Looking ahead, history suggests a more muted September, usually the worst month of the year for stocks. Since 1950 stocks have been down 41 of 71 times, losing on average 0.6%.

The Fed has already stressed it will keep rates low for the foreseeable future. That means the biggest drivers for stocks in the near term will be a Covid-19 vaccine (there will likely be one, but will it be safe or effective?) and politics.