Maybe this year will be better than the last

 

If you’re not sure where this week’s title comes from, it’s the Counting Crows’ 1996 song, Long December. Their Twitter account posted it shortly after midnight on the east coast and I immediately knew it would be this week’s title. This is obviously not referencing performance in too many financial markets, but more about things outside of those. I hope everyone had a wonderful Holiday season and is off to a fast start in 2021. This first post for 2021 will be much shorter than normal. I haven’t been doing as much with markets over the holiday. I caught up on a few movies and finished some books, more on that later.

This week I’ll be watching the Senate runoffs in Georgia. According to Forbes, these races are now too close to call. There’s been a lot of discussion around what these two seats mean for the next two years in politics and fiscal policy. I think the markets overreact either way. There’s also the outstanding last ditch efforts of the GOP to somehow keep control of the Whitehouse. If anything comes of this, I honestly don’t know what would happen.

Earnings Watch

For this week, we don’t have many names reporting, but there are a few names of note. Constellation Brands (STZ), a company with one of my favorite product lineups, reports Thursday. There’s also Micron (MU.O) and Walgreens Boot Alliance (WBA). I’m watching all of these, but really interested in just one, Bed Bath and Beyond (BBBY.O). There’s a huge predicted surprise of 32% for their EPS number. There’s also a bold estimate from Wedbush’s Seth Basham. I’ll be looking to see if some of the older estimates that are not included in the SmartEstimate update their numbers before they report. There are some estimates out there from just after their last report in October. If you remember, their last report was a huge surprise. With the Street expecting a loss of 22 cents, they reported a profit of 50 cents and the stock ripped. The stock has a huge short interest and the Starmine Short Squeeze score is 93. The stock has north of 72M shares short, and only 81M of active long** positions . The options traders look to have opened a lot of new call positions on Thursday and have been very aggressive bidding up the out of the money calls too.

**Active long: Free float shares - minus index fund holdings

Best of the “week”

This was just amazing to listen to. Moderna CEO Stephane Bancel talks about how the development of the mRNA vaccine came about. This story fascinated me and I think this might be the future of drug development.

The Machine That Made the Vaccine: Company, Platform, Innovation - Listening time: 40 minutes


Best of the rest

I enjoyed this conversation with Ben Hunt. Ben is an interesting person to follow and he’s not afraid to call out some extreme opinions. In this chat, Ben joins Jeff Sherman of Doubleline to discuss a few hot button topics. My favorite was Ben’s mention of fiat news, which he says is not fake news, but opinions packaged as news. He thinks that news outlets like CNBC use this to drive ratings because there really isn’t anything to report on all day long, so they effectively make their own news.
Dr. Ben Hunt Immerses Us in Market Narratives, Fiat News and Jolts of Dopamine - Listening time: 60 minutes

Reuters’ Predictions are one of my favorite stories around the end/beginning of the year.
Viewsroom: Predictions and prescriptions (Part 1) - Listening time: 24 minutes
Viewsroom: Predictions and prescriptions (Part 2) - Listening time: 22 minutes

With Bitcoin (BTC=) crossing the 33,000 mark for the first time over the weekend, I couldn’t not include something around this asset. I thought this was a great macro discussion between Brent and Preston around the future of Bitcoin.
Bitcoin & the Macro Backdrop - w/ Brent Johnson from Santiago Capital - Listening time: 64 minutes

This is a nice quick read from PIMCO. These five charts each tell a slightly different story. Looking ahead, I thought the last one was the most positive. The first two-thirds of Q4 are looking positive and defaults are likely to be about the same as the pre-COVID Q1 numbers.
Today's Credit Opportunities in 5 Charts


As I mentioned, I’m not going to reproduce a Best of or Year End Summary, because many others do this. I did however find this chart from the Visual Capitalist team useful. It’s different in that it shows asset class performance, but also the max drawdown and returns off the lows. It’s a different way of looking at this information.

How Every Asset Class, Currency, and S&P 500 Sector Performed in 2020

One last thing I will share that keeps in line with this blog. Last year among all the weekly articles and podcasts, I also read, or listened (Thank you Audible!!) to 38 books. You can follow me here if you’d like to follow what I’m reading. I'm going to need some recommendations as this year, I'm trying to read 50 books. I'm mostly into finance, sales, or American history. 

Here are the top 5 books on my list from last year: 

  1. Unbroken: A World War II Story of Survival, Resilience and Redemption by Laura Hillenbrand - This was an incredible story of a World War II hero. I never saw the movie, but plan on watching soon. This is almost unbelievable.
  2. Range: Why Generalists Triumph in a Specialized World by David Epstein - Great argument against the super specialism we see in society today. This is not just a business book, but worth reading if you have kids in sports too.
  3. Can't Hurt Me: Master Your Mind and Defy the Odds by David Goggins - Today, Goggins is a freak of nature, but learning how he got there helped me understand what sort of privileged life I have had.
  4. Ultralearning: Master Hard Skills, Outsmart the Competition, and Accelerate Your Career by Scott Young - Our director of revenue at Refinitiv loves the phrase Learn-it-all, this book will help you get there.
  5. Leadership Strategy and Tactics: Field Manual by Jocko Willink - Jocko helps you with ownership and strategy using his experiences leading Navy Seals in Iraq as well as his current business. I highly recommend this for anyone, not just managers, but especially managers.

Thanks for spending some of your time with me.
Michael

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