Eye On The Market

Topics: if people avoided SPACs instead of avoiding COVID vaccines, the US would be both wealthier and closer to herd immunity.  An update on our SPAC analysis from last February, and a look at the strange mathematical paradox that ends up understating some critical COVID vaccine efficacy data

 Politics, vaccination resistance and the Delta variant; US economic recovery update; big tech reliance on acquisitions to fuel growth

COVID and the Delta variant; the Fed as firefighter and arsonist; US-China economic divorce picks up steam; and the pig-snake inflation timetable (how long until we know if there’s a permanent wage/price rise).

Every two years, we take a close look at the performance of the private equity industry given its rising share of institutional and individual portfolios.  Our findings this year: the private equity industry is still outperforming public equity, but this outperformance narrowed as all markets benefit from non-stop monetary and fiscal stimulus, and as private equity acquisition multiples rise.  We...

Absent decarbonization shock treatment, humans will be wedded to petroleum and other fossil fuels for longer than they would like. Wind and solar power reach new heights every year but still represent just 5% of global primary energy consumption. In this year’s energy paper, we review why decarbonization is taking so long: transmission obstacles, industrial energy use, the gargantuan mineral and p...

Biden goes for broke on growth, driving coincident and leading indicators to all-time highs; the Value recovery and where it goes from here; COVID herd immunity, the path to normalcy and rising concerns about thrombosis risks from vector vaccines.

If long-term US interest rates stay below 2%, that’s a great sign for equity investors. But if they don’t… it’s amazing to see the pretzels that people contort into to convince themselves that rising rates are not a problem for equities. Also: an early look at the Zoom shock on commercial and residential real estate, and the diverging COVID trends in the US vs Europe.

Short stories on the global recovery, plummeting COVID infections, Larry Summers & the bond market, SPAC sponsors, renewable energy, the Texas power outage and the battle for the Republican Party.

In this month’s note, we look first at the SPAC capital raising boom. Our main focus: returns to date for SPAC sponsors and investors, and the large wealth transfers taking place among SPAC participants. Second topic: Biden’s early stage energy policies (ban on new oil & gas leases on Federal lands, Keystone XL pipeline termination and conversion of Federal fleet to EVs) will probably end up incre...

Equity markets are flying. So is COVID. So are corporate reactions to Congressional objectors.

Michael Cembalest’s views on what will drive markets and the economy in 2021, as well as the challenges we face that stimulus and vaccines can’t solve.

The belief in election illegitimacy is spreading faster than COVID. With field reporting from Alexander Fleming, Rutherford B Hayes, Richard III, Bob Newhart and the Attorney General of Ohio.

The Armageddonists were not rescued from underperformance purgatory by COVID, and markets are at all-time highs again with prospects for further gains in 2021.   However, I can think of something that could rescue them, at least temporarily: the risk of electoral illegitimacy and Constitutional mayhem on January 6th.

For the first time in 100 years, a challenger unseated an incumbent President at a time of strong economic and market tailwinds. However, the election delivered a clearer referendum on the President himself than on policy issues dividing Democrats and Republicans; it looks like divided government may remain. So, in this week’s Eye on the Market, a (possibly) divided government investor playbook. T...

The problem with states that do not allow pre-election processing of absentee ballots; a COVID Rorschach test; Trump and Biden deficit explosions, equity market impacts and trends that are being priced in as Democratic Sweep odds rise; Vaccine timing & virus-sensitive businesses.

The election as referendum on America: how well does the “system” work, and for whom?

The cost of engineering a US recovery as the world waits for a vaccine; Biden agenda on taxes/spending; Tech stocks (2020 vs 1999); COVID and The Fountainhead; US election rules, dates and process in light of derogatory comments on mail-in voting by the President and Attorney General.

US virus decline plateaus; UK is a long way from herd immunity; A post-COVID US housing shift to less dense locations with cheaper land; Lost in Translation: T-cell knowns and unknowns, and financial industry co-conspirators in the war on science.

US infection plateau; Liz Cheney; Hong Kong’s reaction to a mini second wave; Phase I Oxford vaccine antibody response; US spending and hospitalization trends; an update on infections in US hotspots and Latin America; Government march-in rights and herd immunity.

US recovery marches on; why deaths are diverging from sharply rising infections; the American scientific trust gap vs the rest of the world; energy paper client Q&A.

While COVID temporarily reduced global CO2 emissions to 2006 levels, a faster and broader renewable energy transition will be needed to result in more permanent reductions. This year’s topics include decarbonization of steel; the amount of energy storage, reforestation and carbon sequestration required to make an impact; and the financial, political and environmental risks to US energy independenc...

In this week’s Eye on the Market, we review topics from our recent client Zoom calls. Topics include: risk of inflation, second waves of infection, the effectiveness of lockdowns and Biden’s taxation and spending agenda.

An update on the COVID-19 crisis as the US prepares to reopen despite having one of the highest infection rates in the world. Additional topics: monoclonal antibodies and anti-viral trials; the growing gap between markets and the economy; S&P 500 earnings haves and have-nots; regional equity performance (Europe loses again) and leveraged loans at a time of rising bankruptcies.

Michael discusses updates on the Covid19 crisis, including the potential path of decline in US infection rates, the impact of the new fed facilities, the difference between virus and serology testing, and the new vaccine efforts underway.

Michael discusses what the government can and can not fix during a pandemic. In particular, he walks through US high frequency manufacturing and consumer data, the Fed measures, the studies on Chloroquine, and infection outbreak prediction models.