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Daily Brief 11/25 – Hedge Funds can be wrong too

Hedge Funds get it wrong too: Back in June of this year, value investing legend Jeremy Grantham took a net short position in US stocks for the first time since 2008. Grantham articulated his reason in a letter to his funds investors saying, “we have never lived in a period where the future was so uncertain” and yet “the market is 10% below its previous high in January when, superficially at least, everything seemed fine in economics and finance. And if not “fine,” well, good enough. The future paths include many that could change corporate profitability, growth, and many aspects of capitalism, society, and the global political scene.”

S&P 500 since June, oops

Needless to say it was the wrong call. Grantham, like many others in the financial industry, highlighted how disconnected the market and the economy were becoming and further pointed out, “”the current P/E on the U.S. market is in the top 10% of its history… the U.S. economy in contrast is in its worst 10%, perhaps even the worst 1%…. This is apparently one of the most impressive mismatches in history.”

You can read the investor letter here. What worked yesterday, doesn’t work today. And what works today, won’t work tomorrow.

Dry Ice: Per Bloomberg, “United Parcel Service Inc. has set up its own dry ice production and will provide portable, super-cold freezers to its health care customers as the courier prepares for the massive roll out of vaccines against Covid-19. UPS can make as much as 1,200 pounds (540 kilograms) of dry ice an hour near its Worldport air hub in Louisville, Kentucky, and can ship it the next day to U.S. and Canadian hospitals and clinics”

UPS is also offering to deliver and hook up the small freezers, made by Stirling Ultracold, for care providers. I know what you’re thinking, an no Stirling Ultracold is not a publicly traded company. These enhanced capabilities underscore the quick vaccine rollout that is weeks ago.

Stirling Preps Global Communities for COVID-19 Vaccine
A Stirling Ultracold freezer

Half the Labor Force Works from Home: According to the US Census Bureau, 37% of employees were teleworking between late October and early November. However rates can vary widely by state and city, depending on a variety of factors.

In big cities, the share of adults in Boston, Seattle, Los Angeles, New
York and Atlanta who say they were working from home ranged from
45% to 55%. In San Francisco it’s 56.2%, in Washington DC, 55.6%.

Lower-earners don’t have the same opportunity to work from home as higher earners. More than 61% of households earning more than
$75,000 a year said they were able to substitute telecommuting
for some in-person work. For those earning less than $75, it’s about 21% according to the Census figures. Is work from home here to stay? We think the greatest shift in % of workforce working from home will tilt towards developers, coders, and IT professionals. We can think of some of the immediate ramifications being increased cloud usage, more teleconferencing, less travel – helping obvious names like MSFT, AMZN, ZM, among others. However the second order effects of this shift in work will be where the greatest upside in this theme will be.

Working from home: When it works and when it doesn't
If you’re a city white collar professional, chances are this is what you look like

Tweets and Charts we like:

This is a Beta rally not a value rally. There is no value in Energy. Beta defined here

Quantian isn’t wrong here. Have you heard about Moderna pre-Covid?

Junk rally is appropriately named too.

Gold Flows.

Stonk Flows:

That’s your millennialmkts daily debrief. Thanks for reading, if you like this content please consider following this blog and following us on twitter @millennial_mkts

Posts are not investment advice or endorsements.

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