Category: zerohedge

By Michael Zezas, chief political strategist at Morgan Stanley

The benign market reaction last week might lead you to believe that the failure to reach a deal on another round of fiscal stimulus in the US means more aid isn’t required to keep markets and the economy on their V-shaped recovery path. On the contrary, it remains crucial, and the stakes are now even higher.

Consider the following:

• The risks to stimulus action have risen, but so has its size if enacted: The lead-up and subsequent reaction to the stalled negotiation by Republicans and Democrats delivered two important insights. The first is that the size of a deal, if it comes together, is likely higher than we and many investors expected. That’s because there’s bipartisan agreement on another round of stimulus checks to households, which we estimate has a price tag of US$300-600 billion. Additionally, we’d assumed Democrats would settle for US$250 billion of state and local aid, a number in the zone of what Republicans have already offered per various media reports. That a deal hasn’t materialized suggests that Democrats are holding out for more. Taken together, the price tag for stimulus appears more in the US$1.5-2 trillion range, rather than our initial US$1 trillion estimate. The second is that risks to the deal have risen. The president’s executive orders attempting to extend supplemental unemployment benefits, temporary payroll tax relief, and eviction moratoriums have likely created an incentive for both parties to watch and wait for how public opinion is shaped by them. Hence, it would not be surprising if negotiations remained stalled into September, given the passage of many of the catalysts for action (expiry of unemployment benefits, moratoriums, etc.). As anyone who prices options knows, time equals uncertainty.
• The V-shaped recovery is under way, but a lack of stimulus could interrupt that progress: As our global economics team points out, there has been a solid V-shaped rebound so far and the US economy has already made up a lot of lost ground. However, prolonged delays in stimulus could weigh on household consumption and prompt state and local austerity, where we estimate that, without aid, states are facing US$180-375 billion of revenue shortfalls through FY21.
• The sharp rally in risk markets leaves less obvious upside: At current levels, we’re near price targets in key asset classes, like US equities and credit, which our colleagues set on the assumption of a V-shaped recovery. Accordingly, the easy gains of reopening the economy may be largely priced in, and the uncertainty about whether economic growth can continue apace without fiscal support may not be.

Hence, another round of stimulus is the difference between ensuring that the economic recovery continues uninterrupted and a meaningful short-term pullback in growth. It may also be the difference between a confident 6-12- month view on a variety of risk assets and a meaningful near-term correction.

From our perch, we expect Congress to hammer out a deal in time, and hence maintain confidence in the V-shaped recovery. This is largely because of the executive orders issued last weekend. We detail our arguments here, but in short, the mechanics of the orders raise significant questions about how quickly unemployment benefits can be delivered and in what size. They also raise questions about if payroll tax benefits can be delivered at all. Hence, we expect building political pressure to address these deficiencies to bring Congress back to the negotiating table.

What would make us change our view and flag a more cautious market outlook? Time and money. If talks remain stalled deep into September, and reports are that Republicans and Democrats remain far apart on top-line numbers for the deal, it may be too close to the election to get it done. The policy disagreements on stimulus may have hardened and politicians may be eager to get on the campaign trail and away from DC ahead of the November election.

Disney’s series, “The Owl House”, is now the first official animated show to feature a bisexual main character. Both Variety and the Daily Mail described the introduction of the character as “making history”.

The show’s 14 year old main character, Luz Noceda, is portrayed as a normal teenager who goes to another world to become a witch. On the show, she has shown both attraction to male characters and recently with a recurring female character named Amity. 

It is revealed that Luz had intentions of asking the other female character to a prom-style event and the series shows the two of them sharing a dance together in an episode. 

The creator of the series, Dana Terrace, confirmed that the show was, in fact, alluding to an LGBTQ relationship.

She wrote on Twitter: “In [development] I was very open about my intention to put queer kids in the main cast. I’m a horrible liar so sneaking it in would’ve been hard. When we were greenlit I was told by certain Disney leadership that I could not represent any form of bi or gay relationship on the channel.”

She says that Disney, who once pushed back on the idea, is now offering its support. 

I’m bi! I want to write a bi character, dammit! Luckily my stubbornness paid off and now I am VERY supported by current Disney leadership. (Thank you @NashRiskin and team!) Not to mention the amazingness of this crew.

— Dana Terrace (@DanaTerrace) August 9, 2020

Terrace Tweeted: “I’m bi! I want to write a bi character, dammit! Luckily my stubbornness paid off and now I am very supported by current Disney leadership.”

The show’s former animation supervisor Tweeted out the storyboards for the dance scene and said it was his “first time getting to do anything even remotely queer.”

The storyboards for the dance. This was a collaboration between Hayley Foster and myself. At some point I got carried away and timed it to Veo Lu Sluice by Kumi Tanioka.

This was my first time getting to do anything even remotely queer, and I’ve never been prouder of any board. pic.twitter.com/r0ljIGRxTV

— Spencer Wan (@SpencerWan) August 9, 2020

Authored by Bryce Coward by Knowledge Leaders Capital blog,

Over the last few weeks there has been quite a bit of chatter among strategists about whether the market is undergoing a sustainable rotation into “value” stocks from “growth” stocks. It’s a bit surprising to us to see the outpouring of commentary on the issue, since by our work value has only outperformed growth by 3% or so since mid-July. Nevertheless, it is what it is, and so we thought we’d throw our hat into the ring on this issue.

When it comes down to it, there are a few key macro variables that are highly correlated with the relative performance of value vs growth – most of them measuring the reflationary impulse in the system in different ways. As reflation (or expectations thereof) plays out, it tends to be beneficial for the relative factor performance of value. This of course is due in part to the relatively higher degree of operating leverage among the value constituents. After all, a reflation that lifts all boats would tend to be highly accretive to the earnings of companies with relatively more levered income statements and balance sheets. The improvement in earnings subsequently actually reduces balance sheet leverage among value continents to the extent that those earnings are retained, which provides a second-order reflexive dynamic as well.

As the reader can see in the table below, financial statement measures that are indirectly related to operating leverage like PP&E turnover and net debt are significantly different for value and growth companies. Value firms, having relatively higher levels of fixed assets, would stand to have a more pronounced improvement in PP&E turnover than growth firms in an across-the-board reflation. Value firms also have higher net debt levels than growth firms. As top lines improve in a reflation scenario, the debt servicing drag becomes relatively less for value vs growth firms.

So what are our market-based measures of the reflation dynamic saying currently? Are they telling us to get ready for a more durable move into value?

The best we can say at this point is…maybe.

Let’s start with the yield curve. The 10-year minus 2-year Treasury yield spread is one of the best market-based reflation/disinflation measures out there since it factors directly into the profitability of bank lending, and therefore the velocity of money. To the extent that Treasury yields continue to have signaling value, the message coming from they yield curve is that there has been no mechanical change in the reflation dynamic since March. What we would need to see from the yield curve to signal a wholesale shift in value vs growth would be a pronounced widening of the 10-2 spread, which has yet to play out.

Next are inflation expectations. In charts 2 and 3 we should TIPS breakeven inflation expectations and 5-year 5-year forward expectations. The latter measures what 5-year inflation expectations are 5-years from now, which is a preferred indicator of the Fed. They are currently both sending a similar message, which is that market-based measures of inflation have moved up a lot since March, which should be supportive of value vs growth.

But, we note that those inflation expectations remain anchored below average levels of the last cycle, which explains why value stocks have continued to underperform growth for most of the year. The recent experience suggests that we will need to see inflation expectations actually break above trend to get a more durable rotation into value.

In the next two charts we highlight the how the relationship between industrial and precious metals informs, or at least reacts coincident to, the value/growth dynamic.

Lasting reflations are typically associated with rising fixed capital formation and production, which requires rising usage of industrial metals such as copper or even silver. The metals with more industrial uses tend to outperform stores of value (gold) in reflation scenarios. The message we are getting from the metals space currently is mixed.

Copper stopped underperforming gold earlier in 2020, but has made no real relative progress to speak of since then.

Silver, on the other hand, has shown a more pronounced improvement vs gold.

Value stocks have outperformed growth stocks by a few percent since July, but at this stage we lack confirmation from market-based measures of reflation that the move is more than transitory.

What we need to see more of is incentive for money growth (steeper yield curve), above trend inflation expectations, and confirmation from industrial metals that nominal growth is expanding. There is of course a policy mix that could usher in those things, like another round of fiscal and monetary expansion, but we are not there yet.

With more people telecommuting than ever due to the COVID-19 pandemic, it appears that the allure of cramped, expensive urban housing, poo-covered sidewalks and homeless people shooting up in Starbucks has worn off.

According to online real estate company Zillow, there is a mass exodus of people looking to get out of San Francisco real estate – as the housing market is on fire in the Bay Area suburbs, all the way to Lake Tahoe.

According to the company’s “2020 Urban-Suburban Market Report,” home prices in the city have fallen 4.9% year-over-year, while inventory has jumped 96% during the same period, as a flood of new listings hit the market. Zillow notes that they aren’t seeing the same trend in cities such as Miami, Los Angeles, Washington D.C. or Seattle.

Via Zillow:

When comparing the principal city to its surrounding suburbs, the San Francisco metro area does break the mold. Higher levels of inventory, up 96% YoY following a flood of new listings during the pandemic, are sitting on the market in the city proper, a significantly larger jump than the surrounding suburbs. Whereas in similar cities like Los Angeles, Miami, Boston, Seattle, and Washington, D.C., declining or flat inventory is a consistent trend within and outside the city limits. Relatively higher inventory has different causes by city, and is not clearly attributable to either supply or demand. In San Francisco, though, the softening is clear as sellers inundate the market and buyers have not changed their pace to match — newly pending sales in the city are up only 1.7% YoY. 

Meanwhile, both urban and suburban markets nationally are seeing homes sell more quickly than they were in February, while “most areas have seen price cuts decelerate relative to February, and slightly more so in the suburbs,” according to the report.

That said, Zillow is seeing about the same percentage of people searching for urban vs. suburban listings YoY, which would suggest that at least as of June, the ongoing BLM protests which have turned urban cities into Escape From [insert your city here].

Authored by Rick Moran via PJMedia.com,

That dastardly Donald Trump is at it again. He is either the evilest man ever to hold the office of president or the dumbest. He is either a Machiavellian genius manipulating the media and his hypnotized followers or a bumbling know-nothing idiot.

Trump is being accused of sabotaging the November elections because he won’t give the postal unions and incompetent managers in the postal service $25 billion to play with. The money will stave off catastrophe for about a year at the rate the USPS is burning through cash. Without that money, we’re informed by those in the know, thousands — no, tens of thousands — no, millions of voters who wait until the last minute to mail in an absentee ballot might not have their votes counted because, well, Trump.

The procrastinators in America are up in arms and plan a demonstration to show their outrage. But it probably won’t happen until after the election since that’s when they’ll eventually get around to it.

The “crisis” in postal delivery presupposes that, prior to Trump’s shenanigans, the USPS was doing fine — nothing that a few tens of billions of taxpayer dollars couldn’t fix. In fact, that’s what the postal unions are saying. In a statement released on Saturday, the letter carriers and postal workers’ unions assure the public that even without the money, they can do the job.

“The National Association of Letter Carriers (NALC) and the American Postal Workers Union (APWU) know the truth; the members of these unions are the people who actually process and deliver the mail. Postal Workers and Letter Carriers both say, unequivocally, that no matter how much the administration tries to undermine trust in the postal system, the system remains fully capable of delivering every single ballot cast by mail in a secure and timely manner.

“Indeed, the NALC assures that even if every single vote in the November 2020 election were cast by mail, the U.S. Postal Service would have no problem delivering the ballots, whether or not Congress provides the funding included in the HEROES Act.

“The U.S. Postal Service has an entire structure in place to coordinate with state and local election boards to facilitate secure and timely delivery of mail ballots.

So what’s all the hubbub about? The letter carriers say they can deliver the ballots on time. The postal employees claim they don’t need the extra cash.

Where, pray tell, is there a “crisis”?

Nancy Pelosi knows. In fact, she’s about to call the members of the House of Representatives off the campaign trail and back to Washington to deal with the “crisis.”

Politico:

Pelosi and other top Democrats, including House Majority Leader Steny Hoyer (D-Md.) and House Majority Whip Jim Clyburn (D-S.C.), discussed the possibility of returning early during an emergency leadership call Saturday afternoon.

Democrats are looking to address organizational issues at the Postal Service in the coming weeks, not to provide additional funding at this time, according to sources familiar with the discussion.

Nothing says “crisis” in Washington quite like pulling politicians away from their campaigns for a political stunt like holding an “emergency” session of Congress.

One option would be to vote on a modified version of a bill introduced by House Oversight Chair Carolyn Maloney (D-N.Y.) earlier this week that would prohibit USPS from implementing a planned organizational overhaul that critics maintain would handicap mail-in voting.

Other top Democrats also floated addressing other issues, including expired federal unemployment benefits and voting rights. But Democratic sources said the immediate focus — at least for now — is preserving the Postal Service ahead of the election.

So now Democrats want to become experts at mail delivery and dictate to management how the mail is to be delivered?

Sheesh.

The media is doing their part in fanning the flames of crisis. Some of the headlines are choice.

1. “USPS removes mail collection boxes and reduces post office hours as critics accuse Trump administration of voter suppression” — CNN  (Obama removed tens of thousands of mail boxes without a peep from the unions or Democrats)

2. “Trump’s assault on the U.S. Postal Service gives Democrats a new campaign message” — Washington Post

3. “Postal Crisis Ripples Across Nation as Election Looms” — New York Times

4. “Exclusive: UPS, FedEx warn they cannot carry ballots like U.S. Postal Service” — Reuters

That Reuters headline is hysterical. UPS and FedEx are not supposed to carry ballots. They aren’t the U.S. Postal Service. There would have to be an act of Congress before they could carry ballots.

But if it gins up fear and outrage, all the better…

When builders go to the lumberyard, they expect two-by-fours in ample supply. As Galvnews.com reports, it’s like expecting to find milk at the supermarket.

But, in recent months, something has changed… dramatically… Since the lows in early April, the price of Lumber (futures) has exploded 200%…

“We had to pay three times the price,” exclaims Ron Woods, the owner of Firehouse Builders, a general contracting company that specializes in building fences, decks and other smaller projects.

In fact, the surge in prices sent Lumber to its most expensive…ever!

A building boom? This is “great news” some might say as it indicates ‘demand’ is high and the economy is “getting back to normal,” right?

Wrong!

As Woods explains, “the explanation they had for us was that COVID-19 shut down the plants that treat the wood, and that finally caught up.”

So, it’s the supply stupid! And looking at the US construction spending data confirms it is anything but ‘demand’:

“The supply chain was screwed up,” said Wilson, the owner of Wilson Construction in Galveston.

“Dimension sizes were in limited supplies; even something as simple as a two-by-four-by-twelve Southern yellow pine treated was in extremely short supply.”

In fact, as Galvnews.com reports, the price changes are affecting all sorts of basic building materials, said Al Fichera, the owner of Fichera Builders in Galveston. In the past two weeks, sheets of plywood have gone from $15 a sheet to $34 a sheet, he said.

It’s normal for the price of building supplies to fluctuate, he said, but that kind of spike is unusual.

The situation now is that builders have to search wide and act fast to obtain the material they need.

“The prices have gone up and there’s nothing even on the shelf,” said Fichera.

“If you order it, it may be weeks out.”

Ultimately, the added costs that come from buying supplies will be passed on to homebuyers, said Bill Schick, who sells lumber for Raleigh, North Carolina-based Building Materials and Construction Solutions.

“The price increase gets passed on to the end consumer,” Schick said.

“Future homeowners and people remodeling will end up paying the brunt of the price increase.”

And this cost will likely rise further as building permits are beginning to re-accelerate.

Authored by Edward Chancellor, ‘op-ed’ via Reuters Breakingviews,

Alice was tired of studying for the CFA exams, the figures in the spreadsheet were blurry, she laid her head on the desk…

Her first day at Tweedle Asset Management was going to be a busy one. She was escorted around the offices by a young staffer named Otto. Their first visit was to the bond team. Fixed income was Alice’s keenest interest.

“Do you hold bonds for income?” she eagerly asked. Everyone laughed.

“Are you dreaming?” the desk head replied rudely. “The coupon is subtracted from the principal, not paid out. If it’s income you want, you should take out a Danish mortgage, they pay very well. Or sell short Swissies.”

“But why own a bond, if it doesn’t pay interest?” replied Alice, who’d read her Homer and Sylla assiduously.

“As long as yields continue declining, even at negative rates we hold bonds for capital gains. If you want dividends, go ask the equity folks.”

“I see,” said Alice doubtfully, hoping that stock market investors would prove more sensible.

At least they valued investments by discounting future income streams.

But on opening a door marked “Fundamental Active Equity”, she came across an empty trading floor. 

“Oh, we closed down that team last month – they’d been underperforming for decades,” said Otto.

“What was their problem – did they buy overpriced stocks?” Alice asked, keen to show off her knowledge of Fama and French.

“That’s exactly what they didn’t do!” replied Otto scornfully. “They stuck with value, and as everybody knows value sucks. If you want to outperform, you’ve got to show your FANGs.”

This didn’t sound quite right to Alice, who wondered how Otto ever passed the CFA exams.

“If you’ve sacked all your fundamental investors, who manages your equity portfolios?”

“Nobody, exactly. All the money is passively invested in index funds. As they say, ‘if you can’t beat the market, at least you can replicate it.’”

“But that means nobody is assessing the stocks’ fair value. It sounds like the market’s on autopilot,” she commented.

“Forget about equities, Alice,” Otto advised kindly, “that’s no longer where the action is. If you want to meet real investors, go visit the VC team.”

So, a week later, Alice pushed through the swing doors to enter Tweedle’s fancy offices in Menlo Park. Everything was just as Alice had imagined, complete with beanbags and free candy-vending machines.

“What type of companies do you invest in?” asked Alice of the young VC named Anna, who showed her around.

“We invest in unicorns,” replied Anna smartly.

“That must be difficult, because unicorns are mythical creatures,” Alice joked.

“Well, there are hundreds of unicorns in Silicon Valley – a unicorn is just a company with a fabulous valuation. Still, the business side of affairs is pretty mythical,” she added with a smirk.

“What do you mean?” asked Alice, more dumbfounded than ever.

“Well, most unicorns are just black boxes. If you open the box, it turns out to be empty.”

“That doesn’t sound like a very wise investment,” said Alice primly.

“True enough, but they make very good speculations. Besides, our aim isn’t to find companies that do anything useful or will ever make a profit. No, we look to get in at an early funding stage and exit at the IPO. That’s where the real money is made.”

A few days later, Alice spent the day with the private equity team, Tweedle’s highest-compensated employees.

“How do you add value?” she asked to get the conversation going.

“There are only three things you need to know about private equity: leverage, leverage and leverage,” replied a slick young man in a bespoke Savile Row suit. “Our business is financial engineering.”

“But isn’t it risky to load companies with too much debt?” asked Alice, whose vague understanding of Modigliani-Miller taught her that you can’t create value just by adding debt.

“Oh, all the risk is carried by the creditors – we stuff them with covenant-lite loans, payment-in-kind bonds, and the like. They’ll take any dreck for the tiniest slither of income. And when the proverbial hits the fan, we refinance.”

“Everything seems so strange,” Alice thought to herself. “I don’t think I’m cut out to be an investor, after all. Perhaps I’d enjoy economics research more.” 

That’s how she came to find herself knocking on the door of Dr. Oirob, head of Tweedle’s monetary and economics department.

“The highly abnormal is becoming uncomfortably normal,” intoned the doctor, trim beard and bespectacled with a shrewd, playful look on his face. “Interest rates have been pushed down to unimaginable levels. There is something vaguely troubling when the unthinkable becomes routine.”

“At last, here’s someone I understand,” Alice mused, slipping into an empty chair.

“Central banks have stepped through a mirror,” continued Oirob excitedly. “They used to struggle to control inflation. Now they can’t push it up. They used to oppose wage increases, now they urge them on. It’s the same with fiscal expansion. We were taught that inflation was monetary, and that economic activity was real, but now it seems that inflation is real and what we thought was ‘real’ turns out to be purely financial. Everything is upside down.”

Alice now wondered whether she understood any of this. To change the subject she asked:

“Isn’t Modern Monetary Theory the cure to all our problems?”

Alice really was au courant with the latest trends in economics. 

“Why those snake-oil peddlers,” replied the sage, showing an irascible side, “would have us believe six impossible things before breakfast – government debt doesn’t matter, deficits are the cure not the problem, governments don’t have to raise taxes or issue bonds, they can just print money, blah, blah. It’s the most complete nonsense!”

“Here’s the root of the problem,” Oirob continued, his eyes burning intensely.

“For two decades or more, central banks have played around with interest rates, pushing them lower and lower. They meant well, but didn’t understand they were messing with the price of time. If you set the clock – the tempo of capitalism – to run backwards, the normal order of things breaks down: companies turn into zombies, herds of unicorns appear, investment discipline disappears. Wealth becomes virtual. Inequality is unleashed. Society melts down, markets melt up…”

At this point, Alice opened her eyes. Her face was glowing in the reflection of the monitor. It had all been a dream, a most wonderful dream. Now, it was back to dull reality. She clicked on the Reuters website to see if anything had happened while she slept. Nothing remarkable, it seemed, just a story about a new strain of the cold virus spreading in central China.

As we continue to move one day closer to the lawless dystopian war zone that Bill De Blasio envisions for New York City, bullet proof vest sales are skyrocketing. 

Fed up with the litany of shootings and spikes in crime in the city since the Mayor’s cries to defund the police, citizens are now starting to take matters into their own hands. One midtown dealer says that sales of body armor are up 80% over 2019 due to the ongoing “unrest” in the city, according to the NY Post. Most buyers are from the Bronx and Brooklyn, where sales have skyrocketed. 

That dealer, Brad Pedell, told the Post: “You wouldn’t believe the people who call up and say, ‘I’m scared.’”

At the same time, citizens are becoming more standoffish private about their buying habits. One customer, when asked about why she was buying a bulletproof vest, simply responded: “I am a private citizen and I keep a low profile.” Another customer, from Queens, also declined to discuss why he was buying vests. 

Pedell said many of his customers fear being in “the wrong place at the wrong time”.

Even celebrities are taking their safety seriously. “The Amazin Kreskin”, who is an illusionist that formerly appeared off-broadway, bought himself a “high-priced, well-designed” vest last year and said he would now wear it on trips to New York City. “I love the city, but you can no longer feel at home and comfortable with a degree of safety,” Kreskin commented.

He continued: “What really hits home is look at all the innocent children who have been shot. Right now I would not feel comfortable living in New York City.”

Retired NYPD police sergeant Joe Giacalone told the Post: “People are scared.”

He concluded: “Guns are flying off the shelves and now bullet-resistant vests. Bring back cast iron tubs. That’s where mothers used to put their kids to sleep to deflect the bullets.”

By Zach Hrynowski of Gallup,

• 60% of Americans believe pandemic is getting worse in U.S.

• 38% say they worry about the availability of COVID-19 tests

• Majority of Americans still worried about contracting COVID-19

Sixty percent of Americans now say they believe the coronavirus situation in the U.S. is getting worse, a decline of 13 percentage points since mid-July. Meanwhile, 22% — up from 15% in mid-July — say the situation is getting better, while 17% say it is staying the same.

In Gallup polling the week of July 13-19, 73% of Americans said they believed the pandemic was getting worse, the highest level Gallup has yet recorded. At the time, the seven-day average of new COVID-19 cases was 66,000 per day. By Aug. 9, the seven-day average had declined to fewer than 54,000 new cases per day, which may partially account for Americans’ improved outlook.

All Political Parties More Optimistic, Though Significant Gaps Remain

Democrats, Republicans and independents are all less likely now than in mid-July to say the situation is getting worse, although vast party differences remain.

• Republicans are now nearly twice as likely to say the situation is getting better rather than worse. In July, they were evenly divided.

• The nine-point decrease among Democrats in the “getting worse” category has largely shifted to the “staying the same” response, which has increased by eight points over that period. Nine in 10 Democrats still say the situation is getting worse.

• Independents are now eight points less likely to say the situation is getting worse; this decrease is split equally among those who believe the situation is improving and those who believe it is staying about the same.

Worries About Testing, Availability of Medical Services Improving

Beyond increased confidence that the overall coronavirus situation is improving, Americans are also less concerned than they were in mid-July about the availability of hospital supplies and services, and COVID-19 tests. Forty-two percent of Americans are now worried about hospital capacity, and 38% say they worry about the availability of coronavirus tests.

Concerns about hospital services were lower through most of June — and concerns about COVID-19 testing through early July — likely reflecting the lower overall incidence of coronavirus in the American population at that time. As the number of cases began to spike in mid-July, hospitals began nearing capacity in certain regions, and demand for testing surged. Now, with cases again on the decline and more than 70 million tests administered in the United States, Americans’ confidence in their ability to obtain medical services and testing is once more trending in a positive direction.

The percentage of Americans worried about getting COVID-19 has declined slightly in recent weeks. Currently, 55% say they are very or somewhat worried about getting the virus. That compares with 58% in mid-July.

This recent decline may not indicate a coming trend, however, as Americans’ concern about personally contracting the coronavirus has been relatively stable from the time COVID-19 emerged as a public health threat. Since Gallup began collecting data about the coronavirus, the percentage of Americans worried they will become ill with the virus has never risen above 59%, nor has it dropped below 46%.

Implications

While perceptions of the pandemic’s trajectory are currently heading in a more positive direction, Americans’ overall negative outlook and the large partisan gulf in views suggest that COVID-19 will continue to play a role in the November 2020 presidential campaign. Slight declines in Americans’ worry about hospital capacity and the availability of testing may be a good sign for President Donald Trump, who often emphasizes that the United States has conducted more coronavirus tests than any other country in the world. This is further borne out in Trump’s approval ratings, which rebounded by three points in July to 41%, after dropping 11 points between May and June.

Still, 60% of Americans believe the coronavirus situation is getting worse and 55% worry about contracting the virus themselves. Trump’s prospects in November will likely be tied to further easing public anxiety, as well as his ability to create more positive momentum in key policy areas such as testing and hospital capacity.

In addition to the widely publicized changes in Berkshire Hathaway’s portfolio, where as we previously reported Warren Buffett dumped a material amount of his bank holdings in addition to completely selling out of airlines, while making his first ever foray into precious metals with a new $563MM stake in Barrick Gold, there were other quite notable changes in hedge fund portfolios during Q2 as disclosed in the barrage of 13Fs filed on Friday.

As Bloomberg recaps, the 13F filings show that even more hedge funds leaned in to the stay-at-home trade amid the Covid-19 pandemic. Of note, Home Depot was a top new buy for Balyasny Asset Management, while Pershing Square Capital Management and Adage Capital Partners boosted stakes in Lowe’s. Coatue Management boosted its stakes in Peloton and Zoom Video Communications.

Netflix was one notable exception as Appaloosa, D1 Capital Partners and Viking Global Investors cut their stakes. The streaming giant was a new buy at Tudor Investment Corp.

Some funds alswo snapped up shares in Alibaba Group Holding Ltd. Ray Dalio’s Bridgewater Associates and Stan Druckenmiller’s Duquesne Family Office were among those that boosted stakes in the Chinese internet company. Maverick Capital, on the other hand, trimmed its holdings.

In any case no matter what they did, hedge funds continue to dismally underperform not only the broader market but a basket of stocks beloved by retail investors.

Worse, the Sharpe ratio of equity long/short hedge funds is now a negative 0.6. Perhaps it’s time hedge fund paid investors to “manage” their money.

In any case, for those who still care, below is a summary of what the most prominent hedge funds did in the second quarter, courtesy of Bloomberg:

ADAGE CAPITAL PARTNERS

• Top new buys: RPRX, ABBV, W, HZNP, FIVE, ST, CCK, TRV, USB, JCI
• Top exits: BMY, GILD, ETN, PNC, MAS, EXC, AON, CCMP, NI, CX
• Boosted stakes in: BURL, PYPL, FTV, ITT, LOW, GOOGL, TMUS, EYE, AZO, BMRN
• Cut stakes in: LMT, JNJ, PFE, HON, VZ, VRTX, TGT, VMC, PXD, LLY

APPALOOSA

• Top new buys: T, V, MA, PYPL, DIS, SYY, EMR, MO, SQ, TEN
• Top exits: INTEQ, XLU, BKLN
• Boosted stakes in: TMUS, BABA, MU, HCA, MSFT, BSX, TWTR, WFC, CRM, GT
• Cut stakes in: PCG, UNH, TSLA, HUM, VST, AMLP, AVGO, NFLX, QCOM, ADBE

BALYASNY ASSET MANAGEMENT

• Top new buys: SCHW, ABT, TGT, HD, ADBE, SHOP, ITW, COST, C
• Top exits: JCI, AMTD, INTC, CHTR, KR, TMUS, TTWO, NVDA, ICE, ROST
• Boosted stakes in: PYPL, FISV, BABA, JPM, FLT, NSC, LITE, DKS, QCOM, LHX
• Cut stakes in: BSX, LOW, DG, FIS, ABBV, BAX, INTU, JD, BK, ETFC

BAUPOST GROUP

• Top new buys: HCA, VRNT, VTR, SSNC
• Top exits: LNG, ET, XPO, SPR, CARS
• Boosted stakes in: LBTYK, TBIO, QRVO, ATRA, HDS
• Cut stakes in: FB, GOOG, PCG, UNVR, ABC, HPQ, CLNY, VIST, AKBA

BERKSHIRE HATHAWAY

• Top new buys: GOLD
• Top exits: DAL, LUV, UAL, AAL, QSR, GS, OXY
• Boosted stakes in: STOR, KR, SU
• Cut stakes in: WFC, JPM, SIRI, PNC, MTB, BK, MA, V, CHTR, USB

BRIDGEWATER ASSOCIATES

• Top new buys: UPS, ZLAB, CSX, ECL, TT, RNG, PAYC, ROP, GWW, FICO
• Top exits: TLT, HYG, EMB, RY, TD, TIP, CNI, BNS, TRP, BCE
• Boosted stakes in: SPY, GLD, IVV, FXI, BABA, MCHI, IAU, JD, PDD, VEA
• Cut stakes in: EWZ, LQD, INDA, EWY, EEM, IEMG, VWO, EWW, BAM, EWT

COATUE MANAGEMENT

• Top new buys: BA, DOCU, INO, DXCM, WYNN, HWM, LYV, ALGN, TDG, DHT
• Top exits: RNG, SNAP, BYND, LKNCY, GLUU, ISRG, CGC, STNE, MCD, VGK
• Boosted stakes in: DIS, PYPL, ZM, SQ, CRWD, PTON, LRCX, SHOP, MU, PODD
• Cut stakes in: MSFT, LBRDK, BABA, TWTR, JD, NKE, GPN, CREE, GH, NFLX

CORSAIR CAPITAL MANAGEMENT

• Top new buys: IWO, IWM, WMB, NATR, MFIN
• Top exits: LAUR, RHP, ECPG, ATKR, NMRK, TROX, KRA, FSK, HHC, SATS
• Boosted stakes in: VRT, WSC, GDDY, CC, BH, BBCP, METC, BRK/B
• Cut stakes in: HGV, HMHC, FMC, NWSA, REPH, GOOG, CHDN, C, CUBI, PLYA

CORVEX MANAGEMENT

• Top new buys: TMUS, EXC, EVRG, CMCSA, JPM, IAA, TIF, LYV, PCG
• Top exits: ZEN, CRM, FANG, UNP, VMC, MPC, UNH, ANTM, SPY
• Boosted stakes in: MGM, GLD, BABA, CNP, NFLX, HUM, CNC, MSGS
• Cut stakes in: ADBE, ATUS, ATVI, AMZN

D1 CAPITAL PARTNERS

• Top new buys: JPM, AVB, EXPE, TGT, DEI, AAP, ESS, CVNA, SMAR, PNC
• Top exits: LIN, GWRE, TME, NKE, UNH, BAC, PDD, DHI, INMD
• Boosted stakes in: BABA, USB, JD, LVS, MSFT, HPP, KRC, CCC, LYV, HLT
• Cut stakes in: NFLX, FB, AMZN, DIS, RACE, ORLY, PPD, AZO, SBUX, GOOGL

DUQUESNE FAMILY OFFICE

• Top new buys: TMUS, JPM, XBI, SBUX, BKNG, SMAR, CCL, WFC, LYV, CB
• Top exits: ABT, QCOM, NOW, ADBE, INDA, COUP, TWOU, EDU, SNE, TWLO
• Boosted stakes in: MSFT, JD, FCX, FSLY, BABA, CRWD, RETA, PLAN, FLEX
• Cut stakes in: NFLX, FB, AMZN, WDAY, ATVI, GOOGL, GE, IQV, FIS, DISH

ELLIOTT MANAGEMENT

• Top new buys: WELL, FSCT
• Top exits: LQD, RRTS, ESI, HYG, XOP, NEWR, CSOD, NTNX, CNHI, EGHT
• Boosted stakes in: DELL, TWTR, RYAAY

ENGAGED CAPITAL

• Top new buys: JACK, MGLN, SMPL, IWM
• Top exits: APOG
• Boosted stakes in: STKL, NCR
• Cut stakes in: HAIN

FIR TREE

• Top new buys: SQ, LYV, PS, SNAP, VG, EIX, SABR, EXPE, J, PCPL
• Top exits: FLT, FPAC, BKNG, SHLL, CCH, GOOG, APXT, OAC, DMS, EXPC
• Boosted stakes in: CNC, CTXS
• Cut stakes in: DIS, MSFT, TMUS, LAUR, ANTM, DELL, EXC, CMCSA, SLM, TRNE

GREENLIGHT CAPITAL

• Top new buys: GDX, AAWW, TECK, REZI, JACK, GLD, APG, TPX, SATS, WHR
• Top exits: ATUS, ADNT, CNC, MO, PAYX, AXP, GS, DHR, BRK/B, DIS
• Boosted stakes in: AER, CHNG, NBSE, GPOR
• Cut stakes in: CNX, XELA, CC

ICAHN

• Top exits: HPQ, HTZ, FCX
• Boosted stakes in: IEP, LNG, TEN
• Cut stakes in: CLDR

IMPALA ASSET MANAGEMENT

• Top new buys: LAD, DRI, NSC, HES, CMI, VAC, TOL, ADNT, DOOO, MU
• Top exits: MSFT, PCAR, CSX, KBH, VMC, MA, AMZN, FDX, EXP
• Boosted stakes in: HOG, RIO, AAWW, FUN, WYNN, UFI
• Cut stakes in: TGT, QCOM, KSU, SBLK, TTWO, SIX, KNX, TCKRF, NVR, TECK

JANA PARTNERS

• Top exits: NEWR, JACK
• Boosted stakes in: PRSP, SPY
• Cut stakes in: AXTA, HDS, HI, BLMN, ELY, CAG

LAKEWOOD CAPITAL MANAGEMENT

• Top new buys: HDS, CRL, LBTYK, LBTYA, UE, CDK, NKLA, ABG, CROX, SHAK
• Top exits: WUBA, AMZN, ICE, FNF, TWO, YY, RNR, TPR, WW, REAL
• Boosted stakes in: FAF, BABA, ANTM, AXS, BIDU, BHC, HCA, SKX, C, ACGL
• Cut stakes in: GOOGL, CI, FB, MA, DELL, GS, AGNC, APO, CMCSA, BC

LANSDOWNE

• Top new buys: C, VMC, LUV, ED, FCX, RYAAY, AES, COG, TMUS, BKNG
• Top exits: DHT, NKLA, AGI, TT, IQ, BABA
• Boosted stakes in: MU
• Cut stakes in: UAL, DAL, FSLR, GE, ETN, ADI, REGI, LRCX, TSM, SMMT

LONG POND

• Top new buys: PEAK, LVS, DEI, EQR, SHO, WELL, SEAS, UDR, INVH, MAR
• Top exits: H, DHI, VNO, PEB, PGRE, MGM, VAC, RRR, JLL, CUZ
• Boosted stakes in: CPT, AVB, MAA, AIV, HLT, ESS, FR, KRC, JBGS
• Cut stakes in: WH, HGV, RHP, HPP, SBRA

MAGNETAR FINANCIAL

• Top new buys: ADCT, NVS, PKI
• Top exits: HPQ, TSG, DLR, DKNG, ET, EPD, KMI, LHCG, CRL
• Boosted stakes in: GRUB, WLTW, LH, BDX, LCA, CPAA, SYNH, ABBV, CRSA, DGX
• Cut stakes in: PFE, ADSW, TIF, UBER, NVST, BAX, WMB, PPD, MEET, FREE

MAVERICK CAPITAL

• Top new buys: AXP, LIVN, VFC, MKC, GE, BGS, THS, GIS, CRI, FL
• Top exits: QSR, COMM, ALKS, H, BX, GME, WING, ARMK, ORCL, LB
• Boosted stakes in: FB, AMZN, DLTR, MSFT, LRCX, APD, ATRA, NFLX, NKTR, UBER
• Cut stakes in: FLT, BABA, DD, CCK, STNE, PRSP, TMUS, CNC, ADBE, KKR

MELVIN CAPITAL MANAGEMENT

• Top new buys: DOCU, TWLO, SE, GOOGL, AEO, LOW, NUAN, HLT, TPX, PINS
• Top exits: TTWO, CPRT, EDU, DG, ADYEN, EFX, ADI, LKNCY, IQV, QSR
• Boosted stakes in: FISV, AZO, BKNG, JD, PYPL, LB, AAP, MA, FICO, DPZ
• Cut stakes in: FIS, FB, CSGP, LH, NFLX, DRI, VRSN, AMZN, EL, PLAN

OAKTREE CAPITAL MANAGEMENT

• Top new buys: PCG, GTH, API, SRNE
• Top exits: CEO, SRLP, WMB, BRFS, ASRT, ORCC, PVAC, MDRIQ
• Boosted stakes in: TMHC, AU, TSM, CX, ITUB, MELI, BIDU, AFYA, IBN, AZUL
• Cut stakes in: BABA, BCEI, CZR, CCS, SMCI

OMEGA ADVISORS

• Top new buys: DNRCQ
• Top exits: GOOGL, SSSS, TWO, GPMT
• Boosted stakes in: COOP, JPM, FOE, GTN, MGY, SNR, SRGA, AMCX
• Cut stakes in: VICI, GCI, FCRD, NBR, ASPU, OCN, EFC, MVC, PE, ABR

PERSHING SQUARE

• Top exits: BRK/B, BX, PK
• Boosted stakes in: QSR, LOW
• Cut stakes in: HHC

SOROBAN CAPITAL

• Top new buys: RTX, CMCSA, HLT, MAR, YUM
• Top exits: LHX, QSR, NSC
• Boosted stakes in: BABA, SNE
• Cut stakes in: NOC, UNP, CSX, ATUS, AMZN, MSFT

SOROS FUND MANAGEMENT

• Top new buys: IGSB, SLQT, HAIN, PCG, DKNG, DRI, SPSB, BAC, MS, C
• Top exits: XLU, WMGI, UNH, LNT, SHW, ALL, CBOE, LEN, DIS, CVE
• Boosted stakes in: LQD, TMUS, NLOK, VICI, TDG, ARMK, BK, GS, ETFC, FOCS
• Cut stakes in: PTON, TIF, TCO, ORCC, VST, KKR, CLVS, AVTR, ATVI, DHI

STARBOARD

• Top new buys: IWM, IWR
• Top exits: REZI
• Boosted stakes in: MD, ACIW
• Cut stakes in: EBAY, IWN, CERN, NLOK, CVLT, BOX, MMSI, GDOT

TEMASEK HOLDINGS

• Top new buys: BLK, PDD, SBUX
• Top exits: BMRN, UNVR, RDS/B, PAGS, STNE, TOUR, FSLY, WORK
• Boosted stakes in: BGNE, HDB, IBN, CBPO, VMW
• Cut stakes in: BABA, FIS, VIRT, NIO, DDOG, VNET, INFO

TIGER GLOBAL

• Top new buys: ZI, API, DADA
• Top exits: IQ, LVGO, BILL, STG, JCPNQ
• Boosted stakes in: JD, AMZN, MSFT, CRWD, SPOT, PDD, DDOG, CRM, WDAY, ZM
• Cut stakes in: ATH, SVMK, RDFN, MA, STNE, PYPL

TUDOR INVESTMENT

• Top new buys: ADSW, PCG, TMUS, TME, LHX, ATHM, BXMT, NFLX, ESS, EQR
• Top exits: TIP, DEI, ABBV, FHN, KRC, GLPI, COP, PEG, LAD, MS
• Boosted stakes in: AMTD, ETFC, GLIBA, SOXX, X, O, AAPL, UBER, CRWD, TCO
• Cut stakes in: SPY, JAZZ, CERN, TEAM, HPQ, MCD, EA, LRCX, CUZ, PSB

VIKING GLOBAL INVESTORS

• Top new buys: TMO, HLT, APG, NUAN, MCO, PH, ADI, SHW, DRI, ZNTL
• Top exits: ANTM, GOOGL, FB, NSC, ORLY, A, NOW, PGR, BMRN, AJG
• Boosted stakes in: AXP, CMCSA, FIS, LVS, TMUS, PLAN, JPM, AON, CB, SE
• Cut stakes in: NFLX, BSX, JD, LOW, UBER, CME, MELI, MU, CRM, CHNG

WHALE ROCK CAPITAL MANAGEMENT

• Top new buys: SQ, NXPI, MELI, CREE, VRM, ZI
• Top exits: DIS, BABA, INTC, MU, MIME, ZS, ATVI, TSM, KLIC, PLAN
• Boosted stakes in: FSLY, SHOP, DOCU, TSLA, COUP, AMZN, W, FB, OKTA, BILL
• Cut stakes in: NOW, MSFT, NET, PTON, SMAR, FTNT, CRWD, AVLR, ZM, DDOG

Source: Bloomberg, HSBC