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Wednesday Weakness – Investment Banks Shift US Equities to Underweight

Buy! BUY! Sell! SELL! [pic]: investingFinally they are catching up.  

Just 3 weeks after we moved our Member Portfolios to mostly CASH!!! positions, Investment Banks Morgan Stanley, Citigroup Inc. and Credit Suisse Group AG are cautioning investors about the U.S. equity outlook.  Morgan Stanley slashed U.S. equities to underweight and global stocks to equal-weight on Tuesday, citing “outsized risk” to growth through October. Rising cases of the delta virus strain, and tension between elevated inflation expectations and low yields are at play during a time “that has historically poor seasonality,” strategists wrote in a note.

Citigroup said any minor correction is at risk of being amplified given the extent of bullish positions. And on Wednesday, Credit Suisse said it maintains a small underweight on U.S. equities due to reasons such as extreme valuations and regulatory risk.  Indeed the gap between US Equity Performance and Global Equity Performance has recently hit 5% – a very extreme level.

U.S. equities outperformance over global equities has increased since May


Morgan Stanley says they prefer Japan to the US but Business Sentiment in Japan fell 28% last month, from 48.4 to 34.7 and 50 is the line for optimism over there.  The sharpest deterioration in a year and a half sent the gauge back to its lowest point since January when Tokyo returned to a state of emergency.  The surge in virus cases that sent sentiment careening also drove Prime Minister Yoshihide Suga to announce his resignation last week. The country’s next leader is likely to call for a new stimulus package to shore up the recovery, plunging the nation even deeper into their record-setting debt.

Mood among consumer-facing businesses cools sharply as virus surges

And that's a country Morgan Stanley would rather invest in than America!

Sentiment fell in all 10 major Japanese regions tracked by the survey. The mood among bar and restaurant operators, which have endured government calls for shortened hours and a stoppage to alcohol sales, fell the most among sectors.  The report cited a real estate agency in the Osaka area as saying it was dealing with an endless stream of businesses, from big to small, that were canceling leases.

The Nikkei, meanwhile, has been on a tear since the PM's resignation as it is widely expected that the new Prime Minister will distribute MORE FREE MONEY which will, like America, go directly into the pockets of the people who need it the least and the rich will get much, much richer – go Capitalism! 

Japan truly is an Oligarchy, a country run exclusively for the benefit of the Corporations called Keiretsu, which is a system in which the Banks and Corporations work together in interlocking relationships (Mitsubishi Manufacturing and Mitsubishi Bank are an example).  The members' companies own small portions of the shares in each other's companies, centered on a core bank; this system helps insulate each company from stock market fluctuations and takeover attempts, thus enabling long-term planning in projects.   

That's why a Prime Minister who refuses to turn on the printing presses isn't long for his job in Japan, which is now 266% of their GDP in debt and climbing rapidly.  Japan's debt is 1,400,000,000,000,000 Yen or 1.4 Quadrillion but that's "only" $13.1Tn – less than half of the US's now $28.5Tn debt.  That's why BitCoin MUST fail as a currency – if it succedes in El Salvadore and other countries adopt it – here's the problem:

  • There are only 21M Bitcoins and they can't make more – that's their "value" as an instrument of exchange.  
  • The US is 25% of the Global GDP at $21Tn – So let's say the US has 5M BitCoins
  • Japan is 7% of the World's GDP at $5Tn – Let's say Japan has 1.5M BitCoins 
  • So the Rest of the World has 14.5M BitCoins to run their economies with.  

The US is running a $3Tn budget deficit (so far) this year and that would be 1M BitCoins.  As it stands now – the US and Japan just print more money to run a deficit but they can't do that if the currency is fixed – they would have to actually go and borrow it first but then the problem is they never actually pay it back.   Both the US and Japan simply pay interest on their debts and never pay down the principle.  

Even if we ignore the fact that the US is already 7.5M BitCoins in debt and Japan is already 4M BitCoins in debt (which would suck up pretty much all the remaining BitCoins in the World) – how could they possibly sustain their deficit spending when there isn't enough money to go around?   

M2 Money Stock (DISCONTINUED) (M2) | FRED | St. Louis FedIt's easy to borrow money when all you have to do is print more of it.  If the money is a fixed supply it becomes harder and harder to borrow it as your lenders eventually run out of BitCoins (or whatever) to give you.  Fortunately, we don't have that problem – yet.  The problem we do have, at the moment, is that the supply of money (M1) is 350% higher than it was in 2019 and, if you don't have 350% more money than you did in 2019 – it means somebody, somehwere is getting your share!  

And while that is happening, you are being paid less and less when somebody wants to borrow your money.  Why?  Because, unlike BitCoin, the supply of the money you have is not fixed and the Government just more than tripled the supply of Dollars – making your Dollars worth significantly less.  

This is what happens when the Government pretends to cut taxes.  You still get your money taken from you – just in a different way.  Devaluation affects ALL of your money – not just the money you earn each year.  


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  1. Good Morning.

  2. Ilene-sorry for the delay in getting back to you. The first article you posted is not available and the second article is not correct. I imagine Smithsonian does not want the article I have in general circulation. It is not listed in the directory and being a member does not seem to make a difference. I read this article when it first came out and thankfully saved it. November 2017, volume 48, number 7. THE NEXT PANDEMIC. Articles: Journal of the Plague year by John Barry and How to Stop a Lethal Virus by Maryn McKenna. It quotes alot from Michael Osterholm, PHD who apparently is not popular with the current administration. But a universal flu vaccine was in process that would have INCLUDED all flu's including the pandemics. Osterholm has 2 books out which I am trying to track down, Deadliest Enemy, 2017 and Living Terrors 2000. The very thought that this could have been prevented is hard to wrap your head around, so of course it is very controversial. He says we have another 4 years of this and there are videos on the site if you Google it. Also NBR has a very good documentary outlining the history of of the 1918 pandemic which is gripping.  Anyways, I am shorting all the pharma company's!! I am the outlier, but I think Phil, as usual is right. Their plan is to let this run out just like it did over 100 years ago.

  3. The Bug/Pirate – I knew Mike Osterholm when I was on faculty at UMN. Very competent epidemiologist (look up his Schwann Ice Cream outbreak investigation) but given to hyperbole and publicity-seeking. That tends to rub a lot of people the wrong way. Anyway, here's his group website:

  4. Good morning! 

    No Webinar today as we're in talks with investors for New Age/Other World – our project for turning hemp into plastic.

    Natural Gas up near $5 which is not good for global consumers and industrials.  In 2005 we hit $14 and $6 should be resistance but this is too crazy to bet on.    In 2005, oil was $70 and hit $140 in 2008 and THAT collapsed the Global Economy – this is just an annoyance – so far…

    The Biden administration on Wednesday released a plan to produce almost half of the nation’s electricity from the sun by 2050 as part of its effort to combat climate change.

    The problem is, a plan like that only works if we don't have any Republican administrations for the next 30 years.  

    Sill, makes SPWR look kind of cheap at $22:

    In a new report, the Energy Department said the country needed to double the amount of solar energy installed every year over the next four years compared with last year. And then it will need to double annual installations again by 2030.

    Mr. Biden wants to use tax credits to encourage the use of solar power systems and batteries at homes, businesses and utilities. The administration also wants local governments to make it quicker to obtain permits and build new solar projects — in some places it can take months to put panels on a single-family house, for example. And officials want to offer various incentives to utility companies to encourage the use of solar.

    Jennifer M. Granholm, Mr. Biden’s energy secretary, said part of the administration’s strategy would focus on its Clean Electricity Payment Program, which would reward utilities for adding more renewable energy to the electric grid, including rooftop solar. Many utility companies have fought against rooftop solar panels because they see a threat to their business and would rather build large solar farms that they own and control.

    “Both have to happen, and the utilities will be incentivized to take down the barriers,” Ms. Granholm said. “We’ve got to do a series of things.”

    • The Bank of Canada continues its current pace of quantitative easing at a target of C$2B per week.
    • The central bank also holds its target for the overnight rate at the effective lower bound of 0.25 percent, with the Bank Rate at 0.5 percent and the deposit rate at 0.25 percent.
    • Developing… check back for updates.
    • COVAX, a global initiative to provide COVID-19 vaccines to low-income countries, now says it will likely meet its goal of delivering 2B doses in Q1 2022.
    • Based on its latest supply forecast, COVAX expects to have access to 1.425B doses by the end of this year.
    • Of that number, ~1.2B will be available for lower income economies participating in the COVAX Advance Market Commitment, enough to protect 20% of the population, or 40% of all adults.
    • COVAX says that only 20% of people in low- and lower-middle-income countries have received a first dose of the COVID-19 vaccine, compared to 80% in high- and upper-middle income countries.
    • So far, countries have donated more than $10B to the COVAX effort with commitments to provide up to 4.5B doses.
    • In June, President Biden said the U.S. would donate much of its unused COVID-19 doses to COVAX.
    • Vaccine names: AstraZeneca (AZN -1.8%), Johnson & Johnson (JNJ -0.2%), Moderna (MRNA -2.5%), Pfizer (PFE -0.6%), BioNTech (BNTX -0.3%), and Novavax (NVAX -2.4%).
    • HBO Max (T +0.8%) is set for its European trip. The streaming service will launch in its first countries on the continent Oct. 26.
    • As part of a phased global rollout, HBO Max will debut in Sweden, Denmark, Norway, Finland, Spain and Andorra.
    • Next year, another 14 territories are planned: Bosnia and Herzegovina, Bulgaria, Croatia, Czech Republic, Hungary, Moldova, Montenegro, North Macedonia, Poland, Portugal, Romania, Serbia, Slovakia and Slovenia. And still more are ahead in Europe in 2022.
    • It will be available to new customers as well as existing customers of HBO España, HBO Nordic and HBO Go.
    • HBO Max made its first foray outside the U.S. in June (just after its one-year birthday in the United States), launching in 39 territories across Latin America and the Caribbean.
    • Bank of America's collection of several dozen catalysts for Internet companies in the second half covers a gamut of events at the industry and company level – and there's no shortage of items ready to impact the very biggest companies in the sector, the heavily scrutinized FANG stocks.
    • Take Google/Alphabet (GOOGGOOGL), for example: The company is set to roll out Android 12, the latest version of its dominant mobile operating system, and it's got more milestones ahead on its steady progress at Google Cloud, with a key conference on the calendar, and autonomous-driving unit Waymo.
    • It also may be facing the brunt of the recent escalation in regulatory activity, lately involving its Play Store app market, BofA notes. The Justice Dept. is reportedly preparing a new antitrust suit over the company's digital ad business.
    • BofA said industry events coming up include not only Google's Cloud conference, but also Adweek and Amazon Web Services RE:Invent (NASDAQ:AMZN). Amazon also has its new $1.5 billion air hub ramping up, and one-day shipping is accelerating along with new retail stores planned.
    • Facebook (NASDAQ:FB), meanwhile, has a number of shopping-related catalysts still ahead this year, including a Shop Pay rollout on its core app, shoppable ads on Instagram's IGTV and short-form video Reels, and its ongoing attempts to monetize business messaging.
    • And Netflix's (NASDAQ:NFLX) hefty second-half content lineup differentiates the top streamer from its competition, BofA says, with the company possibly giving a preview of what's in store for 2022 with an upcoming fan event on Sept. 25.
    • The bank says its three macro sector themes for the rest of the year fit into the "three Rs": Reopening, regulation and rates. A reopening economy figures into its picks as it favors more-cyclical Internet companies (like Google (GOOGGOOGL) and Booking (NASDAQ:BKNG) for the reopening trade.
    • As for regulation, it's heating up for the FANGs, though investors seem to be brushing off developments as they happen so far. And rising interest rates would tend to favor value-oriented stocks – Booking (BKNG), Facebook (FB), Google (GOOGGOOGL) – while any further pullback in rates would be a boon to the fast growers. And it's there where BofA expects Snap to take share in media, (AMZN) in e-commerce, and Airbnb (NASDAQ:ABNB) in travel).
    • As for what's up first on its calendar: the fresh news of expiration of enhanced unemployment, a move that could prove a risk for e-commerce and online media if spending slows down – but could improve supply dynamics for gig economy companies like DoorDash (NYSE:DASH) and Uber (NYSE:UBER), and for (AMZN).
    • Also happening this week and in September: new sales data points from the launch of Peloton's (NASDAQ:PTON) lower-priced Tread,  and the Skift Global Forum from September 21- 23 should bring discussion of the size and health of the global travel industry, with likely impact for Booking (BKNG), Expedia (NASDAQ:EXPE), TripAdvisor (NASDAQ:TRIP), Trivago (NASDAQ:TRVG) and Airbnb (ABNB).
    • Circling back to the entire Internet sector, among the FANGs, Alphabet is still BoA's top 2021 pick, due to factors such as more cyclical exposure, easier fourth-quarter search comps vs. DR peers, and cloud acceleration opportunity.
    • But turning to small- and mid-caps, BofA likes Fiver (NYSE:FVRR) and Vroom (NASDAQ:VRM) - exposure to labor and auto shortages – and says Match Group (NASDAQ:MTCH) is in good position for reopening.

  5. Thanks Snow. Yes you maybe correct but the articles I quoted goes into detail of how they worked out getting the protein spike changed out so it is not recognized by the new virus so does not infect. It truly is fascinating. I had no family members including aunts, uncles etc who ever talked about living and surviving the 1918 pandemic. So it was a shock to me.

  6. Early stumble as El Salvador starts Bitcoin as currency

  7. That link Snow posted has a newsletter you can sign up for with many topics.

    • Kraft Heinz (NASDAQ:KHC) reaffirms its full-year outlook ahead of a presentation at the Barclays Global Consumer Conference.
    • The food giant also disclosed that it has increased prices in approximately two thirds of its U.S. portfolio, and is prepared to take additional actions if input costs continue to rise.
    • "We are implementing necessary pricing actions to manage the cost inflation we are currently seeing, including impacts likely to carry into next year. For 2022, we expect to sustain stronger consumption versus pre-pandemic levels and maintain industry-leading margins as we effectively manage costs and continue to invest in our growth strategy."
    • Shares of Kraft Heinz (KHC) are flat in premarket action.
    • Read more about inflation pressure in the food sector.

    We used to play KHC and I do like them down here at $36.50, which is $43.6Bn and they are good for over $3Bn in earnings so less than 15x is fair and it puts a floor under them at about $25.  They pay a 4.5% dividend ($1.60) so let's add them to the Dividend Portfolio as such:

    • Buy 1,000 shares KHC at $36.50 ($36,500) 
    • Sell 10 2023 $35 calls for $4.25 ($4,250) 
    • Sell 10 2023 $32.50 puts for $3 ($3,000) 

    That's net $29,250 and, if all goes well, we get called away at $35,000 with another $2,400 in dividends for a net profit of $8,150 (27.8%) in 16 months.  Worst case is we end up owning 2,000 shares at an average of $30.875, which is a nice 20% discount to the current price.  Not a bad worst case!

    In the LTP, we can go the following way:

    • Sell 10 KHC 2023 $35 puts for $4 ($4,000) 
    • Buy 25 KHC 2023 $32.50 calls for $5.85 ($14,625)
    • Sell 25 KHC 2023 $40 calls for $2.25 ($5,625)

    That's net $5,000 on the $18,750 spread so $13,750 (275%) upside potential but we'll sell some short calls along the way when it's closer to $40 and whittle down that $5,000.  If we can get $2 for the Jan $40s (now 0.80) and sell 10 of them, that's $2,000 right there.  

  8. GIS up today but also a good play stock or BCS

  9. FB Jan23 300 put for 24.50. I sold the Jan 23 210 put on 3/3/21 for 19.35, when the stock was 255

    • The shortage in the U.S. auto industry continues with August inventory down ~58k units from the end of July to 1.06M units. Bank of America notes that inventory level works out to 20 days supply of autos, which is roughly 63% below the 5-year average of 55 days supply.
    • Analyst John Murphy says August marks the seventh consecutive month of sequential decline in absolute units of inventory. Supply is now less than half the level in August 2020 and only 30% of the pre-COVID level in August of 2019.
    • "It is unclear how much lower inventory can go from current levels, especially now that sales are also coming under pressure. That said, the constrained inventory environment may perversely be a positive dynamic for the industry by depressing sales lower for longer and creating true pent-up demand that would be more naturally released over a multi-year cyclical recovery."
    • U.S. auto sales are forecast to peak again in the mid-2020s at which time the electric vehicle battle between General Motors (NYSE:GM), Ford (NYSE:F), Tesla (NASDAQ:TSLA) and Toyota (NYSE:TM) will be in full swing. The extended recovery could also give startups and commercial vehicle sellers more time to develop their models and position themselves to the supply-demand curve. That group includes Canoo (NASDAQ:GOEV), Lucid Group (NASDAQ:LCID), Fisker (NYSE:FSR), GreenPower Motors (NASDAQ:GP), Nikola (NASDAQ:NKLA), Hyzon Motors (NASDAQ:HYZN), Lordstown Motors (NASDAQ:RIDE), Arrival (NASDAQ:ARVL), Workhorse Group (NASDAQ:WKHS) and Faraday Future Intelligent Electric (NASDAQ:FFIE).
    • Read yesterday's wrap up of the latest electric vehicle news.
    • Bank of America launches coverage on ChargePoint Holdings (NYSE:CHPT) with a Neutral rating.
    • While ChargePoint is seen as positioned to capitalize on the growing electric vehicle penetration, BofA is cautious amid supply chain challenges, emerging competition, elevated expectations and a valuation check. The firm comes up with a $26 price objective through a discounted cash flow analysis through 2030.
    • Analyst Ryan Greenwald on ChargePoint: "CHPT is the operator of the largest online network of independently owned EV charging stations with over 5K customers across its footprint. The company’s asset-light B2B operating model is a competitive advantage in contrast to some peers who opt to own and operate the chargers in a more capital-heavy approach. The reduced barriers to entry and less upside from scaling utilization are offset by materially improved FCF visibility."
    • Wall Street ratings scorecard on ChargePoint Holdings (CHPT): 8 Buy-equivalent ratings or better, 2 Neutral-equivalent ratings and no Sell-equivalent ratings.
    • Citi slashes its price target on Boston Beer (NYSE:SAM) to $618 from $854 after adjusting estimates to account for the summer slowdown in the hard seltzer category.
    • Analyst Wendy Nicholson believes Boston Beer now deserves to trade at a 5% premium to the market vs. the prior 40% target premium slapped on the stock for its growth potential.
    • Citi is not the only firm to adjust expectations on SAM due to the deceleration in the hard seltzer category.
    • Shares of Boston Beer fell back a few weeks ago when Cowen warned on the hard seltzer sales slowdown.
    • The average Wall Street price target on SAM is down to $907.75 and likely to track even lower as more analysts reset expectations. 
    • High valuations, indexes near all-time highs, Delta variant cases and weak seasonality is bringing out some bearish warnings on U.S. stocks.
    • S&P futures (SPX) (NYSEARCA:SPY), Nasdaq 100 futures (NDX:IND) (NASDAQ:QQQ) and Dow futures (INDU) (NYSEARCA:DIA) are slightly lower this morning, but there's not much conviction to the downside.
    • Morgan Stanley downgraded U.S. equities to Underweight and global equities to Equal Weight.
    • "We continue to think this is a 'normal' cycle, just hotter and faster, and our cycle model remains in 'expansion," Andrew Sheets, chief cross-asset strategist at Morgan Stanley, writes in a note. "But the next two months carry an outsized risk to growth, policy and the legislative agenda."
    • The dilemma is straightforward, Sheets says:
    1. "If global growth remains resilient, the US infrastructure bill passes and COVID-19 cases see a near-term peak (our base case), US yields need to adjust higher. That is especially challenging for more expensive 'growth' parts of the market, which are trading with a positive correlation to bond prices." (See Morgan Stanley chart at the bottom.)
    2. "Alternatively, if the economy does slow, many risk premiums look too low versus prior growth scares. While temporary, 3Q21 should see a deceleration; our economists have lowered their tracking estimate for US GDP in the quarter sharply from 6.5% to 2.9%."
    • "After the initial post-recession bounce, growth usually moderates," he adds. "An improving economy usually brings more cost pressure and inflation as demand rises and labor markets tighten. It usually means central banks shift to tighten policy. We continue to see similarities to 2004."
    • Having closed out early-cycle trades, Sheets is buying Brazilian equities (NYSEARCA:EWZ), selling gold (NYSEARCA:GLD) and staying short U.S. duration (NYSEARCA:TBT) (NASDAQ:TLT) (NASDAQ:SHY).
    • Other signs of jitters: Also this week, Credit Suisse maintains its small Underweight on U.S. stocks, citing regulatory risk and high valuations, Bloomberg reports.
    • And Citi says longs outnumbering shorts on the S&P by 10 to 1 risks amplifying a small correction, with half of the longs exposed to losses by a dip of more than 2.2%.
    • September tends to be a tough month for equities and the S&P hasn't seen a 5% correction this year.
    • Meanwhile, Goldman Sachs has downgraded its Q3 consumption forecast to -0.5%, citing the effect of the Delta variant.
    • While the Delta setback is "brief," fiscal support has already dropped off "substantially," and consumers will also have to rotate from an elevated level of spending, Goldman's Jan Hatzius writes in a note.
    • The "rest of the service sector recovery will be much slower than the easy phase that followed vaccination, and with COVID fears likely to persist through the winter virus season, it might take a while for spending to recover in still-depressed categories such as very high-contact and office- adjacent services," he says.
    • On the other side, LPL Financial recently laid out five bearish market arguments that it says don't hold water.

    • Philip Dormitzer, the chief scientific officer of Pfizer (NYSE:PFE), shrugs off criticism that the company was too aggressively promoting the rollout of COVID-19 booster shots.
    • Amid concerns over its declining efficacy, he also defended the potency of the vaccine, the U.S. pharma giant co-developed with its German partner BioNTech (NASDAQ:BNTX).
    • “Our job is to create the tool that’s going to be needed for the problem that’s coming,” Dormitzer told the Financial Times“If we waited until there was just widespread breakthroughs of severe disease to advance a solution, we would be way too late.”
    • The comments of Pfizer’s top scientist come as U.S. plans to roll out COVID-19 booster shots for all Americans in a few days, beginning with the messenger-RNA-based shot developed by Pfizer (PFE) and BioNTech (BNTX).
    • “Being very proactive and making sure that the solution is in place ahead of a crisis is important — I think it’s the right thing to do,” he added, noting that the responsibility for “the decision to deploy the solutions” lies with policymakers, not with Pfizer (PFE).
    • Meanwhile, arguing that booster shots might not be required for everyone, Pascal Soriot, CEO of AstraZeneca (NASDAQ:AZN) urged the U.K. government to wait until data brings more clarity.
    • It was important to understand how long the efficacy of two doses last and protect the U.K. health service from a potential “unnecessary burden,” Financial Times reported, quoting the comments of Soriot published in The Telegraph.
    • On potency of Pfizer/BioNTech COVID-19 shot amid evidence that the rival jab from Moderna (NASDAQ:MRNA) elicited a stronger immune response, Dormitzer said: “We used the minimum dose level that gave us an immune response in older adults that was greater than the immune response that we saw after natural infection.”
    • “We made experience-based and evidence-based careful decisions about where we were going to go to balance strong immune response versus reactogenicity,” he added, referring to the term used by the scientific community to identify side effects in clinical trials.
    • A recent study published in the Journal of the American Medical Association indicated that Moderna’s (MRNA) shot led to more than twice the level of antibodies as that generated from Pfizer (PFE)/BioNTech (BNTXCOVID-19 vaccine.
    • Philip Morris International (NYSE:PM) updates guidance ahead of a presentation today at the Barclays Global Consumer Staples Conference.
    • The company reaffirms its prior full-year EPS forecast of $5.97 to $6.07 vs. $6.09 consensus and guides for organic revenue growth to be toward the upper end of the +12% to +14% range.
    • "We remain on-track for an excellent performance in 2021, underpinned by better combustible volumes and continued strong demand for IQOS," says Philip Morris CEO Jacek Olczak on the path ahead.“
    • "While the increased impact of the global semiconductor shortage is currently limiting our ability to realize the full potential of IQOS, the underlying momentum of the brand is clear – as evidenced by the positive early results for IQOS ILUMA in Japan following the launch last month."
    • PM -0.08% premarket to $105.98.
    • The Seeking Alpha Quant Rating of 4.43 on Philip Morris places it in the top 10% of all consumer staples stocks.
    • Cowen lifts its price target on Outperform-rated Chipotle (NYSE:CMG) to $2,250 and calls its a 2021 Best Idea pick. The firm sees a three-year path for the restaurant chain's comparable sales to top expectations and for restaurant margins to expand to over 27%.
    • Analyst Andrew Charles: "We argue Chipotle's 'omnichannel' presence that features a 25% digital carry-out mix of sales & 24% third-party delivery mix leaves sales well positioned to outperform whether the reopening narrative is faster or slower."
    • Charles and teams think Chipotle's 2021 comparable sales will top expectations due to a growing mix of digital sales for pick-up & third-party, proprietary survey data that suggests accelerating consumer demand for transparent food sourcing and menu innovation/advertising benefits.
    • The Chipotle Rewards loyalty program is also noted to be showing early signs of promise and strong growth in enrollment to 24M active members in roughly two years.
    • Shares of Chipotle are up 0.38% premarket to $1,901.96.
    • The relative strength index on Chipotle is still over 50.
    • The Macau casino sector is looking for a second day of gains on some incrementally good news on traffic trends for the first week of September. A new travel program in Hong Kong that will allow more Mainland visitors is also raising optimism levels.
    • Also in the mix, Bernstein analyst Vitaly Umansky thinks the region could see a long-term boost from China's State Council announcement that Hengqin Island will be a special low-tax jurisdiction under co-governance by Guangdong and Macau.
    • Looking ahead, Umansky and team expect Macau visitation to start getting back to April-May levels by October and forecast September GGR to be down at a mid to high 60% range to improve from the August tally. "We expect GGR improvement beginning in the fourth quarter, but more significant travel impediment removals are not likely until next year. Longer term, IVS eVisa and group visa restart and Hong Kong travel resumption will be necessary to drive GGR upwards," reads a recent Bernstein update.
    • Macau casino stocks: Wynn Macau (OTCPK:WYNMFOTCPK:WYNMY), Wynn Resorts (NASDAQ:WYNN), Sands China (OTCPK:SCHYYOTCPK:SCHYF), Las Vegas Sands (NYSE:LVS), MGM China (OTCPK:MCHVFOTCPK:MCHVY). MGM Resorts (NYSE:MGM), Galaxy Entertainment (OTCPK:GXYEF), SJM Holdings (OTCPK:SJMHFOTCPK:SJMHY), Melco Resorts & Entertainment (NASDAQ:MLCO), Studio City International (NYSE:MSC).
    • Read more about Macau traffic trends.

    • Robert Kaplan, a Fed voting member on rates last year, made several million-dollar-plus stock trades in 2020, including megacap stocks that benefit from lower rates.
    • According to reporting from 11 of the 12 Fed regional banks (the Chicago Fed did not provide information yet), other Fed members made much more modest trades, The Wall Street Journal reports.
    • The disclosure form said Kaplan had 27 individual stock, fund or alternative assets valued at more than $1M, the Journal says.
    • Holdings include five of the Big Six megacaps: Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN), Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL), Tesla (NASDAQ:TSLA) and Facebook (NASDAQ:FB).
    • He made some combination of sales or trades of more than $1M in 22 companies or funds, including Apple, Amazon and Alibaba (NYSE:BABA).
    • Those stocks have been susceptible to rising Treasury yields, with their high valuations.
    • Other holdings include Boeing (NYSE:BA), GE (NYSE:GE), Chevron (NYSE:CVX) and Johnson & Johnson (NYSE:JNJ).
    • Kaplan worked at Goldman Sachs for more than 20 years.
    • The size of the trades raises questions about the Fed at a time when the central bank is providing a huge amount of monetary stimulus that has led to record-high asset prices.
    • The trades are not unprecedented, though. Former Dallas Fed President Richard Fisher had "substantial" assets and trading, the Journal reports.
    • Kaplan also been a hawkish voice at the Fed and expressed concern about the effect of such large accommodation on asset prices.
    • He recently called for the tapering of Fed bond purchases to start in October.

    • MBA Mortgage Applications
    • Composite Index: -1.9% vs. -2.4% the previous week.
    • Purchase Index: -0.2% vs. +1% the previous week.
    • Refinance Index: -3vs. -4% the previous week
    • 30-year mortgage rate unchanged at 3.03%.
    • On a year-over-year basis, purchase mortgage apps down 18% and refis down 4%.
    • “Refinance volume has been moderating, while purchase volume continues to be lower than expected given the lack of homes on the market,” said Mike Fratantoni, MBA’s chief economist. “Economic data has sent mixed signals, with slower job growth but a further drop in the unemployment rate in August. We expect that further improvements will lead to a tapering of Fed MBS purchases by the end of the year, which should put some upward pressure on mortgage rates.”
    • The World Health Organization (WHO) says that COVID-19 is likely “here to stay with us” as the virus mutates like flu viruses making its elimination unlikely.
    • Speaking at a press briefing, Dr. Mike Ryan, the executive director of the WHO’s Health Emergencies Program said: “I think this virus is here to stay with us and it will evolve like influenza pandemic viruses, it will evolve to become one of the other viruses that affect us.”
    • “People have said we’re going to eliminate or eradicate the virus.” “No, we’re not, very, very unlikely,” CNBC quoted Dr. Ryan as saying.
    • Early this year, seeing a drop in vaccine-driven immunity and the threat of new variants, the top executives at COVID-19 vaccine developers Pfizer (NYSE:PFE) and BioNTech (NASDAQ:BNTX) predicted that there would be a need for annual vaccinations against the coronavirus.
    • Meanwhile, Maria Van Kerkhove, the WHO’s technical lead, said on Tuesday that the world lost its chance to contain the spread of the virus at the beginning of the pandemic.
    • “We had a chance in the beginning of this pandemic,” she said, adding that “this pandemic did not need to be this bad.”
    • According to Kerkhove, the highly contagious Delta variant remains the “most concerning” strain, despite the emergence of the new “mu variant” of the coronavirus.
    • “The delta variant for me is the one that’s most concerning because of the increased transmissibility,” Kerkhove noted.
    • The mu variant is increasing its prevalence in certain South American countries. However, in some other countries, especially where the Delta variant is already circulating, it is decreasing in prevalence, Kerkhove said.
    • Late last month, the WHO added the “mu” variant, also known as B.1.621, to the agency’s list of variants “of interest.”
    • According to the White House, three-quarters of adults in the U.S. have received at least one dose of a COVID-19 vaccine as of Tuesday - Bloomberg.
    • White House COVID-19 data director Cyrus Shahpar on Tuesday tweeted that the U.S. "just hit 75% of adults with at least one dose!"
    • The CDC reported that 193,798,688 adults have had at least one shot, while 165,947,460 people, or 64.3% of the adult population, are fully vaccinated.
    • The tally includes vaccines from Pfizer (NYSE:PFE) - BioNTech (NASDAQ:BNTX), Moderna (NASDAQ:MRNA) as well as Johnson & Johnson (NYSE:JNJ).
    • The rate of vaccinations has picked up in recent weeks as the highly transmissible Delta variant spreads throughout the country.
    • President Joe Biden has planned a speech Thursday to outline a “six-pronged strategy” to get the pandemic under control, Press Secretary Jen Psaki said.
    • The U.S. reached the 75% threshold about a month after hitting 70% in early August. Previously, President Biden had hoped to achieve the 70% mark by July 4.
    • As per the CDC, 53.2% of the total population has been fully vaccinated so far and 62.5% of the total population has received at least one dose.
    • Other COVID-19 vaccine makers: AstraZeneca (NASDAQ:AZN); Novavax (NASDAQ:NVAX); Sanofi (NASDAQ:SNY); GlaxoSmithKline (NYSE:GSK); CureVac (NASDAQ:CVAC); Inovio Pharmaceuticals (NASDAQ:INO); Ocugen (NASDAQ:OCGN).
    • Also recently, Dr. Anthony Fauci said that Pfizer/BioNTech COVID-19 boosters will likely be ready for Sept. 20 rollout, while Moderna lags.

  10. Hi Private Investor and Snow and All - 

    PI: Here's another try to post the link to the first article, How to Stop a Lethal Virus, by Maryn McKenna:

    The article posted by Snow (thanks!) is very good:

    Regarding your comment, PI: 

    …. It quotes alot from Michael Osterholm, PHD who apparently is not popular with the current administration. But a universal flu vaccine was in process that would have INCLUDED all flu's including the pandemics…The very thought that this could have been prevented is hard to wrap your head around, so of course it is very controversial. …Their plan is to let this run out just like it did over 100 years ago.

    A universal vaccine for the flu is continually being worked on, but it takes time and there are problems in taking basic science to actual vaccines.  There's no plan or conspiracy to prevent a universal vaccine from being developed. See, for example:

    Pre-existing immunity to influenza virus hemagglutinin stalk might drive selection for antibody-escape mutant viruses in a human challenge model (Jun. 2020)

    Flu mutation study suggests universal flu vaccine may be even more challenging than expected (June 2020)

    Innovative universal flu vaccine shows promise in first clinical test (Dec. 2020)

  11. FOMO/panic bought my way back into ETH and REN (crypto) and GBTC (stock). Long term I'm still bearish but short term always the hardest to discern direction.

  12. Phil – and to add to your morning comments: tax and spend is one way to fund programs, and debt and spend is another. They both work and they both have consequences. The latter (debt and spend) is less efficient, which is its biggest drawback, but it's the most politically palatable because you're not taxing billionaires, who fight back.

  13. Fighting back/BDC – True, the fight back from Obamacare gave us Trump.  Imagine what would happen if Joe Biden actually raises taxes on the wealthy?  President McConnell perhaps?  

    Mitch McConnell Defends Trump's Refusal to Concede to Joe Biden