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Other Takes and Opinions

Is There Really a Toilet Paper Shortage?

  • Is there a toilet paper shortage?
  • Short answer is yes, at least over the near-term, but manufacturers are ramping up production to meet the panic demand, although production is limited.
  • New to us, with the decline in recent years of newspapers and printed documents, manufacturers have converted production to making tissue products. Although because it is so bulky to store, tissue paper tends to be made to order.
  • Retailers are being tested to keep toilet paper in stock.
  • Our Take: Rest assured, it seems like days, maybe a week, but not months, before stores shelves can be replenished. 

Italy Leads Sharp Rebound for European Equities as Governments Start to Step Up Coronavirus...

  • If you think US markets are volatile, take a look at Europe, and specifically Italy's market being up 17% today, after declining 17% yesterday.
  • Spain is up 11% today after being down 14% yesterday.
  • As in the US, the ECB stands ready to provide liquidity, and central banks across Europe continue to cut rates (where they can).

Low-Volatility Stocks Are Winning as the Market Swings. Thank Falling Interest Rates

  • Something to consider as the article looks at the performance of the Invesco Low Volatility ETF (SPLV).
  • The low volatility ETF, which includes S&P 500 stocks that have demonstrated the lowest volatility over the prior 12 months, has outperformed the broader market the past two weeks and the past year.
  • The ETF holds largely high dividend utility and real estate stocks, stocks that tend to outperform in a low interest rate environment.

Indian Wells Tennis Is First Large U.S. Sporting Event Canceled Over Coronavirus Fears

  • For those of us in Southern California (who play tennis), this was disappointing with cancellation of the BNP Open in Indian Wells this week.
  • This is the largest U.S. sporting event to be called off over concerns about the spread of the disease. The cancellation was after a case of coronavirus was confirmed in the Coachella Valley.
  • Many of the players had already arrived for the tournament: “We’re here and still deciding what’s next,” tweeted Rafael Nadal, the world’s second-ranked player.
  • Really too bad.

Gyms and Coronavirus: What Are the Risks?

  • Something we've been thinking about during our workouts.
  • From a professor at Johns Hopkins, sweat cannot transmit the coronavirus but high-contact surfaces, such as barbells, can pose a problem.
  • Not to freak you out, but studies have found that the virus can last on glass, metal and plastic surfaces for two hours to nine days. Handles and doorknobs are more likely to harbor the virus.
  • Gyms, yoga studios etc. are stepping up the frequency of cleaning and seeing out reminders to members to stay home if they are sick. Gym owners in the northwest are reporting declines in attendance by members.
  • The article suggest gym users actively wipe down the equipment they use with solutions that are at least 70% alcohol (from us, such as Purrel).

Gold Bounces Higher as Stocks React to Spread of Coronavirus

  • Gold prices and stocks continue to move up as a safe haven in a historic low interest rate environment.
  • Good quote from the article: “Gold looks like one of the most attractive assets in this global environment, With US rates likely heading towards the zero lower bound.,” wrote Stephen Innes, chief market strategist at AxiCorp, in a Thursday research note.
  • Article also rightfully mentions institutional and individual investor allocations to gold will continue to increase.

Democratic Turnout Surges on Super Tuesday

  • After Super Tuesday, we think this is interesting as we think voter turnout will be crucial to the results of the upcoming Presidential election.  Something that candidate Hillary Clinton was unable to do in 2016. Here are some 2000 vs 2016 voter turnout stats from yesterday.
  • Virginia: +70%, Texas: +45%, North Carolina: +17%
  • Turnout also skyrocketed in contests in Colorado, Maine, Minnesota and Utah, though those states switched from caucuses to primaries this year, making it difficult to compare.
  • California ballots are still be counted, but there will likely be an increase.
  • Oklahoma was the only state that saw (modestly) lower turnout.
  • The article quotes a democratic strategist: “If I was in the White House or I was in Trump’s campaign looking at poll numbers right now, I would be absolutely terrified,”
  • That view may be a bit extreme, but we would think these high turnouts will help the democrats come November ... if they can keep the momentum.
           

Retail Stock Rundown: Urban Outfitters, Nordstom’s, Ross Stores, Dollar Tree, AutoZone

  •  A bunch of retailers reported earnings today. Here is a brief summary.
  • Urban Outfitters/URBN (-7.9%): Missed 4Q EPS and gross margins and warned that issues will continue into 2020. although had a strong 4% sales comp. Corona virus is impacting business.
  • Ross Stores/ROST (-.8%): "Ok" 4Q earnings report, but company guided down FY 2021, which some analysts think is conservative. Cited impact of coronavirus and election year distractions (?) on traffic.
  • Dollar Tree/DLTR (-1.0%): Modestly missed 4Q sales, but modestly beat on EPS. Raised FY 2020 guidance.
  • AutoZone/AZO (-.9%): Reported mixed 2Q results impacted by warm winter weather, a calendar shift and a slow start to tax refunds. Some analyst say 3Q off to good start and underlying business trends remain solid.

Uber Acknowledges Risk to Business from Coronavirus in Filing

  • Company disclosed in a federal filing that the coronavirus could cause the number of platform users to drop and could disrupt the company's supply chain in new businesses (e-bikes and scooters).
  • This isn't surprising, but first time we have seen this.
  • Separately, Needham added the stock to its Convistion Buy list.  essentially a valuation call as the analyst acknowledged the impact of coronavirus on business, but with the stock down 20% post earnings, he likes the "risk reward".
  • Stock is up 3.9% today.

Airbnb May Delay Its Public Float to 2021 as Coronavirus Sends Shivers Through the...

  • One of many private companies that have postponed IPOs.
  • In the case of Airbnb, according to Bloomberg the company was looking to start the IPO process in March/April.
  • Probably not helping, the company lost $322 million in the first nine months of 2019.
  • Stay tuned.