5-Chart Friday (10/30/20)

By Charlie Bilello

30 Oct 2020


5 charts from the past week that tell an interesting story in markets and investing…

1) Rising Volatility

The Volatility Index ($VIX) hit 40 this week for the first time since June.

Created in YCharts

The S&P 500 fell over 5% on the week, its largest weekly decline since March.

What’s driving the recent increase in fear?

Take your pick: the coronavirus resurgence, lack of a second stimulus bill, and “election jitters” just to name a few.

2) The Third Wave

The third wave of covid-19 is well underway in the US, with hospitalizations hitting their highest levels since August 13.

Created in YCharts

Globally, cases hit new highs this week and deaths hit their highest levels since April 25.

3) Earnings, Earnings, Earnings

It was a huge week for earnings, with all of the big 5 tech companies reporting (Apple, Amazon, Microsoft, Facebook, and Google). While they all handily beat expectations (which always seems to be the case), the reaction was less positive, with only Google managing to trade higher.

A few interesting stats…

Amazon now has over 1.2 million employees a 50% increase over the last year. What’s driving that growth? Surging revenues, up 37% over the past year. This was the 76th consecutive quarter of double-digit revenue growth from Amazon. $AMZN

Facebook reported 2.74 billion monthly active users, up 12% over the past year. With a global population of 7.8 billion, that means 35% off the world used Facebook at some point in the last month. The network effect.

Apple reported revenues that were up only 1% over the past year. Meanwhile, its stock was up 92% over the same time period. The result: rapid multiple expansion (with price to sales exceeding the prior peak back in December 2007).

Created in YCharts

-A summary of 3rd quarter revenue growth…

4) Growth Bouncing Back

Our first look at 3rd quarter real GDP came in this week, showing a sharp bounce back as expected.

Created in YCharts

At -2.9% over the last year, however, the recovery is still ongoing in many parts of the economy. For comparison, here are the largest YoY declines in GDP during past recessions.

5) No Upside Without Downside

Investors in DraftKings received another friendly reminder this week as the stock is in the midst of its 3rd 40% drawdown of the year. Incredibly, even after a 45% decline, it is still up over 230% year-to-date.

The lesson: there is no upside without downside, no reward with risk. $DKNG

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And that’s it for this week. Thanks for reading.

Have a great weekend everyone!

-Charlie

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About the author

Charlie Bilello

Charlie is the founder and CEO of Compound Capital Advisors.

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