5-Chart Friday (7/24/20)

By Charlie Bilello

24 Jul 2020


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

1) Great Expectations

Tesla reported earnings this week with high expectations going in.

A year ago, the stock was trading at less than 2x sales. Before earnings, it was trading at an incredible 12x sales, with its stock up over 500% in the past year.

Created in YCharts

At such a high multiple, one would assume that Tesla was about to report a blockbuster quarter, showing its immunity to recession.

And what did the results say?

Revenue down 4.9% over the prior year.

Data via YCharts

In true 2020 fashion, investors initially cheered the revenue decline, with the stock gapping higher. It would subsequently reverse course to end the day lower.

Is the Tesla mania coming to an end? Stay tuned.

2) Big Blue Buybacks

Over the past 20 years, IBM has bought back $140 billion of its stock.

Its current market cap: $118 billion.

Created in YCharts

IBM reported revenues down 5.4% over the past year. Revenue for the company was higher 20 years ago than it is today.

Data via YCharts

3) 0 for Longer…

In December 2018, the Fed was forecasting a Fed Funds Rate of 3.125% by the end of 2020.

By December 2019, they had lowered that to 1.625% after cutting rates 3 times last year.

Today, the market (via Fed Fund Futures) is pricing in a 0% Fed Funds Rate at year-end and for the next 3 years at least.

4) No Country for Old Yields

The one-way trend in Treasury yields over the past 40 years…

Starved for yield, investors continue to bid up riskier securities, with investment grade bond yields moving below 2% for the first time.

Created in YCharts

5) Hospitalization Highs

COVID-19 hospitalizations in the US hit a new high this week (59,628), surpassing the prior high from April 15 (59,260).

Created in YCharts

On April 15 the highest number of hospitalizations by a wide margin were in New York, the 4th largest US state.

This time, its more evenly distributed, with the 3 largest US states all hitting new highs…

  • California: 8,681
  • Texas: 10,858
  • Florida: 9,520
Created in YCharts

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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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