As you know, we do our own work; as we absolutely have to if we are to have confidence/conviction in how we manage portfolios.

The above said, I do find value, be it confirmatory, or incentive to dig even deeper, in the findings of other analysts and economists, but — for obvious reasons — primarily of those with no connection to Wall Street.


One such economist happens to be Hedgeye’s Christian Drake. I found his morning commentary — his “rhetorical contextualization” of today’s data — to be spot on. Or, I should say, if found it to be in agreement with my own assessment:

“When you get paid to analyze things there exists a sometimes sneaking tendency to discount the obvious in favor of more “sophisticated” interpretations. After all, there’s (perceived ) scarcity value in sophistication that doesn’t exist in overtly straightforward and common sense conclusions.

In the spirit of dispensing with superfluous sophistication this morning, consider the following rhetorical contextualization of this morning Jobless Claims and Durable Goods/Capex data:

1. Initial Claims: This COVID shock is now more than a full 3-months old. If you are losing your job now, 3+ months in and with consumers/business still benefiting from unprecedented policy support initiatives, how likely is that your job loss is “temporary”? An important corollary is that the labor recovery curve is already flattening and longer suppressed demand and new/elevated job loss persists, the higher the likelihood for rising unemployment in adjacent industries and the higher the probability for incurring lasting, structural damage.

2. Capex: Would you (durably) accelerate investment spending into declining demand, depression level job loss, already negative earnings growth, an ATH in inventories, an ATH in excess capacity, an ATH in leverage, rising input costs and pervasive domestic/social/political/geopolitical uncertainty?

One needn’t be a quant, savant or c-suite virtuoso to conjure correct answers to those queries.

There is always nuance that can be harvested, but if you want to distill and frame the prevailing, bigger-picture setup in the most direct terms, the two sentences above pretty simply capture the defining contours of the domestic labor and capex-scape.”