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One Small Step For Man, One Giant Leap For Tupperware?

I wasn’t sure how this week would end given a host of news, that on its surface, was not very uplifting.  Two more pharmaceutical companies this week temporarily halted their COVID-19 vaccine trials due to potential issues with at least one or more patients in their trials.  Unemployment claims came in higher than expected, reversing the recent downward trend and once again Brexit is making headlines.  All-in-all, it was a week that you might have expected the markets to head lower, and yet defying the headlines, it closed out the week higher.

The coming weeks will be critical, not just because of the presidential election, but because earnings season will help us understand how the economic recovery is coming along.  Earnings from S&P 500 companies are projected to drop 20.5% from a year earlier in the third quarter, marking an improvement from the 25% decline anticipated at the end of June and the 32% drop reported for the second quarter.  Results that top forecasts could fuel another leg up for a stock market that has advanced more than 50% from March lows, though there are still many unknowns.  Just 69 companies in the S&P 500 have issued guidance compared with an average of 104, and more than 25% of companies are still not providing an earnings outlook for 2020 or 2021.  The actual numbers, when they are reported, are going to be much more crucial for the market to interpret, to get a sense of how well the patient is doing.

Apple held its annual iPhone event this week during which it introduced its latest iPhone 12.  The big new feature is 5G which is a new wireless standard allowing for significantly faster speeds.  The catch, and one that they didn’t mention, is that 5G is only recently being rolled out across the country.  Unless you are in one of a few very large cities, you likely don’t have access to 5G and its blazing speeds.  Perhaps this helps explain a recent poll in which only 1 in 10 people plan on upgrading in the coming year.  Putting an even finer point on it, of those 10% who do plan on upgrading, only 5% are doing so for 5G.  The remainder simply need a phone upgrade.  Despite this poll, my opinion is that more people will upgrade in the coming year than those polled, but it will likely be a rolling upgrade cycle taking place over years. 

In a surprising twist, we learned that car sales are down this year.  No, that’s not the twist!  The surprise is that despite falling sales, car prices are edging higher.  In the third quarter, sales volume was down 10% compared to a year ago, which in normal times might be considered falling off a cliff, but after falling 34% in the second quarter it was a small relief.  So why are prices rising?  It seems to be a supply issue with car manufacturers having cut back production significantly.  In September, the average selling price hit $38,973, the third highest monthly price in history according to Kelley Blue Book.  If current trends continue, we’re fast approaching the day when the average new car in the U.S. will cost more than $40,000.

This next bit of news I bring to you is as someone who personally deals with the complications of severe myopia (nearsightedness).  To my surprise, there is a relatively new (and somewhat experimental) treatment for children on the path to severe myopia.  A company called Eyenovia has developed a treatment consisting of an ophthalmic solution containing atropine.  I don’t know how it works, but according to the study, a couple drops a day over the course of a year could significantly slow the progression of worsening vision in children under the age of 15.  I was skeptical until I saw that Bausch Health has acquired an exclusive license in the U.S. for development and commercialization of this new treatment.  While it may be too late for me, perhaps you know someone with a child who could use this information.

In closing, I turn to Tupperware Brands, the maker of many of the plastic containers in your cupboard.  You’re probably wondering how this could be a story.  Well, it turns out the company recently received a U.S. patent for a unique device designed to grow vegetables in low earth orbit with minimal maintenance.  The device is called PONDS (Passive Orbital Nutrient Delivery System) and has been tested in space in both 2019 and 2020.  In a nutshell, when the day comes that humans eventually leave the confines of the earth, it appears Tupperware won't be far behind.  Now you know.

Bruce J. Mason, MBA