Gavin Baker

@GavinSBaker

1) Morgan Stanley’s always excellent quarterly CIO survey out this morning shows IT spend intentions are now -4.4% YoY, down from +3.9% last quarter.

First decline in 10 years, largest expected decline ever and largest negative revision ever. Worse than 2009.

Gavin Baker

@GavinSBaker

1) Instinct is that risk/reward on the market is deteriorating rapidly, but thought I would highlight parts of the bull case that had struck me recently.

Sentiment and positioning are overwhelmingly bearish. Chart via the superb GS macro/hedge fund specialist team.

Gavin Baker

@GavinSBaker

1) So far in the battle of the irresistible force of the largest stimulus ever vs. the immovable object of the sharpest economic slowdown in history, the irresistible force is *overwhelmingly* winning.

Gavin Baker

@GavinSBaker

1) Thought provoking chart from the best strategist:

When intra-sector valuation spreads are narrowing from really high levels - as they are now - estimate cuts haven't mattered. Dividend cuts have.

N is very low. Curious if the other instances came after a comparable rally.

Gavin Baker

@GavinSBaker

1) We are at a critical juncture for the market.

The events of the next month will shape the next year.

In 20 years of investing, I've never seen such high sensitivity to initial conditions and such a wide range of outcomes with no real precedent to help guide thinking.

Gavin Baker

@GavinSBaker

1) We are in a severe recession right now. My European macro friend called me and he is still very cautious.

Likely the largest demand shock in history. The fastest bear mkt in history. Peak levels of fear and volatility. And the biggest rate cut in history.

Gavin Baker

@GavinSBaker

1) Working from home and no school are pulling the Metaverse forward.

Parents trying to be productive are giving their kids free rein for gaming - probably the first time it’s ever been encouraged.

Videogame engagement and revenue increasing sharply per various data sources.

Gavin Baker

@GavinSBaker

1) Strange that China is the bull case. Car and coffee sales both down 80%ish in February and the recovery does not appear V-shaped so far. Curious to see how long China holds in given their economy is still export dependent.

Gavin Baker

@GavinSBaker

1) Not my lane, but instinct is that last week was partially the market beginning to price in a Sanders presidency as a consequence of virus weakening the economy.

Biden’s big SC win and Buttigieg/Steyer dropping out likely results in a brokered convention that Bernie won’t win.

Gavin Baker

@GavinSBaker

1) Smart videogame analyst noted that DLC/MTX monetization - season passes, items, emotes/dances - is difficult with an annual release schedule that destroys the value of that content annually.

Important contributor to evergreen F2P games monetizing better than annual releases.

Gavin Baker

@GavinSBaker

1) The Metaverse will likely be the next platform after smartphones.

Xbox All Access, which has received little attention, might drive the biggest change in the videogame industry since the shift to digital/mobile while advantaging Microsoft in this coming platform shift.

Gavin Baker

@GavinSBaker

1) Casper vs. Purple is an interesting case study in the benefits of being public vs. private.

Going public forced Purple to develop discipline that can clearly be seen in their superior growth/profitability metrics vs. Casper.

Purple is a lean, mean fighting machine.