The Closer 4/28/17 – End of Week Charts

Looking for deeper insight on global markets and economics?  In tonight’s Closer sent to Bespoke clients, we recap weekly price action in major asset classes, update economic surprise index data for major economies, chart the weekly Commitment of Traders report from the CFTC, and provide our normal nightly update on ETF performance, volume and price movers, and the Bespoke Market Timing Model.

Sample

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ETF Trends: Fixed Income, Currencies, and Commodities – 4/28/17

European ETFs continue to dominate the best performers list with every ETF in the top 12 (other than possibly Turkey, depending on how you define “Europe”) part of that geographic group. Among the top 20 ETFs we track, only Biotech, Private Equity, FX-hedged Japanese equities, and Medical Devices are in the same league as European indices. Gold, silver, and coffee have gotten hit had over the past week, with currency carry strategies undereperforming as well as REITs, long bonds, and a variety of FX crosses.

Bespoke provides Bespoke Premium and Bespoke Institutional members with a daily ETF Trends report that highlights proprietary trend and timing scores for more than 200 widely followed ETFs across all asset classes.  If you’re an ETF investor, this daily report is perfect.  Sign up below to access today’s ETF Trends report.

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GDP: MOASD

Today’s advance read on Q1 GDP came in weaker than expected this morning, missing forecasts by 0.3 percentage points. While economists were forecasting a SAAR reading of 1.0%, the actual reading came in at 0.7%. The fact that this report was weaker than expected should come as a surprise to no one. The table below was pulled from our Interactive Economic Indicator Database (available to all Institutional clients) and shows the originally reported advance read on Q1 GDP versus estimates dating back to 1999. In the last 19 years, this report has only been better than expected four times. In the last fifteen years, it has only been better than expected once, and in the last nine years, it has been weaker than expected every year! This trend gives new meaning to the phrase, “If at first you don’t succeed, try, try, try, try, try, try, try, try, and try again!”  When it comes to forecasting errors, Q1 GDP has been the Mother of all Seasonal Distortions (MOASD).

GDP

 

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Bespoke Morning Lineup

Highlights

Bespoke’s Morning Lineup is the top pre-market report on Wall Street.  We cover everything you need to know to get your trading day started, including international market moves and events, post-market and pre-market earnings news, upgrades and downgrades, dividends and splits, economic indicators and estimates, big stock movers, market internals and much more.  It’s all presented in the original and concise format that Bespoke is known for so you can digest lots of information quickly and efficiently.

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The Closer — Investment, Durable Goods, Homeowners — 4/27/17

Log-in here if you’re a member with access to the Closer.

Looking for deeper insight on global markets and economics?  In tonight’s Closer sent to Bespoke Institutional clients, we take a look at the strong rebound in investment in Q1 GDP stats due tomorrow morning. We also recap the durable goods report from today, quarterly US Census stats on the US housing stock, and a couple data points from Mexico and Brazil.

Sample

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One Chart Explains Amazon

Amazon (AMZN) blew earnings out of the water tonight, with GAAP earnings per share coming in at $1.48 versus $1.08 expected. But all you really need to understand just how fast Amazon is creating value is the chart below. It shows three metrics, all trailing 12 month averages going back to 1998. The red line is earnings before interest, taxes, depreciation, and amortization. It’s how much Jeff Bezos and company earn before they pay interest on debt, the tax man, and cover the cost of depreciation on assets they own. It’s accelerated in a breathtaking move from less than $3 billion five years ago to more than $16 billion today. Amazon has also been pouring money into build-outs of its network of distribution centers, Amazon Web Services infrastructure, and a variety of other projects which has sent its capital expenditure surging from less than $2 billion five years ago to over almost $7.5 billion over the last 12 months. Initially, that reduced free cash flow. But EBITDA is growing so quickly, Amazon can no longer invest fast enough to soak it all up! The results? An explosion of cash that totals $10.5 billion over the last year. Relative to the company’s $440 billion market cap, that’s not huge…but it’s growing at an absurd rate, and investors think the Seattle-based company can sustain that pace. Shares are up almost 4% in the wake of results.

042717 AMZN

 

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Bespoke’s Sector Snapshot — 4/27/17

We’ve just released our weekly Sector Snapshot report (see a sample here) for Bespoke Premium and Bespoke Institutional members.  Please log-in here to view the report if you’re already a member.  If you’re not yet a subscriber and would like to see the report, please start a 14-day trial to Bespoke Premium now.

Below is one of the many charts included in this week’s Sector Snapshot, which highlights the relative strength versus the S&P 500 over the last year for the Consumer Discretionary and Energy sectors.  When the line is rising, the sector is outperforming the S&P 500.  When the line is falling, the sector is underperforming.  As you can see, the relative strength for Consumer Discretionary has sky-rocketed over the last few weeks just as the Energy sector has fallen.  There’s a clear shift going on in these two sectors.

To see our full Sector Snapshot with additional commentary plus six pages of charts that include analysis of valuations, breadth, technicals, and relative strength, start a 14-day free trial to our Bespoke Premium package now.  Here’s a breakdown of the products you’ll receive.

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ETF Trends: International – 4/27/17

European ETFs continue to dominate the best performance list thanks to their post-election bump but we should note most are off their best levels as the gains were added all at once but haven’t had a follow-on. Gold miners continue to suffer, down about 8%, while oil and energy ETFs also rank high on the list of best performers we track.

Bespoke provides Bespoke Premium and Bespoke Institutional members with a daily ETF Trends report that highlights proprietary trend and timing scores for more than 200 widely followed ETFs across all asset classes.  If you’re an ETF investor, this daily report is perfect.  Sign up below to access today’s ETF Trends report.

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the Bespoke 50 — 4/27/17

Every Thursday, Bespoke publishes its “Bespoke 50” list of top growth stocks in the Russell 3,000.  Our “Bespoke 50” portfolio is made up of the 50 stocks that fit a proprietary growth screen that we created a number of years ago.  Since inception in early 2012, the “Bespoke 50” has beaten the S&P 500 by 35 percentage points.  Through today, the “Bespoke 50” is up 108.7% since inception versus the S&P 500’s gain of 73.2%.  Always remember, though, that past performance is no guarantee of future returns.

To view our “Bespoke 50” list of top growth stocks, sign up for Bespoke Premium ($99/month) at this checkout page and get your first month free.  This is a great deal!

042717

An Anemic Year For Gas Prices

avg gas through 042617It may sound hard to believe, but one month from today marks the Saturday of Memorial Day Weekend.  Memorial Day weekend typically marks the start to the summer driving season, so it is a time of year where gas prices increasingly become an area of focus.  If you are planning to do much driving this year, though, you are in for a pleasant surprise at the pump when you go to fill up.  Looking at the YTD change in gas prices so far this year, prices are only up 2.4%, which is the most anemic price increase at this point in the year we have seen going back to at least 2005.  Since then, there have only been three other years where the YTD change through 4/26 was less than a double-digit percentage gain, and the average YTD change at this point in the year is 17.8% (median: 17.5%), so 2.9% is nothing!

While prices could certainly go up from here, if they follow anything close to the seasonal pattern, the window for price increases is rapidly coming to a close.  The chart below compares the current YTD change in gas prices to a composite of the YTD change in prices for all years since 2005.  As shown, prices typically rise in the first half of the year, peak in early June, move sideways for the summer, and then rapidly decline from Labor Day through year end.  Therefore, if prices don’t increase much between now and early June, barring a major hurricane in the Gulf or a geopolitical shock, they are unlikely to get much of a lift in the summer.

Composite gas through 042617

As far as the inflationary impact of gas prices in concerned, any upward pressure is likely to be contained going forward.  The chart below shows the y/y change in gas prices since 2006.  The surge in the y/y change that we saw towards the end of 2016 was similar to increases that we saw in other commodities and was a big contributor to the upward pressure in CPI.  However, now that the base effects that contributed to the upward move in the CPI are running off, the pace of increase in y/y readings is quickly declining.  After peaking out at a 34.55% y/y change in late February, gas prices are now up a relatively modest 11.7% y/y.

YY gas through 042617

 

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