Bespoke’s Morning Lineup – 12/12/22 – Small Problems

Dec 12, 2022

See what’s driving market performance around the world in today’s Morning Lineup.  Bespoke’s Morning Lineup is the best way to start your trading day.  Read it now by starting a two-week trial to Bespoke Premium.  CLICK HERE to learn more and start your trial.

“The best is yet to come.” – Frank Sinatra

Morning stock market summary

Below is a snippet of content from today’s Morning Lineup for Bespoke Premium members.  Start a two-week trial to Bespoke Premium now to access the full report.

Futures are in the green to start the week, but with less than 15 trading days left in 2022, any hopes for anything but a bad year in the stock market can be put to bed.  The bulls have pretty much run out of time.  This week is starting out on a quiet note with little in the way of economic or earnings-related news, but it’s a major week for global central banks, including the FOMC, and the tone of these meetings will also likely be dictated at least in part by Tuesday’s CPI report for the month of November.

We’ve never fully adhered to the idea that small caps lead the broader market.  When an entire index like that Russell 2000 is only 22% larger than the largest single company in the S&P 500 (Apple – AAPL), it’s hard to say that it leads the entire economy.  Whether they are a leading indicator or not, though, small-cap stocks are widely followed, and recent trading in the space hasn’t been particularly bullish.

Starting with the Russell 2000, the IWM ETF has been range bound now since early November, but in Friday’s decline it barely closed out the week above its 50-DMA after closing below the 200-DMA earlier in the week.

Trading in micro-cap stocks has been even weaker.  Not only did the Micro-Cap ETF (IWC) never trade above its 200-DMA in the last several weeks, but on Friday, it opened and closed below its 50-DMA as well.

Looking at all US index ETFs in our Trend Analyzer, the indices that track the largest market cap companies are generally the farthest above their 50-DMAs, and then as you go down the market cap scale, the closer they get to their respective 50-days with the micro-cap ETF (IWC), the only one actually trading below that level.

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Bespoke Brunch Reads: 12/11/22

Dec 11, 2022

Welcome to Bespoke Brunch Reads — a linkfest of the favorite things we read over the past week. The links are mostly market related, but there are some other interesting subjects covered as well. We hope you enjoy the food for thought as a supplement to the research we provide you during the week.

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Foreign Affairs

Tiny Lithuania Could Change How The World Handles China by Akbar Shahid Ahmed (Huffpost)

Chinese diplomats have made pulling tiny Lithuania to heel a major policy priority, but the tiny Baltic state, used to domination from its large neighbor, is having none of it. [Link]

TSMC founder Morris Chang says globalization ‘almost dead’ by Cheng Ting-Fang (Nikkei Asia)

At an event in Phoenix, Arizona marking the first equipment installation at a $40bn advanced chip fab that represents years of effort to onshore critical industries to the US, the Taiwanese industrialist blamed geopolitics for shifts away from free trade. [Link; soft paywall]

Selling

Surging retail theft could force Walmart to close stores and raise prices, CEO Doug McMillon warns by Thomas Barrabi (NYPost)

A vague gesture towards closing stores is part of a retail industry effort to highlight dollar increases in “shrinkage” or inventory lost to thieves. National data suggests shrinkage has not risen as a percentage of revenue in recent years. [Link; auto-playing video]

Auto Dealers Gird for Softening Demand Amid Higher Rates, Uncertain Outlook by Nora Eckert and Mike Colias (WSJ)

After a two year boom fueled by low rates and soaring demand, auto dealers are facing a big shift that has dealers preparing for the worst: higher payments, too much inventory, and a weak economy are all potential problems. [Link; paywall]

Congress

Sinema leaves Democratic Party, registers as independent by Daniela Altimari and Herb Jackson (Roll Call)

In a desperate bid to save her seat, Arizona Democrat Sinema has retreated from the Democratic Party (though she will keep her committee assignments). She has a lower approval rating with her own party than the rest of the Arizona electorate. [Link]

How Kevin McCarthy Could Lose The Election For Speaker Of The House by Nathanial Rakich (538)

An unusually tight House majority and an unruly caucus could keep frontrunner Kevin McCarthy out of the Speakership and cast the body into chaos at the start of the year. [Link]

Building Permits

A Sense of Where You Are by Devin Bunten (Unplanned Ideas)

The current makeup of American cities and suburbs is a direct function of policy choices made 70 years ago today, themselves driven by the need to meet a massive shortfall in housing construction, a desire for racial segregation, and a new technology in the form of the automobile. [Link]

Climate Hawks Should Have Given Joe Manchin His Pipeline by Eric Levitz (NYer)

Progressive politicians and lobbyists likely made the wrong choice (even based on their own policy goals) when they declined to trade allowing more fossil fuel infrastructure for a failed effort to make decarbonized infrastructure easier to build. [Link]

Food

Is Chicken Birria Authentic? by Javier Cabral (L.A. Taco)

By far the most famous form of birria is the Jalisco-derived braised goat recipe that taco eaters adore. But more unusual – and no less authentic – forms of birria can be found all over Mexico. [Link]

Social Media

Twitter’s Rivals Try to Capitalize on Musk-Induced Chaos by Kalley Huang (NYT)

Social media sites ranging from upstart Post to open source Mastodon are trying to move into the real estate put at risk by antics of Twitter’s new CEO Elon Musk. [Link; soft paywall]

Kids Don’t Want Cash Anymore–They Want ‘Robux’ by Sarah E. Needleman and Sarah Donaldson (WSJ)

Wildly popular online gaming platform Roblox is a key destination for pocket money these days as children prefer buying digital goods to heading down to the store. [Link; paywall]

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Have a great weekend!