Dec 5, 2022
Front-month lumber has fallen through critical levels of support at the past few months lows. In the first year of the pandemic, lumber had a brief time in the limelight as the thinly traded commodity posted massive gains from mid-2020 to mid-2021 on tight supplies amidst strong housing demand. After peaking in the spring of 2021, it has erased all of its pandemic gains. So far in December alone, it has fallen over 8% with current levels (red dotted line) down to the lowest since June 2020.
Lumber’s shaky technical picture has poor sentiment data to boot. Recent data from the Commitments of Traders report from the CFTC has shown an overwhelming share of open interest is positioned bearishly in lumber futures. As shown below, a net 48.29% of open interest is short, slightly off the lows last month but still down around some of the most pessimistic levels on record.
As we do each Monday, in tonight’s Closer, we will provide a more complete rundown of the positioning in other assets per the CFTC data.
Given it is a key input for construction, the decline in lumber prices has largely been a result of weakness in the housing sector (which we discussed in aggregate in last week’s Matrix of Economic Indicators). Like lumber, the charts of various construction/housing-related areas leave something to be desired. For example, front-month copper is running up to and failing to take out the past year’s downtrend line while Weyerhaeuser (WY)—a publicly traded American timberland company—does the same. Meanwhile, stocks in the S&P 1500’s homebuilder and building and products industries have both run into resistance at their summer highs. Click here to learn more about Bespoke’s premium stock market research service.
Dec 5, 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.
“Once, during Prohibition, I was forced to live for days on nothing but food and water.” – W. C. Fields
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.
It’s been a weak start to the trading week this morning as major averages in Europe and futures in the US are lower. While China rallied overnight, economic data in the EU didn’t do anything to encourage investors as PMI data for the services sector was generally weaker than expected, remaining in contractionary territory. Retail Sales in the region also declined slightly more than expected, falling 1.8% versus forecasts for a decline of 1.7%. Here in the US, the S&P 500 is on pace to open about 0.5% lower, treasury yields are modestly higher and crude oil is higher after OPEC+ announced plans to keep production levels intact. The only area of the market showing any strength this morning is crypto where bitcoin and Ethereum are both up nearly 1%. Overall, there’s no real catalyst for the weaker tone besides the fact that Morgan Stanley’s Mike Wilson said the rally has little upside left in the tank.
The equity market finds itself at an interesting juncture right now with almost as many conflicts as a high school lunchroom. Despite declines on five of the last six trading days, thanks to a 3%+ rally last Wednesday, the S&P 500 managed to finish the week up just over 1%. Similarly, while the S&P 500 also closed above its 200-day moving average (DMA) for the first time since the spring, the downtrend from the all-time high at the start of the year remains firmly in place. For every positive, it seems, there’s a negative.
In the European equity market, it’s a similar setup. The STOXX 600 was three weeks ahead of the S&P 500 in getting above its 200-DMA, and it also managed to break its downtrend on that same day. While those are positive technical developments, the current 16%+ rally is at least temporarily running out of gas right at the same levels that rallies in May and August both stalled out. If all of this confusion is enough to make you want to drink, look on the bright side; at least you can now do that legally now as Prohibition ended 89 years ago today.
Our Morning Lineup keeps readers on top of earnings data, economic news, global headlines, and market internals. We’re biased (of course!), but we think it’s the best and most helpful pre-market report in existence!
Start a two-week trial to Bespoke Premium to read today’s full Morning Lineup.
Dec 4, 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.
While you’re here, join Bespoke Premium with a 30-day trial!
Compulsion
I’m Scared of My Baby Monitor by Damon Beres (The Atlantic)
Many of the products billed as reducing stress or keeping us safe are better thought of as acute vectors for stress and anxiety that we otherwise wouldn’t have. [Link; soft paywall]
Britain Opened the Door to Online Gambling. Now It’s Living With the Consequences by Gavin Finch, Harry Wilson and Ann Choi (Bloomberg)
Long before online sports gambling platforms proliferated in the US, Britain unleashed the industry on its citizens at scale. The results have been brutal including hundreds of suicides. [Link; soft paywall]
Sports Excess
When V.I.P. Isn’t Exclusive Enough: Welcome to V.V.I.P. by Sarah Lyall and Christina Goldbaum (NYT)
Rules don’t apply to the highest-paying guests at the FIFA World Cup in Qatar, but there is always an additional level of extreme luxury and exclusivity to achieve. [Link; soft paywall]
This Florida Home’s Memorabilia Collection Gives the Baseball Hall of Fame a Run for Its Money by John Sandman (WSJ)
A former health care executive has built a monumental shrine to baseball in a sprawling six bedroom, twelve bathroom house with more square footage than 15 starter homes. [Link; paywall]
Subterranean Situations
What Are Manhattan’s Street Chimneys? by Taku Ward (The Nib)
A fascinating infographic explaining why Manhattan is filled with odd, orange-and-white temporary “street chimneys” belching steam throughout the year. [Link]
Elon Musk’s Boring Company Ghosts Cities Across America by Tedd Mann and Julie Bykowicz (WSJ)
Big promises that never turn into anything are the hallmark of Elon Musk’s Boring Company, a venture that is incapable of actually delivering on anything it commits to in wave of vaporware glitz and glam. [Link; paywall]
Health Care
Google Health strikes deal with iCAD to commercialize mammography AI by Heather Landi (Fierce Healthcare)
Google Health is using artificial intelligence models to better-diagnose breast cancer, and its latest step towards commercialization is a deal that will improve models’ accuracy. [Link]
How diabetes med Ozempic became a fad weight-loss drug by Yasmin Gagne (Fast Company)
Multiple forms of the same bioactive drug (semaglutide) are proving wildly popular…but may be leading to weight loss seekers taking doses from patience that have greater medical need. [Link]
Real Estate
Where tighter monetary policy hits homeowners hardest by Neil Irwin and Courtenay Brown (Axios)
Not all housing markets have the same degree of exposure to changes in short-term interest rates, though of course exposure to short-term rate changes can be a very sharp double-edged sword. [Link]
U.S. Government to Backstop Mortgages Above $1 Million in High-Cost Areas by Andrew Ackerman (WSJ)
A few very pricey markets will see homes worth $1mm qualify for status as a conforming loan that can be backed by Fannie Mae and Freddie Mac starting next year. [Link; paywall]
Electric Vehicles
BEVs: Not Just in California Anymore by John Howard (Wards Auto)
Battery electric vehicle (BEV) adoption is surging across the country, with some of the fastest adoption coming in some unlikely places including Oklahoma City, Dallas, Houston, and Tampa. [Link]
Tesla’s Lithium Lead at Risk as Rivals Make Supply Deals by David Stringer, Yvonne Yue Li, and Gabrielle Coppola (Bloomberg)
Original equipment manufacturers (OEMs) that don’t have large BEV businesses already are setting up supply chains for their rapidly scaling battery lineups, in a process that could leave Tesla with less supply. [Link; soft paywall]
Artificial “Intelligence”
OpenAI invites everyone to test new AI-powered chatbot—with amusing results by Benj Edwards (Ars Technica)
Basic text prompts ar enough for ChatGPT to spew out an impressive range of responses that read remarkably close to human-written language. [Link]
This AI Chatbot Is a Shockingly Competent Macro Pundit by Joe Weisenthal (Bloomberg)
If you want bland, consensus commentary on macroeconomics and financial markets, the OpenAI model is surprisingly effective. [Link; paywall]
Disinformation
On TikTok, Chinese State Media Pushes Divisive Videos About U.S. Politicians by Emily Baker-White and Iain Marin (Forbes)
Chinese government accounts are editorializing US politics at epic scale, generating millions of follows and views; none were disclosed as productions of the Chinese government’s propaganda system. [Link; soft paywall]
Flight In Luxury
Alibaba founder Jack Ma living in Tokyo since China’s tech crackdown by Kana Inagaki and Leo Lewis (FT)
After the Chinese government cracked down on the companies controlled by China’s richest man, he has surfaced living a low profile existence near Tokyo that also includes jaunts to Israel and the US. [Link; paywall]
Credit Dries Up
Cash-Hungry Companies Get Creative Raising Capital by Corrie Driebusch (WSJ)
Low stock prices and pressure to preserve cash are forcing companies to place equity through private funding rounds that offer investors preferred stakes with lower risk than common stock in the same companies. [Link; paywall]
Read Bespoke’s most actionable market research by joining Bespoke Premium today! Get started here.
Have a great weekend!
Dec 2, 2022
This week’s Bespoke Report newsletter is now available for members.
In this week’s newsletter, we’ve updated our Equity Market Risk Gauge for the month of December, and we also take a look at market technicals, improving internals, international equity market outperformance, interest rate movements, and the dollar’s recent weakness.
To see our updated Equity Risk Gauge and access everything else Bespoke’s research platform has to offer, join Bespoke Institutional and get half off for the first three months!
