Bespoke’s Morning Lineup — 8/5/24 — The Best Laid Plans…
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 laid plans of mice and men often go awry” – Robert Burns
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
The Fed decided to hold rates steady once again last week while indicating that it was highly likely to cut rates at its next meeting in September. Since that decision, markets have decided that the Fed got too cute. As shown below, with risk assets plummeting around the world this morning, the odds of at least 50 basis points of rate cuts by the September meeting are now at 100%.
Suddenly the Fed Funds Rate all the way up at 5.25-5.50% looks wildly out of line with where the 10-year and 2-year Treasury yields are trading at around 3.75%.
This Week’s Can’t-Miss Analysis — 8/2/24
We publish a lot of market-related content each week, and we want to make sure you don’t miss the most important topics. Below are some charts and tables we view as “can’t miss” from the last week.
Chair Powell and the Fed left rates unchanged on Wednesday and signaled that they’d likely be cutting rates at the September meeting. Then all hell broke loose. Since 3 PM ET when Powell had his post-FOMC press conference on Wednesday, the S&P 500 is down 3.5%, the Nasdaq 100 is down 5%, and the small-cap Russell 2,000 is down 8.3%. A series of very weak economic indicators, a failure to post strong enough beats from a few mega-caps, and more Presidential election volatility all of a sudden has investors shaking in their boots. Treasury yields have plummeted in a sign of weakening economic expectations, and Powell and the Fed don’t have another meeting until September 18th. Oh, and August and September are historically two of the worst months of the year for the market from a seasonal perspective, so there’s that to deal with as well.
It’s amazing how the market can go from thinking the Fed has everything under control to suddenly appearing way behind the curve. That’s how it always seems to work, though, doesn’t it?
As shown below, the CNN Fear & Greed index, which looks at several volatility and sentiment figures to gauge investor skittishness, has ticked into “Extreme Fear” mode. (If you’re a contrarian, you love to see it.)
As we move into August, below is a reminder of the seasonal weakness that August and September typically bring. Over the last 50 years, August and September are the only two months that have seen the Dow average declines. September is the worst month by far with an average decline of 1.28% and positive returns only 36% of the time.
To continue reading the rest of this week’s “Can’t-Miss” analysis, which includes another dozen or so important market-related topics, sign up for one of our two membership levels with our Dog Days of Summer special below!
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STOCK MARKET SUMMER CAMP FOR STUDENTS
If you or any of your friends or colleagues have children, grandchildren, nieces, or nephews, please take note!
Here at Bespoke we’ve been following the stock market 24/7 for more than two decades, so based on the “10,000 hour” rule, we can confidently say that we are market “pros”.
At the same time, traditional education across grades K-12 doesn’t focus on the stock market, investing, and how it all works.
For years, we’ve thought about addressing the “stock market literacy gap” for students across the country. Now, we’ve come up with a plan!
From August 12th-16th, we’ll be running our Stock Market Camp for students in grades 5-8!
Bespoke’s Stock Market Camp will run for five days from Monday-Friday with each live Zoom class lasting roughly 75 minutes. Camp will be fun, engaging, and interactive, and by the end of the week, students will have a basic understanding of how the stock market and investing works! If a live class is missed, a recording will be available.
We don’t have to tell you how valuable knowing this information at a young age can be! Instead of kids playing video games, scrolling through TikTok, or messing around on Snapchat, we think our five-day Stock Market Camp will pay major dividends down the road!
For now we are making our Stock Market Camp available to students that are referenced by Bespoke readers. We already ran a one week of camp for high school students (grades 9-12) from July 22nd-26th, and our next one is for middle school students (grades 5-8) from August 12th-16th. Each weekly camp is capped at 40 students max, so please sign up ASAP to reserve your student’s spot. You can purchase as many spots as you’d like or forward this email to colleagues and have them sign up.
SIGN UP YOUR STUDENT OR STUDENTS TODAY AS THE CAMPS ARE LIMITED TO JUST 40 ATTENDEES!
We will touch base after sign-up to gather the pertinent information. If you sign up and the student cannot attend during the dates listed above, we can either provide access to a full recording of the camp or a credit for a future camp. Refunds will be provided upon request if we are notified at least one week before the camp’s start date.
Please reach out if you have any questions about Bespoke’s Stock Market Camp. The camp is for informational and educational purposes only, and there will be no investment advice or recommendations provided. All discussions will be impersonal and historical in nature. There will be no forward-looking analysis or discussion.
Don’t forget to go check out our Bespoke Threads site to pick up some super-soft Bespoke merch!!!
Have a great weekend!
AI vs. the Web
In our premium research over the last few months, we’ve done a lot of analysis comparing the launch of ChatGPT and the AI Boom that has ensued with other major technological advances over the last few decades.
One of the most correlated periods to now in terms of the Nasdaq 100’s performance was the launch of the modern web browser (Netscape) back in late 1994. Just as ChatGPT brought AI to the masses, the Netscape browser made the internet easily accessible.
As shown in the chart below that was included in our latest Bespoke Report newsletter, if we tie the release of ChatGPT in November 2022 to the release of the Netscape web browser in December 1994, the Nasdaq 100 is up about the same amount, and we would currently be around August 1996 on a time scale.
What’s interesting about August 1996 is that we’d be about four months away from Fed Chair Alan Greenspan’s famous “Irrational Exuberance” comments that were meant to highlight some of the frothiness that he was seeing in markets at the time.
Those comments by Alan Greenspan turned out to be correct (eventually), but if we expand the chart above out ten years, they were about three years early! As shown below, the Nasdaq would go on to experience a massive bubble for years after Greenspan’s first mention of “irrational exuberance” in late 1996.
There are plenty of investors saying the same thing and worse about Tech/AI stocks right now, but keep in mind that we’ve yet to see a pick-up on the M&A and IPO fronts that usually accompany bubbles. Some of that can be tied back to the fact that companies that may have gone public 25 years ago are often getting acquired before they go public, but overall, the AI Boom, while certainly hot, still seems far more subdued than what we saw during peak Internet boom back in the late 1990s.
Of course, every boom/bust cycle is different, and the chart below is not to suggest that the Nasdaq will continue following the path it took back in the 1990s. We just thought it was helpful to see the two periods side by side when comparing the launch of ChatGPT to the launch of the Netscape web browser.
As always, past performance is no guarantee of future results!
We have a lot more interesting analysis like this in our newest Bespoke Report. If you’d like to read it, simply start a trial to one of our three membership levels.
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