Dec 15, 2023
Both the NYSE FAANG+ Index and Renaissance IPO ETF (IPO) have put in place fresh 52-week highs in the past couple of days, however, zooming out, those fresh highs are on different planets. The NYSE FAANG+ index—comprised of many mega cap Tech stocks—is not only at a 52-week high, but it’s trading at record highs. Since the pre-COVID market high in February 2020, the FANG+ group is now up 120.1%. As for the IPO ETF, this week’s 52-week high only leaves the group at the highest levels since April 2022. Contrary to the all-time high for FAANG+, IPO is still down 51.7% from its February 2021 high and is up a meager 4.7% since pre-COVID. As you can see below, these two traded closely inline with each other in the early days of the post-COVID rally, but FANG+ has left IPO in the dust since the start of 2022.
Dec 14, 2023
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Looking for deeper insight into markets? In tonight’s Closer sent to Bespoke Institutional clients, we begin with a review of the latest ECB happenings (page 1). We then review the sharp reversal to new highs for the Russell 2,000 (page 2) and provide some notes on sector new highs (page 3). We finish with a rundown of rate premiums (page 4).
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Dec 14, 2023
More and more equity indices are hitting fresh record highs with the S&P 500 within 1.5% of doing the same. Understandably on these moves, investor sentiment has gotten a further boost. Per the latest AAII Investor Sentiment Survey, 51.3% of investors reported as bullish this week. And keep in mind, due to the timing of the survey, that would not have fully captured any investor response to yesterday’s FOMC. That is the highest and first reading above 50% since July 20th of this year when bulls were only 0.1 percentage points higher. Outside of that week, it would be the highest bullish sentiment reading since April 2022.
Given the new high in bulls, bears have been nowhere to be found. A meager 19.3% of respondents reported as bearish this week. That surpasses the recent low of 19.6% from just two weeks ago for the lowest amount since the first week of January 2018 when only 15.56% of responses were bearish.
The overwhelmingly bullish sentiment can also be observed through the bull-bear spread. Currently, the share of bulls outnumber bears by 32 percentage points. That is the widest margin in favor of bulls since April 2021. Looked at another way, that is 2.1 standard deviations above the historical average of the spread meaning sentiment is extremely extended..
The cheery sentiment on the part of investors certainly means there is a warm and fuzzy feeling during this holiday season, but we would note that sentiment is historically a contrarian indicator. In other words, opposite to what investors are feeling, extremely bullish sentiment readings have historically been followed by more lackluster returns.
Dec 14, 2023
Economic data this morning broadly came in healthier than expected, including weekly jobless claims. Initial claims were expected to go unchanged at 220K. While that previous week’s reading was revised up to 221K, this week’s print fell all the way down to 202K. That is the lowest reading on jobless claims since the week of October 14th and September 16th before that. In all, that makes for one of the lowest readings on claims since January of last year.
Before seasonal adjustment, claims are largely following the usual seasonal pattern having been trending higher since the early fall. Currently at 248.3K, unadjusted claims are running at the lowest level for the comparable week of the year since 1969.
Continuing claims have gotten much more elevated than initial claims over the past few months. Currently totaling 1.876 million, continuing claims have risen meaningfully from the low of 1.658 million put in place just three months ago. However, the consistent pace of increases over that span (every week from September 16th through the first week of November saw a week over week increase) has slowed, having been more choppy in the past month. In fact, at 1.876 million, the current reading is still almost 50K below the recent high of 1.925 million set in mid-November.
