Bespoke’s Morning Lineup – 12/13/24 – Lucky Friday the 13th?

Dec 13, 2024

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.

“In general, things either work out or they don’t, and if they don’t, you figure out something else, a plan B.” – Dick Van Dyke

Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.  

gain of 0.40% with positive returns just under 62% of the time!

Before you go out and buy everything this morning, though, there’s a big caveat to that average; one of the better market days on record occurred on March 13th, 2020 when the S&P 500 rallied 9.3%! If you take that out, the average S&P 500 performance on Friday the 13^th falls by more than half to 0.15%. Still not terrible, though.

The chart below shows the S&P 500’s performance on each individual Friday the 13th since 1999. Big downside moves on Friday the 13th have been uncommon with just three days out of 42 where the S&P 500 fell more than 1% (December 2002, April 2012, and November 2015) while there have been seven days that rallied more than 1%. Who knows? Since Friday the 13th historically hasn’t been that unlucky for the market, maybe we’ll finally get a day of positive breadth!

Bespoke’s Morning Lineup – 12/12/24 – PPI Hot, Claims Cool

Dec 12, 2024

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.

“You only live once, and the way I live, once is enough.” – Frank Sinatra

Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.  

Heading into today’s PPI report, US equity futures took a breather after yesterday’s rally. While S&P 500 futures were just marginally lower, Nasdaq futures were down by a more sizable amount, indicating a decline of nearly 0.5%. Yields are up by a couple of basis points across the curve, crude oil is back above $70, and Bitcoin has held above $100K overnight for now at least.

The just-released November PPI came in hotter than expected at the headline level (0.4% vs 0.2%) and October’s reading was revised up from 0.2% to 0.3%. Ex food and energy, producer prices were inline with forecasts at 0.2%.  While inflation data was on the hot side, jobless claims were weak. Initial claims spiked up to 242K versus forecasts for a reading of 220K while continuing claims also came in 9K higher than expected at 1.886 million. In response to the data, equity futures added modestly to their pre-market losses while yields erased most of their morning increases.

The Nasdaq broke out to a record high yesterday, and the S&P 500 finished within one-tenth of a percentage point shy of hitting its 58^th record closing high this year, and the S&P 500 is up 27.5% for the year.  With numbers like these, you can’t fault investors for being optimistic about the stock market.  By just about every sentiment measure out there, investors have embraced the bull market, but many of the indicators we track seem somewhat restrained relative to the magnitude of the market’s gains.

Take the weekly sentiment survey from the American Association of Individual Investors (AAII). In the latest update this week, bullish sentiment declined from 48.3% to 43.3%. Bulls still outnumber bears by over ten percentage points, but current levels are hardly extreme, and the weekly reading has been higher on just over 20% of all other weekly readings since the start of 2009.

Taking a closer look at bullish sentiment during the current bull market, the peak sentiment reading was just under a year ago on 12/21/23 when bullish sentiment reached 52.9%. Back in July shortly before the August pullback, bullish sentiment got close to that December reading reaching a level of 52.7%.  Since then, bullish sentiment has been gradually trending lower with multiple lower highs and lower lows.

One reason sentiment has remained contained lies in the fact that breadth has been incredibly weak in recent days. As noted yesterday, the S&P 500’s daily breadth reading has been negative for eight straight trading days. Just over the last five trading days, the S&P 500 is essentially unchanged (-0.03%), but nine out of eleven sectors are lower with five down over 2%!  Not exactly what you would associate with a year-end rally.

Bespoke’s Morning Lineup – 12/11/24 – CPI Right on Target

Dec 11, 2024

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.

“I certainly wouldn’t invest in the stock market. I never believed in it. Most people lose money because of the emotional difficulty involved.” – Bernie Madoff

Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.  

Equity futures and international markets were little changed headed into the November CPI report. The STOXX 600 was unchanged, and overnight the Nikkei was also unchanged. The CPI report continued the narrative that inflation remains sticky, but it wasn’t any worse than expected. For both the headline and core readings, the m/m and y/y readings were right in line with expectations. At 3.3% y/y, though, core CPI remains too high for the Fed’s liking. The lack of any upside surprises, though, has provided a boost to pre-market futures, bond yields have pulled back slightly, and Bitcoin has gotten a bump higher. The fact that the numbers were right in line with expectations, though, all but locks in a rate cut at next week’s meeting.

Remember when CPI reports were the only thing the market cared about?  Back in late 2022 and early 2023 right in the middle of the Fed’s rate hiking cycle, the monthly release of CPI was to economists and traders what a Taylor Swift concert was to teenage and twenty-something girls (and a lot of other people). It was an event, and the S&P 500 regularly rallied or declined 1% or more in reaction to the monthly “drop”. As shown in the chart below, in late 2022 and early 2023, the 12-month average daily change in the S&P 500 on the day of CPI reports was a gain or loss of just under 2%. Dating back to the turn of the century, the only other time that market reactions to CPI reports were more volatile was during the financial crisis, but that was a period when overall volatility was a lot higher too, so moves of more than 1% were the norm on any day during that period.

As inflation data has become less ‘exciting’, the market’s infatuation with it has subsided. As shown in the chart below, the average daily change of the S&P 500 on CPI days has plummeted below the long-term average of 0.86% down to 0.71%.

The S&P 500’s daily change on CPI days since the start of 2022 when the Fed’s last rate hiking cycle kicked off, shows the declining importance of CPI data on the market. Over the previous six months, there has only been one month where the S&P 500 moved 1% on a CPI Day, and following last month’s report, the S&P 500 finished the day unchanged rising by just 0.02% or 2 basis points (bps). That was the smallest daily move on a CPI Day since 2019 and was a far cry from two years earlier when the S&P 500 rallied 5.54% in reaction to the October 2022 report which was the largest upside move in reaction to a CPI report since 2008 and the third largest since 1999.

One reason for the more muted reactions to recent CPI reports is that the data has become more behaved and less ‘exciting’. Whether that changes or not remains to be seen, but the recent stickiness of Core CPI relative to headline has economists speculating that there could be a second act.