Nov 20, 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.
“We survived ourselves. We were our own worst enemy.” – Jensen Huang
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
There’s a modestly positive tone in futures this morning, but the decks have been cleared to the mother of all earnings reports after the close when Nvidia (NVDA) reports. The only economic report on the calendar was MBA Mortgage Applications which showed a weekly increase of 1.7%. Asian stocks were mixed overnight with modest moves in either direction, and it’s a similar story in Europe this morning. Expect to see much larger moves in tonight’s Asian session, though, as NVDA’s results will have reverberations across the tech sector.
Walmart (WMT) may have marked the unofficial end of earnings season yesterday, but the largest company in the world goes by its own rules and reports on its own schedule. As mentioned above, NVDA will report after the close today, and with the stock accounting for more than 7% of the entire S&P 500 (most than most sectors), a lot rides on how the company reports. The company has reported an astonishing seven straight earnings triple plays which is practically unheard of for any company, but the fact that the most valuable company in the world has so consistently exceeded expectations across the board is unbelievable.
The chart below shows the performance of Nvidia (NVDA) since the release of ChatGPT nearly two years ago, and the red dots indicate each of the seven earnings reports (all triple plays) during that time. While the stock has had several positive reactions to those seven earnings reports (it rallied between 9% and 24% the day after four of those reports) not every one of those triple plays was a launching point for the stock. Following three of those reports, the stock was flat to down on the day after in reaction, including a 6.4% following its triple play in August. As “blowing the doors off” relative to expectations has become more common, investors have come to expect it, which only raises the bar. The best thing NVDA may have going for it heading into this afternoon’s report is that the stock has gone nowhere in the last five months.
For investors positioned for a broadening of the rally, a positive reaction by the market to NVDA earnings may be the last thing they want. The chart below shows the performance of NVDA versus the Russell 2000 ETF (IWM) during 2024. Since the end of May, there has been a tendency for the Russell 2000 to perform poorly when NVDA has surged as it sucks all the capital from the pool, and vice versa.
As the market awaits NVDA earnings, this morning’s major report has been Target (TGT) which reported a reverse triple play with weaker-than-expected EPS, revenues, and lower guidance. While analysts have consistently underestimated NVDA earnings, they have been overly optimistic regarding TGT results. As shown in the snapshot below, before this morning’s report, its last report was the only one in the previous ten where the company didn’t miss EPS forecasts, revenue forecasts, or lower guidance. By missing all three this morning, the stock is indicated to gap down over 18%, which would be the second largest downside gap in reaction to earnings since at least 2001.
As shown in the graphic above, even with the relatively poor results recently, shares of TGT haven’t necessarily reacted negatively to the news. However, even in a bull market where the S&P 500 has surged, the stock has performed negatively, and there are only three reports in the last eight where the stock was higher going into one earnings report than it was heading into the prior report.
Nov 19, 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.
“And like most other overnight successes, it was about twenty years in the making.” – Sam Walton
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
What was looking like a positive morning for equities turned murkier in the last few hours as Russian President Vladimir Putin updated the country’s nuclear doctrine in response to President Biden’s move giving Ukraine the go-ahead to launch attacks on Russian targets deep inside the border. Under the new policy, a spokesperson for the Kremlin said that Russia now “reserves the right to use nuclear weapons in the event of aggression using conventional weapons against it and/or the Republic of Belarus.”
Before the comments, Asian stocks were higher, with fractional gains across the board overnight. European stocks also opened flat to slightly higher but then steadily sold off in the wake of the updated doctrine. The STOXX 600 currently sits down about 0.75%, as even a small increase, however unlikely, of an escalating conflict can understandably cause investors to become more risk averse. It’s also worth highlighting that Putin made similar comments over the weekend that supplying Ukraine with long-range missiles would cross a red line.
Given the tensions, Treasury yields are lower as the 10-year yield is back below 3.4%, crude oil is fractionally lower, and gold and bitcoin are up nearly 1% each with the latter trading firmly above $92K. In terms of economic data, Building Permits and Housing Starts for October were just released and both headline readings came in modestly lower than expected.
Shifting from macro to the micro, Walmart (WMT) marked the unofficial end to earnings season this morning reporting better-than-expected EPS and sales and reiterating its full-year guidance. This was the tenth straight quarter that the company reported better than expected EPS and sales, and in response, the stock is poised to gap up 3.5% which would be the fourth time in a row that the stock gapped up in reaction to earnings. Shares of WMT have already been on a monster run for the last year after dropping below $50 late last year, but this morning the stock is at record highs around $87. One thing to be aware of is that on each of its last six earnings reaction days, the stock has traded down from the open to close.
Nov 18, 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.
“It is a very sobering feeling to be up in space and realize that one’s safety factor was determined by the lowest bidder on a government contract.” – Alan Shepard
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
Two headlines on the front page of the Wall Street Journal stood out to us this morning. The first was “Investors Are Betting on a Market Melt-Up.” There’s not much to say about this except that if you are bullish on the market, given the election results and other factors, you’re not alone. That’s not to say that the market has to go down, but gains could be harder to come by. The beach is always much better when it’s less crowded.
The second headline concerns the still-awaited nomination from President-elect Trump over who should become Treasury secretary (“Jockeying To Lead Treasury Spills Out In Public”). Heading into the weekend, it looked like it was a two-person race between Scott Bessent and Howard Lutnick, but now it appears that the lobbying has annoyed Trump, and he is now expanding the potential field from more than just those two. This pick is easily the most important remaining pick of the future President’s cabinet, and depending on who “gets the rose” it would impact US trade policy and the dollar’s direction.
Markets hate uncertainty, and perhaps some of the increased uncertainty over who will lead the Treasury Department has shown up in the performance of gold and bitcoin this morning, as both are trading higher.
Starting with gold, after an 8% pullback from its late October high and breaking its uptrend that had been in place since earlier in the year, the SPDR Gold Trust (GLD) is trading up over 1% this morning after bouncing near support levels coinciding with its late summer base. If you’re long GLD, seeing a bounce after six days in a row of losses is nice. The real test will come in the days ahead as it looks to get back above that former uptrend line.
It’s hard to attribute a daily 1% move in Bitcoin to anything specific as it’s such a volatile asset. But even after many assets that surged in the immediate days after the election have started to pull back, bitcoin remains within 1% of its record high last week.
