B.I.G. Tips – Retail Sales Mixed
This content is for members onlyB.I.G. Tips – Analyst Sentiment by Market Cap, Sector
This content is for members onlyA Bipartisan Rally: Crude Oil and the Dollar
WTI crude oil prices crossed a major milestone when they traded above $70 per barrel for the first time since late 2014, when prices were crashing from over $100 to ultimately under $30. With the recent gains, crude oil prices are up over 16% YTD now and 52% over the last 12 months.
The most surprising aspect of the rally in crude oil prices is that the most recent leg higher has come as the dollar has rallied along with it. Historically, crude oil prices have had an inverse correlation to the dollar and looking at the chart below, it’s pretty easy to see that the rally in crude oil prices over the last year has mostly coincided with a decline in the dollar. Over the last four weeks, though, the US Dollar Index has seen a pretty sizable bounce of over 3%, but rather than stop the rally in its tracks, crude oil has been unfazed, gaining an additional 10%+.
We just published a report for clients looking at how equities have reacted following prior periods where crude oil and the dollar have rallied by similar magnitudes on a simultaneous basis. After going through this must-read report, you may be surprised to see just how uncommon a scenario like this is. To see the report, sign up for a monthly Bespoke Premium membership now!
April Employment Report Preview
Heading into Friday’s Non Farm Payrolls (NFP) report for April, economists are expecting an increase in payrolls of 193K, which would be a big improvement from March’s dismal reading of 103K, in what was the biggest NFP miss relative to expectations since the September 2017 report. In the private sector, economists are also expecting a similar increase of 190K. With these increases, the unemployment rate is expected to fall to 4.0%. The big area of focus, however, will come from average hourly earnings. With so much concern around inflation, any stronger than expected reading in wage measures will be a negative for the market.
Ahead of the report, we just published our eleven-page preview of the April jobs report. This report contains a ton of analysis related to how the equity market has historically reacted to the monthly jobs report, as well as how secondary employment-related indicators we track looked in April. We also include a breakdown of how the initial reading for April typically comes in relative to expectations and how that ranks versus other months.
One topic we cover in each month’s report is the S&P 500 stocks that do best and worst from the open to close on the day of the employment report based on whether or not the report comes in stronger or weaker than expected. In other words, which stocks should you buy, and which should you avoid? The table below highlights the best-performing stocks in the S&P 500 from the open to close on days when the Non-Farm Payrolls report has been better than expected over the last two years.
Of the 25 top performing stocks on days when the NFP beats expectations, eight sectors are represented, and Consumer Discretionary leads the way with nine. Vornado (VNO) has been the best performing stock with an average open to close gain of 2.86%. In terms of consistency, CH Robinson (CHRW) has been up every time, while another six stocks have been positive nine out of ten times.
For anyone with more than a passing interest in how equities are impacted by economic data, this report is a must-read. To see the report, sign up for a monthly Bespoke Premium membership now!
