B.I.G. Tips – Post Election Recap
Time travel back to November 7th, 2016 — one day prior to the 2016 US Presidential Election. Which of these outcomes would you have thought more likely? 1) Trump wins the Election, or 2) the S&P 500 rallies 20%+ over the next year IF Trump wins the Election. We’ll let you ponder over that one for a moment, but fast-forward to today, and we’re now one year past Trump’s improbable victory on 11/8/16. Since then, the S&P 500 is up 21%.
Below is a table highlighting the performance of 76 stock markets around the world since Election Day 2016 (in local currency). All but 6 of the 76 countries are up over the last year, with Jamaica on top at +72.19%. Of the G7 countries, Italy ranks first with a gain of 35.76%, followed by Japan at +33.44% and Germany at +27.67%. The US has been just the 5th best of the G7, with only Britain and Canada posting smaller gains. Of the BRICs, India is up the most while China is up the least
We’ve just published an in-depth report on the state of the market one year past Election Day 2016. If you would like to give it a read, start a 14-day free trial to Bespoke Premium now!
B.I.G. Tips – October Employment Report Preview
Heading into Friday’s Non-Farm Payrolls (NFP) report for October, economists are expecting an increase in payrolls of 310K, which would be a huge improvement from last month’s decline of 33K. If expectations are met, it would be the strongest month for job creation since October 2015 and the biggest month over month increase (+343K) since September 1997! Obviously, a lot of that rebound is related to the bounce-back from the hurricanes, but anytime you are talking about the biggest move in twenty years, it’s impressive. In the private sector, economists are expecting a similar increase to 301K from last month’s level of –40K, but even with the improved job creation numbers, the unemployment rate is expected to remain unchanged at 4.2%. Growth in average hourly earnings is expected to slow back down to 0.2% from last month’s 0.5%, while the average workweek should remain at 34.4 hours per week.
Ahead of the report, we just published our eleven-page monthly preview for the October 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 October. We also include a breakdown of how the initial reading for October 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, six sectors are represented, with Energy and Technology both leading the way with seven. Leading the way to the upside, Hewlett Packard Enterprises (HPE), Vornado (VNO), and Qorvo (QRVO) have seen average open to close gains of over 2%. In terms of consistency, Urban Outfitters (URBN), Skyworks (SWKS), Autodesk (ADSK), and Albermarle (ALB) have been in the black 92% of the time.
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!
