The Bespoke Report – 4/16/21 – Only One Way To Go With Risks So Low?

Policy stimulus continues to run at full tilt, and has carved off some of the worst possible forward outcomes for the economy and markets. Meanwhile, interest rates have been falling after a meteoric rise in Q1, while the bull market in commodities continues to run. Manufacturing activity gauges are roaring and retail sales are soaring. What does all of this mean for investors looking ahead to the rest of the year given the already-impressive move higher for stocks in 2021?

We discuss in detail along with an earnings round-up, review of recent economic data, a look at housing, and more in this week’s Bespoke Report.

This week’s Bespoke Report newsletter is now available for members.

To read the report and access everything else Bespoke’s research platform has to offer, start a two-week free trial to one of our three membership levels.  You won’t be disappointed! 

The Closer – End of Week Charts – 4/16/21

Looking for deeper insight on global markets and economics?  In tonight’s Closer sent to Bespoke clients, we recap weekly price action in major asset classes, update economic surprise index data for major economies, chart the weekly Commitment of Traders report from the CFTC, and provide our normal nightly update on ETF performance, volume and price movers, and the Bespoke Market Timing Model.  We also take a look at the trend in various developed market FX markets.

The Closer is one of our most popular reports, and you can sign up for a free trial below to see it!

See tonight’s Closer by starting a two-week free trial to Bespoke Institutional now!

Bespoke’s Morning Lineup – 4/16/21 – On the House

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 free trial to Bespoke Premium.  CLICK HERE to learn more and start your free trial.

“It all comes down to interest rates. As an investor, all you’re doing is putting up a lump-sum payment for a future cash flow.” – Ray Dalio

The anti-gravitational pull higher in equities has continued this morning as some modest weakness in futures overnight has reversed with all of the major averages now looking to open in the green.  Housing data has the spotlight this morning, and both Housing Starts and Building Permits topped consensus expectations.  The latter saw only a small beat relative to expectations, while the former exceeded forecasts by more than 100K (1739K vs 1611K). The only other indicator on the calendar between now and the weekend is Michigan Confidence.

Read today’s Morning Lineup for a recap of all the major market news and events including a recap of the biggest overnight events including some key earnings reports, international economic data, as well as the latest US and international COVID trends including our vaccination trackers, and much more.

ml0203

We’re already hard at work on this week’s Bespoke Report, but this morning we wanted to provide a quick update to a chart from last week’s report.  The annotated chart below shows the yield on the 10-year US Treasury on an intraday basis over the last 15 trading days.  Along with the move in yields, we’ve also annotated the chart with the releases of some key economic indicators over that time period.  So, let’s recap them for you.

On 3/30, Consumer Confidence saw its biggest beat relative to expectations since at least 2000 and the third largest m/m gain on record.  On 3/31, the Chicago PMI was the strongest since July 2018.  The next day (4/1), the ISM Manufacturing report came in at the highest level in decades.  The equity market was closed for Good Friday on 4/2, but Non-Farm Payrolls came in more than a quarter of a million above forecasts.  The following Monday on 4/5, the ISM Services report, which goes back to the mid-1990s, came in at the highest level on record.  After 4/5, there was a bit of a lull in the data, but last Friday (4/9), PPI saw its largest y/y increase since 2011 while this week’s CPI saw the largest m/m increase since 2009.  Finally, in yesterday’s data dump, Jobless Claims dropped to their lowest level of the pandemic, Retail Sales came in at nearly twice consensus expectations with the second-largest m/m increase on record, and both the Philly and NY Fed Manufacturing indices surged.

With all of this great data following a period where the market was freaking out over interest rates, you could have expected to see a big jump in rates, but instead, we’ve seen the complete opposite with the yield on the 10-year at its lowest level since February.  As Peter Lynch once said, “Nobody can predict interest rates”, or for that matter, “the future direction of the economy or the stock market.”

The Bespoke 50 Top Growth Stocks — 4/15/21

Every Thursday, Bespoke publishes its “Bespoke 50” list of top growth stocks in the Russell 3,000.  Our “Bespoke 50” list is made up of the 50 stocks that fit a proprietary growth screen that we created a number of years ago.  Since inception in early 2012, the “Bespoke 50” is up 468.1% excluding dividends, commissions, or fees.  Over the same period, the Russell 3,000’s total return has been +267.6%.  Always remember, though, that past performance is no guarantee of future returns.  (Please read below for more info.)  To view our “Bespoke 50” list of top growth stocks, please start a two-week trial to either Bespoke Premium or Bespoke Institutional.

The Bespoke 50 performance chart shown does not represent actual investment results.  The Bespoke 50 is updated weekly on Thursday.  Performance is based on equally weighting each of the 50 stocks (2% each) and is calculated using each stock’s opening price as of Friday morning each week.  Entry prices and exit prices used for stocks that are added or removed from the Bespoke 50 are based on Friday’s opening price.  Any potential commissions, fees, or dividends are not included in the performance calculation.  Performance tracking for the Bespoke 50 and the Russell 3,000 total return index begins on March 5th, 2012 when the Bespoke 50 was first published.  Past performance is not a guarantee of future results.  The Bespoke 50 is meant to be an idea generator for investors and not a recommendation to buy or sell any specific securities.  It is not personalized advice because it in no way takes into account an investor’s individual needs.  As always, investors should conduct their own research when buying or selling individual securities.

B.I.G. Tips – Boom Goes the Retail Sales

After a lousy report for the month of February when freak weather across the south temporarily shut down several areas of the south, Retail Sales bounced back with a vengeance in March as vaccine rollouts accelerated and stimulus checks were spent.

The moves higher in Retail Sales over the last few months have been incredible.  As shown below, while it took 40 months to make a new high following their pre-Financial Crisis peak, COVID only caused a five-month drought without a new high.  From the low in April 2020, Retail Sales have bounced 50%!

Even more impressive, though, is not only are total Retail Sales above their pre-COVID peak, but they are more than 17% above that peak just 14 months ago.  The second chart shows the 14-month rate of change in Retail Sales since 1992.  While the post-COVID decline was the steepest on record, the 14-month gain is the highest on record.   Ironically, had it not been for COVID and the stimulus it resulted in, there is no way Retail Sales levels would be where they are now.

In our just-released B.I.G. Tips report, we broke out the details of the March report including its bright and dark spots. For anyone with more than a passing interest in how the COVID outbreak and subsequent stimulus is impacting the economy, our monthly update on retail sales is a must-read.  To see the report, sign up for a monthly Bespoke Premium membership now!

Bespoke’s Morning Lineup – 4/15/21 – Better Than Expected

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 free trial to Bespoke Premium.  CLICK HERE to learn more and start your free trial.

“Money is made by sitting, not trading.” – Jesse Livermore

Futures have been higher all morning driven by solid earnings results from some of the largest banks.  In addition to the earnings results, we just got a slug of economic data in the form of Jobless Claims, Retail Sales, Empire Manufacturing, and Philly Fed Manufacturing.  As “Crazy Eddie” would say, the results were “Insane”.  With the exception of Continuing Claims, which still came in right near their post-pandemic lows, every other report came in much stronger than expected.  It’s still early, but what could be more impressive than the results themselves is the fact that the yield on the 10-year is actually lower now than it was before the releases.

Read today’s Morning Lineup for a recap of all the major market news and events including a recap of the biggest overnight events including some key earnings reports, international inflation data, as well as the latest US and international COVID trends including our vaccination trackers, and much more.

ml0203

As shown on page two of our Morning Lineup, the S&P 500 has been consistently trading in ‘extreme’ overbought territory in recent days (2+ standard deviations above its 50-DMA).  Yesterday marked the 9th straight trading day that the S&P 500 finished the day in this area marking the longest streak since January 2018 and just the 7th streak of nine or more trading days.