Bespoke’s Morning Lineup – 2/22/21 – 52-Week Highs…In Treasury Yields

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.

“The stock market is filled with individuals who know the price of everything, but the value of nothing.” – Phillip Fisher

It’s looking like it’s going to be one of those Mondays this morning.  Treasuries are trading higher this morning while equities are looking to open moderately lower.  Bitcoin, meanwhile, is down over 8% after Elon Musk said over the weekend that prices ‘seem high’. That’s enough these days.

In economic news, the only two datapoints on the calendar this morning are Leading Indicators at 10 AM and Dallas Fed at 10:30 AM.  Earnings season is unofficially over, but there’s still a number of key reports to contend with after the close and over the next few days.  Make sure to track them all in our Earnings Calendar.

Be sure to check out today’s Morning Lineup for updates on the latest market news and events, earnings reports from around the world, economic data from around the world, an update on the latest national and international COVID trends, and much more.

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As the pre-pandemic days start to fall further in the past, one-year charts of various financial assets are starting to look a lot more different. Take the yield on the 10-year US Treasury. Along with the fact that yields are rising, the higher levels of rates from before the pandemic are falling out of the one-year window.  Through that combination of events, today’s yield of 1.3721% would mark a 52-week high on a closing basis.  It’s been a while since we’ve been able to say that!  As if the chart doesn’t look interesting enough now, wait until late March when the down leg falls completely out of the picture.

Bespoke’s Morning Lineup – 2/19/21 – You’ve Got to Play Your Hand

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.

“Lately it occurs to me, what a long, strange trip it’s been.” – “Truckin'”, Grateful Dead

Strange may be the understatement of the century when it comes to the last twelve months.  One year ago today, the S&P 500 closed at an all-time high as COVID was ravaging China and quietly spreading around the world.  What made the S&P 500’s new high even more impressive was the fact that just two days earlier, Apple (AAPL) issued a profit warning due to the fact that factory closures in China would constrain supply.  Still, the market bounced back and rallied,  It would only be a couple of days later over the weekend that reports of an outbreak in Italy brought it home that COVID wasn’t just a China problem.  The following Monday, global equities plummetted, and within basically a month, the S&P 500 lost a third of its value.  While the path of the equity market since the March lows has been pretty steady to the upside, everything else has been, to say the least, a strange trip.  We’re all hoping for a quick return to normalcy, but if the last year has taught us anything, things often only seem to get stranger by the day.

In market news today, futures are higher while gold and crude oil have pulled back.  In economic data, Markit PMI data around the world has generally topped expectations in the manufacturing sector but hasn’t been quite as positive in the more important services sector.  Later this morning, we’ll get the same updates for the US economy.

Be sure to check out today’s Morning Lineup for updates on the latest market news and events, earnings reports from around the world, flash PMI data, an update on the latest national and international COVID trends, and much more.

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As we look back on the one-year anniversary of the S&P 500’s pre-COVID high, it’s pretty amazing to think that the S&P 500’s YTD performance this year (4.5%) is nearly identical to the YTD performance on this same day in 2020 (4.6%).  If that sense of deja vu makes you nervous, we would note that the similarities are only skin deep.  Underneath the surface, the equity market’s rally this year doesn’t look a whole lot like last year.

The chart below shows the performance of S&P 500 sectors on a YTD basis as of the close on 2/18 last year versus this year.  Last year (blue bars), the sectors leading the rally included Technology and yield sensitive sectors like Utilities and Real Estate. On the downside, Energy and Materials were the only two sectors down on the year.  This year, Energy is leading the way higher with a gain of just under 20%, while Financials and Communications Services are both up over 8%.  In fact, looking at the three leading (and lagging) sectors this year none of the top (or bottom) three performing sectors were the top (or bottom) three performing sectors at this point last year.  Conversely, none of the top (or bottom) three performing sectors at this point last year were the top (or bottom) three performing sectors at this point this year.  As the saying goes, you’ve got to play the hand your dealt.

The Bespoke 50 Top Growth Stocks — 2/18/21

Every Thursday, Bespoke publishes its “Bespoke 50” list of top growth stocks in the Russell 3,000.  Our “Bespoke 50” portfolio 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 490.2% excluding dividends, commissions, or fees.  Over the same period, the S&P 500 is up in price by 183.7%.  Always remember, though, that past performance is no guarantee of future returns.  To view our “Bespoke 50” list of top growth stocks, please start a two-week free trial to either Bespoke Premium or Bespoke Institutional.

Bespoke’s Morning Lineup – 2/18/21 – Earnings Season Ends on a Down Note

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.

“High expectations are the key to everything.” – Sam Walton

With Walmart’s (WMT) earnings crossing the tape this morning, we have finally reached the unofficial end to earnings season.  Despite high investor expectations, it was generally a positive period for the equity market, although initial stock reactions to earnings reports haven’t been particularly positive. The key to the tepid initial reactions of stocks reporting, as Sam Walton once said, is high expectations.  When investors and analysts are expecting good news, it sets the bar high. The key to the market’s ability to post positive returns during earnings season was the fact that the economy has been hanging in just fine, COVID trends are moving in a more favorable direction, and the FOMC continues to prime the pump.

WMT’s reported weaker than expected headline EPS this morning, and the stock is trading down over 4% on the news.  While 4% may not sound like much for the typical stock reporting earnings, for WMT, it represents a pretty significant move.  Historically, the stock has only moved up or down 2.6% on the day it reports earnings, and going back to 2001 there have only been two other times where the stock saw a larger downside gap – 2/20/18 (-7.4%) and 8/17/07 (-4.6%).

Futures are indicating a lower open today as the trend has been lower all night.  A ton of economic data was just released, though, so we’ll see how the market digests them.  Below, we provide a summary of how these reports came out relative to expectations. Overall, it was a mixed bag, and the initial reaction from futures has been muted.

Housing Starts – 1,580K vs 1,660K estimate
Building Permits – 1,851K vs 1,679K estimate
Initial Claims – 861K vs 770K estimate
Continuing Claims – 4,494K vs 4,450K estimate
Import Prices – 1.4% vs 1.0% estimate
Philly Fed – 23.1 vs 20.0 estimate

Be sure to check out today’s Morning Lineup for updates on the latest market news and events, earnings reports from around the world, economic data out Asia and Europe, an update on the latest national and international COVID trends, and much more.

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Concerns over rising interest rates crept into the market yesterday as the 10-year yield briefly topped 1.30% hitting its highest level since last March.  Heading into the opening bell, the 10-year yield is currently sitting right at 1.30%, but that is still well below levels seen a year ago right before the pre-COVID peak in rates and also 20 basis points below the dividend yield on the S&P 500.  Which would you rather have?  All else equal, higher rates are worse for equity prices than lower rates, but when you’re coming from record low levels of rates due to a complete shutdown of the US economy, some increase in rates can certainly be tolerated.

B.I.G. Tips – Retail Sales Surge

Based on the latest Retail Sales report for January, it looks like the $600 stimulus checks that were sent out to both struggling (and non-struggling) Americans in later December and early January achieved their purpose.  After three straight weaker than expected reports, Retail Sales for the month of January blew the doors off estimates, surging by 5.3% compared to expectations for an increase of 1.1%.  After stripping out Autos and Gas, the increase was even more at close to 6%.

To put this spread versus expectations into perspective, since the late 1990s, the only other times that Retail Sales topped expectations by more than four percentage points were last June coming out of the lockdowns and back in November 2001 after the 9/11 attacks.  While December’s report was revised down, it did little to dent the positive impact of the January numbers.

Not surprisingly, breadth in this month’s report was perfect.  Of the thirteen sectors that comprise the total pie, all of them were higher on a m/m basis led by Electronics & Appliances, Furniture, and Online, which all spiked more than 10%.  If the distortions resulting from the COVID lockdowns weren’t so fresh in our collective memories, we’d be calling these types of moves historic.  On the downside, Health and Personal Care was the weakest sector, and it still increased over 1%!

The characteristics behind the total level of sales have changed markedly in the post-COVID world.  In our just-released B.I.G. Tips report, we looked at these changing dynamics to highlight the groups that have been the biggest winners and losers from the shifts.  For anyone with more than a passing interest in how the COVID outbreak 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!