Apr 29, 2022
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Bespoke’s Quote of the Day: “Risk comes from not knowing what you’re doing.” – Warren Buffett
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It’s not looking like a positive close to the week with futures solidly in the red following negative reactions to earnings from Amazon.com (AMZN) and Apple (AAPL). With the Fed announcement looming next week, investors are likely to be a bit apprehensive ahead of the meeting.
In terms of economic data, the week is closing off on a busy note. Employment Cost Index for Q1 came in much higher than expected at 1.4% compared to forecasts for an increase of 1.1%, and it was the highest level since at least the mid-1990s. Personal Income and Personal Spending also topped expectations. Still upcoming, we’ll get an update of Chicago PMI at 9:45 and Michigan Sentiment at 10 AM.
In today’s Morning Lineup, we recap overnight events in Asia and Europe (pg 4), inflation in Europe (pg 5), and prior quarters whereAMZN gapped down sharply in reaction to earnings (pg 5).
It’s been quite a week for US stocks. While both the Russell 2000 (IWM) and Nasdaq 100 (QQQ) made marginal new lows this week, the S&P 500 (SPY) managed to hang on to its lows from earlier this year. The fact that equities were quick to bounce following those breakdowns was encouraging, but with futures in the red to kick off the last trading day of the month, these will be critical levels to watch throughout the day.
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Apr 28, 2022
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.
Bespoke’s Quote of the Day: “Your time is limited, so don’t waste it living someone else’s life.” – Steve Jobs
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Wouldn’t you just love to be on the Fed right now? As the FOMC is in the early stages of what is expected to be its most aggressive rate hiking cycle since the early 1980s, the first read on Q1 GDP not only came in weaker than expected but it actually declined more than 1.4%. Whether or not they put themselves in this position in the first place or not, we don’t envy the place they are in now. Other economic data this morning was mixed. Personal Consumption came in weaker than expected (2.7% vs 3.5%) while the GDP Price Index rose more than expected (8.0% vs. 7.2%). Jobless claims were right in line on an initial basis but came in ever so slightly higher than expected on a continuing basis.
In today’s Morning Lineup, we recap overnight events in Asia and Europe (pg 4), take a look at the collapse in the yen (pg 4), sentiment in Europe (pg 5), and then a look at 2%+ gaps higher in the Nasdaq 100.
Many of you liked it the last time we did it, so this morning we are bringing back our little game to test your chart reading abilities and see how good of a technical analyst you are. Take a look at the chart below. It’s a one-year stock chart of a US company in the period spanning August 2020 through August 2021. Looking only at the chart pattern do you think the stock was higher or lower six months later? Make a decision and click on one of the buttons below to find out if you picked the right trade (the answer will appear in a new window). Good luck!
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Apr 27, 2022
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.
Bespoke’s Quote of the Day: “I much prefer the sharpest criticism of a single intelligent man to the thoughtless approval of the masses.” – Johannes Kepler
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6,999 years ago today, the Universe was born. At least that’s according to German astronomer Johannes Kepler who came to that conclusion in the 1600s. Kepler’s work has been ‘revised’ in the centuries since, and it is now widely agreed that he was off by at least 10 billion years. What’s a few billion amongst friends, though? It just goes to show that facts that people take for granted in one environment can look foolish in another.
Futures are looking to recoup some of yesterday’s losses, but even at their best levels earlier this morning, we weren’t even on pace to recoup half of Tuesday’s losses. Let’s just call it the ‘two steps backward, one step forward market’. There’s been a ton of earnings news since the close yesterday, and the pace will only intensify over the next two days.
The only two economic reports on the economic calendar this morning are Wholesale Inventories which came in higher than expected (2.3% vs 1.5%), and at 10 AM we’ll get the latest read on Pending Home Sales which are expected to show a decline of 1.0%
In today’s Morning Lineup, we recap overnight events in Asia and Europe (pg 4), take a look at the rising levels of volatility in the Nasdaq 100 (pg 4), and then highlight the dollar’s rip higher in recent weeks (pg 5).
While equities are looking to gain today, the Nasdaq has declined 8.3% over just the last five trading days. Relative to history, this move hasn’t been extraordinary by any means, but it still hurts. Looking more recently at just the period since COVID first surfaced in early 2020, there have only been three other periods where the Nasdaq saw steeper declines in a five-day period.
The first two were during the COVID crash while the third occurred in September 2020 right when the Nasdaq experienced a short-term peak. What’s interesting to note about the current period is that ever since the start of 2022, we’ve started to see the intensity of five-day sell-offs start to increase.
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Apr 26, 2022
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.
Bespoke’s Quote of the Day: “Good ideas are always crazy until they’re not” – Larry Page
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Yesterday’s reversal was a welcome reprieve for bulls, especially after the straight line lower from early last Thursday. From a technical perspective, there’s not much positive to say about the charts of the S&P 500 and the Nasdaq, but to provide an optimistic scenario, we would note that both indices appear to be showing some signs of a reverse head and shoulders. It’s going to take a lot more upside to make these formations look more convincing, and the pattern for the Nasdaq is much looser than the pattern for the S&P 500, but we thought it was worth highlighting.
While the two largest US indices may, and we stress the word may, be showing early signs of a positive pattern, the semiconductors, which typically act as a leading indicator actually opened at their lowest level since Last May on Monday morning. That being said, like the broader market, the SOX did manage to turn things around finishing the day higher by just over 1.75% and outperforming the S&P 500 and the Nasdaq in the process.
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Apr 25, 2022
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.
Bespoke’s Quote of the Day: “Thus fear of danger is ten thousand times more terrifying than danger itself.” – Daniel Defoe, Robinson Crusoe
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Last week was a brutal one for US stocks as the Nasdaq, Russell 2000, and the S&P 500 fell at least 2.5%. Sector performance within the S&P 500 was also mostly lower but varied widely. Both Real Estate and Consumer Staples managed to finish the week higher, but every other sector was down at least 1% and in many cases a lot more. Thanks in large part to Netflix (NFLX), the Communication Services sector was down nearly 8%, while Energy, Materials, and Health Care all fell more than 3%. Despite the carnage last week, though, only three sectors head into the new week at oversold levels, and two are actually overbought.
What’s also interesting about last week’s declines was that the selling wasn’t confined to either just the year’s winners or losers. The two worst performing sectors are also the worst performing (Communication Services) and the best performing (Energy) year to date. In other words, there wasn’t a whole lot of rhyme or reason behind the weakness.
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Apr 22, 2022
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.
Bespoke’s Quote of the Day: “Interest rates are like gravity on valuations. If interest rates are nothing, values can be almost infinite. If interest rates are extremely high, that’s a huge gravitational pull on values.” – Warren Buffett
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Yesterday’s market sell-off coincided with expectations for an even tighter Fed. As fed fund futures priced in a higher likelihood of tighter policy over the next year, equity prices fell. Below is a chart showing the expected path for the Fed Funds Rate (lower bound) through the March 2023 meeting. Pricing is now suggesting a 50 basis point hike at the May meeting, a 75 basis point hike at the June meeting, and another 50 basis point hike at the July meeting. That would take the Fed Funds Rate up to 2-2.25% (remember, it’s at just 0.25-0.50% now) by mid-July. Talk about a tight summer!
After the estimated 175 basis points of tightening through July, markets are pricing in five more consecutive 25 basis point hikes through March 2023, which would leave the lower bound of the Fed Funds Rate at 3.25%.
If we do see a Fed Funds Rate of 3.25-3.50% by next March, it will be tied for the steepest one-year of tightening since 1989:
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