Apr 4, 2022
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“Given that Twitter serves as the de facto public town square, failing to adhere to free speech principles fundamentally undermines democracy.” – Elon Musk
Heading into today, it was looking like a quiet start to what was looking like a slow week as the economic calendar is light and earnings season doesn’t kick off for at least another week. That changed a bit following news that Elon Musk had taken a passive 9.2% stake in Twitter (TWTR) pushing the stock up by more than 25% in pre-market trading to its highest level since late November. Last week on Twitter, Musk made the statement at the top of this note and then followed up with the question, “What should be done?” Well, this morning we appear to be getting an answer. Twitter has long been criticized for not realizing its full potential, and TWTR shareholders are hoping Musk can move the company in that direction.
Read today’s Morning Lineup for a recap of all the major market news and events from around the world, including the latest US and international COVID trends.
With the stock poised to open up more than 20% this morning, it will be just the fourth time in its history as a public company in 2013 that TWTR has gapped up more than 20%. Two of those days were in reaction to earnings (July 2014 and February 2018), and then on the day of its IPO in November 2013. Today, it’s all Elon.
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Apr 1, 2022
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“The strength of the team is each individual member. The strength of each member is the team.” – Phil Jackson
It’s a new quarter today, but markets will get right into it today with a good deal of economic data. For starters, we get the March employment report at 8:30 eastern, and then at 10 AM, we’ll get Construction Spending and the ISM Manufacturing report. While payrolls are expected to show a modest decline, ISM Manufacturing is expected to see a modest bounce. With the employment report, though, the devil will be in the details.
In Europe, equities are trading higher following what has generally been weak manufacturing PMI data in the region. Interest rates are moving higher on the day while crude oil has dropped below $100 per barrel.
After a plunge into the close yesterday, futures are looking to claw back those losses in early trading, but even at current levels, we’re only basically back to where we were a half-hour before yesterday’s close.
Read today’s Morning Lineup for a recap of all the major market news and events from around the world, including the latest US and international COVID trends.
April may bring showers in terms of the weather, but historically it has been one of the greener months of the year. Over the last 100 years, the Dow’s average gain of 1.46% with positive returns 62% of the time ranks as the third-best of any month behind July (1.65%) and December (1.52%). In the last 50 years, the 68% frequency of positive returns hasn’t been the most consistent, but the 2.21% average gain is easily the highest of any month. Likewise, the average gain of 2.21% in the last 20 years has also been the strongest of any month. Not only that, but with just three down Aprils over the last 20 years, no other month during this period has been more consistent to the upside.
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Mar 31, 2022
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“I ought to be jealous of the tower. She is more famous than I am.” – Gustave Eiffel
133 years ago today, the Eiffel Tower, one of the most iconic landmarks in the world today opened for business. It may sound hard to believe, but when the tower first opened a number of critics thought it would be an eyesore on the Paris landscape, and twenty years after it opened the Eiffel Tower was almost demolished when the lease on the land it stood on expired. The main reason it was spared was because of its utility as a radio antenna! More than 100 years later, the mere thought of Paris without the Eiffel tower would be considered a sacrilege. Just like in the stock market and everything else in life, one person’s (or generation’s) trash is another one’s treasure.
In markets this morning, investors want nothing to do with oil as WTI is trading down more than 5% on reports of a massive stockpile release from the US Strategic Petroleum Reserve (SPR). For more on this and how the SPR works, make sure to check out our explanation in today’s Morning Lineup. The weakness in futures has equity futures up modestly, but it’s the last day of the quarter, so expect to see a decent amount of volatility throughout the trading day.
In economic news, we just got a slug of economic data this morning, and there weren’t that many major outliers. Perhaps the biggest outlier was Personal Spending which rose 0.2% versus forecasts for an increase of 0.5%.
Read today’s Morning Lineup for a recap of all the major market news and events from around the world, including the latest US and international COVID trends.
There’s still a day left in the quarter, and despite the strong rally in the last couple of weeks, for the majority of stocks and sectors, it has been a quarter to forget. On a year-to-date basis, Energy is the clear leader with a gain of more than 40%, but over the last week, both Utilities and Financials have moved into positive territory for the year. At the other end of the spectrum, Communications Services, Consumer Discretionary, Technology, and Real Estate are all still looking at losses of more than 5%. Not great, but it could have been a lot worse were it not for the 3.5%+ gains in the last week.
While the vast majority of sectors are looking at YTD declines to close out Q1, they’re also trading at short-term overbought levels. All eleven sectors are currently above their 50-DMAs, and all but Financials and Communication Services are also ‘overbought’ (at least one standard deviation above their 50-DMA.
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Mar 30, 2022
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“Damn the torpedoes. Four bells, Captain Drayton, go ahead. Jouett, full speed.” – Admiral David Farragut
In today’s edition of never put a lot of trust in headlines coming out of the Russia-Ukraine war, after yesterday’s optimistic tone regarding a potential ceasefire, reduction of Russian troops, and even the possibility of a meeting between Putin and Zelenskyy, this morning much of that optimism has been walked back as the withdrawal of Russian troops appears to have been a mirage, and Zelenskyy is claiming that Russia is sending in new forces.
Across most asset classes, we’re seeing a reversal of yesterday’s moves with US equity futures down across the board and oil trading higher. In Germany, they’re even starting to talk about the possibility of rationing natural gas.
In economic data today, the ADP Private Payrolls report was pretty much right in line with forecasts while the second revision to GDP rose 6.9% which was slightly weaker than expected.
Read today’s Morning Lineup for a recap of all the major market news and events from around the world, including the latest US and international COVID trends.
Following yesterday’s rally and the big bounce we have seen since the recent lows, we wanted to provide a quick look at all of the major index ETFs based on market cap. Moving from smallest to largest, both the Russell Micro-Cap Index (IWC) and the Russell 2000 (IWM) have broken their downtrends that have been in place since late 2021 after making a number of higher lows. In the mid-cap space, the S&P 400 (MDY) has also made a number of higher lows and taken out its early February high, but yesterday’s rally stopped out just shy of the intermediate-term downtrend.
Moving on to the large-cap side of the spectrum (bottom two charts), both the Nasdaq 100 (QQQ) and S&P 500 (SPY) look very similar to each other (probably because they are dominated by the same companies), and yesterday’s advance in both indices took out the highs from the short-term ‘double top’ in early February.
While technicals often have a way of looking good until they don’t, we’d be remiss not to note that the technical picture for the market looks rather impressive especially when you consider the fact that inflation is rampant, the FOMC is hiking rates, and there’s a war in Europe. Paraphrasing Admiral Farragut’s comments from the Battle of Mobile Bay back in August of 1964 during the Civil War, damn the torpedoes. Full speed ahead.
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Mar 29, 2022
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“Price is rarely the most important thing.” – Tim Cook
When our alarms went off this morning, futures were indicating a mixed to positive open, but that tone has moved firmly to the side of gains following reports of progress being made in the Russia-Ukraine ceasefire talks. The Ukrainian side believes that enough progress has been made to warrant a meeting between Putin and Zelenskyy, while the Russian side has said that talks have become constructive. We’ve seen positive headlines like this in the past only to get walked back in the hours following, but given the heavy losses Russian troops have sustained, there is a stronger feeling that Russia has become increasingly eager for a way out of the war. However things ultimately play out, the market has responded with equities moving higher, and both gold and oil dropping.
Read today’s Morning Lineup for a recap of all the major market news and events from around the world, including the latest US and international COVID trends.
Price may rarely be the most important thing, but shares of Apple (AAPL) are in the middle of an impressive winning streak with ten straight days of gains. Since the launch of the iPod in late 2001, the current streak ranks as just the fourth time that AAPL’s stock has rallied for ten or more days, and it’s the first such streak since July 2010. Of the three prior double-digit winning streaks, the only one that lasted more than ten days was back in 2003.
The chart below shows the performance of AAPL since the start of 2002, and we have included red dots to show each prior time that AAPL was up for ten or more days. Looking at where the prior streaks occurred relative to AAPL’s price trend, one occurred early in an uptrend, one was followed by a short-term pullback, and the other was right in the middle of an uptrend. So, while the winning streak for AAPL is great for shareholders, it appears to say little about the future performance of AAPL’s stock. One item we found interesting, though, is that even after the current ten-day run of gains, the current streak is the first of the four that AAPL’s trailing three-month performance was negative (-2.1%). On the 10th straight day of gains in the prior streaks, AAPL’s trailing three-month returns were 29.3% (2003), 48.8% (2004), and 27.3% (2010).
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Mar 28, 2022
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“The way to crush the bourgeoisie is to grind them between the millstones of taxation and inflation.” – Vladimir Lenin
What was looking like a positive start to the week has taken a turn for the worse as US equity futures have given up much of their earlier gains in the last few minutes. It’s been a quiet morning so far in terms of economic data, and the only real fireworks are taking place at the short end of the Treasury curve and in the crypto space as bitcoin trades above $47K to its highest levels of the year. On the war front, Russia’s stalled advance has that country now narrowing its focus to the ‘liberation of Donbas’ so there is some optimism that talks this week could lead to some sort of peace breakthrough. It’s the last several days of what has been a very volatile quarter, so don’t be surprised to see more of it as we close out the quarter.
Read today’s Morning Lineup for a recap of all the major market news and events from around the world, including the latest US and international COVID trends.
US stocks are still well off their highs from late 2021 and early 2022, but in the short-run, most are either close to or at short-term overbought readings. The S&P 500 moved into overbought territory last week for the first time since January 4th, and at current levels is just shy of taking out its early February highs – a level it stalled out twice at in the first ten days of February.
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