Apr 18, 2022
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Bespoke’s Quote of the Day: “The difference between death and taxes is death doesn’t get worse every time Congress meets.” – Will Rogers
Below is a snippet of content from today’s Morning Lineup for Bespoke Premium members. Start a two-week trial to Bespoke Premium now to access the full report.
Below is a table we highlight each year showing the S&P 500’s performance in the weeks leading up to and the weeks immediately following Tax Day. As shown, over the last 20+ years, the weeks before Tax Day have been much weaker for the market than the weeks after. This year has been no different thus far with the S&P falling more than 3% in the two weeks leading up to Tax Day. Now we just need the trend of gains in the two weeks following Tax Day to hold as well!
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Apr 14, 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.
“You only get out of it what you put into it. If you are a sheep in this world, you’re not going to get much out of it.” – Greg Norman
As bad as you think you think you have it right now with the weakness in the stock and bond market this year, just consider yourself lucky you weren’t in Greg Norman’s shoes 26 years ago today at Augusta. Actually, at this point in the day, as the birds chirped, the morning dew on the fairways glistened in the sun, and the scent of azaleas filled the air, Norman probably had a pretty big smile sitting on a six-stroke lead over Nick Faldo heading into the final round of the Masters. When the round started, though, the path got a lot rougher. Norman started with a bogey on the first but got back on track with a birdie on two. Then, after a par on the third, Norman bogeyed the par-three fourth and then bogeyed again on the par-four eighth.
One over for the front nine wasn’t bad, but coming out on the back nine, Norman put up bogey, bogey, and double-bogey on 10, 11, and 12 and finished the round with a six over 78. What looked like a Sunday formality for Norman turned into one of the biggest collapses in Masters history as Nick Faldo countered with an epic 67 and was fitted for the green jacket in the clubhouse. 26 years later, Norman’s round is still considered the worst collapse in Masters history; almost like the golf equivalent of the 1987 crash (or at least Marlboro Friday). As a columnist for the Tampa Tribune described it, “For Greg Norman’s lifetime, for yours, for mine, for eternity, wherever golf is played and remembered, in pro shops, pawnshops, locker rooms, card rooms, bars, churches, in Augusta, Ankara, and Alaska, the 1996 Masters will be recalled simply as the one Greg Norman blew.” See, things aren’t so bad.
Even with that collapse, most of us would change places with Greg Norman in a second. Winston Churchill once said, “Success consists of going from failure to failure without loss of enthusiasm.” And while Norman never went on to win another major and only managed to win a handful of other tournaments, he went on to enjoy an extremely successful professional career in clothing, golf course design, wines, real estate, and a number of other endeavors. In other words, he adapted to and capitalized on the environment he found himself in. Similarly, the stock market is always evolving. While a certain approach works in one environment, as circumstances change, investors need to adapt and capitalize on the opportunities that present themselves.
Economic data this morning was mixed with Initial Jobless Claims coming in slightly ahead of forecasts while Continuing Claims were weaker. Headline Retail Sales were just shy of forecasts while the reading ex-autos and gas came in at 1.1% compared to forecasts of an increase of 0.9%. The reaction from futures has been muted as a lot of traders may already be starting their holiday weekend early.
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.
Sometimes we look at an indicator and just say, “Whoa”. That was out reaction this morning when we saw the latest sentiment survey from the American Association of Individual Investors (AAII). After dropping to an already depressed level of 24.7% last week, this week’s reading plummeted to 15.8%. To find a lower reading you have to go back even further than Greg Norman’s collapse at the Masters. The last time there were fewer bullish investors in the AAII survey was in September 1992 when Boyz II Men topped the charts with “End of the Road”. While the period from 1992 through 1994 wasn’t the best time period for the stock market, it certainly wasn’t the end of the road either.
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Apr 13, 2022
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“We remain optimistic on the economy, at least for the short term – consumer and business balance sheets as well as consumer spending remain at healthy levels – but see significant geopolitical and economic challenges ahead due to high inflation, supply chain issues and the war in Ukraine. – Jamie Dimon
Earnings season basically kicked off this morning as JPMorgan Chase (JPM) reported first-quarter results and is trading down 2% in reaction to the release. While top-line numbers were basically in line with forecasts, bottom-line EPS missed consensus forecasts ending a streak of seven straight quarters where the company topped EPS results. While this may sound like an ominous signal, we would note that despite topping EPS forecasts, the stock has traded lower on its earnings reaction day for six straight quarters.
The quote above is from this morning’s earnings release from JPM, and you better get used to it as we think it is likely to be a major theme of the Q1 earnings season. Consumer balance sheets remain strong coming out of COVID (for now) due to increased savings and a flood of stimulus payments but faced with higher costs and geopolitical uncertainty, there is a major disconnect between how consumers feel and the current health of their checking accounts.
Equity futures are basically flat this morning after a much stronger than expected PPI and some relatively hawkish FOMC commentary from Bullard and Barkin, but they were much higher overnight and have been drifting lower all morning as investors simply can’t find much in the way of positive news to grasp lately.
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.
This morning we wanted to play a 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 January 2016 through January 2017. Looking only at the chart pattern do you think the stock was higher or lower one year 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 tab). Good luck!
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Apr 12, 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.
“In spite of the cost of living, it’s still popular.” – Kathleen Norris
The CPI report that everyone was waiting for has finally arrived and as is usually the case when everyone expects the worst, the results weren’t as bad as feared (although they’re far from good). On a headline basis, CPI rose 1.2% m/m which was right in line with forecasts. Core CPI, however, rose ‘just 0.3%’ compared to forecasts for a gain of 0.5%. Given the weaker than expected core reading, futures have shot higher with the Nasdaq up nearly 1%. As equities have rallied, Treasury yields are falling but still high even relative to where they were last week!
Make no mistake, these readings are still very high relative to recent history. For example, backing out the period since 2020, the 0.3% increase in m/m Core CPI would have been the highest since March 2006. Compared to recent trends and what people were expecting, though, this morning’s report was a positive surprise.
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.
We all know that recent inflation data has been high, but the consistency of upward pressure has been incredible. It’s a popular narrative that the Fed is behind the curve, but they’re not the only ones. Economists have simply not been able to catch up and get ahead of the persistent trend of rising prices. The chart below shows the rolling 24-month total of the weaker than expected m/m headline CPI reports going back to 2000.
During this span there have only been three months where headline CPI came in weaker than expected. Three!. Going back to 2000, there has never been a period where weaker than expected CPI reports were as scarce as they have been in the last two years.
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Apr 11, 2022
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“You get recession, you have stock market declines. If you don’t understand that’s going to happen, then you’re not ready, you won’t do well in the markets.” – Peter Lynch
It’s another case of the Mondays for US stocks this morning as all three major averages are firmly in negative territory with the Nasdaq leading the way lower. Along with equities, just about every other risk asset is trading lower, including bitcoin and crude oil. Bonds are down again as well, while yields continue to surge in what has been one of the most relentless moves higher in yields that the market has seen in years.
The economic and earnings calendars are pretty much empty today, but things will pick up greatly as the week goes on with a busy slate from Tuesday through Thursday before Friday’s equity market holiday.
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.
Given the widening lockdowns in China and concerns of a broader economic slowdown, oil prices have been under pressure this morning continuing a trend of weakness from last week. While the week is just a few hours old at this point, WTI is trading below $94 per barrel and in danger of breaking a relatively important support level. At current levels this morning, WTI is pretty much up 24% YTD but down 24% from its closing high in early March.
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Apr 8, 2022
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“Whenever you see a successful business, someone once made a courageous decision.” – Peter F. Drucker
Equities are looking to finish off what has been a disappointing week on a positive note today, but unless futures build on their early gains during the trading day, the first full week of April looks like it’s going to be a negative one for the S&P 500. For the Russell 2000, the week is already a lost cause as it’s down close to 4%. The economic calendar is light this week with Wholesale Inventories the only release on the calendar. Looking ahead to next week, though, Monday will be quiet, but then in the final three trading days of the week (equity markets are closed on Friday), we’ll get CPI, PPI, Retail Sales, and many other important reports. In addition to a busy week of economic data, next week will also mark the start of earnings season with the major banks kicking things off.
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.
Bombarded with the same headlines over and over again, it’s easy to become numb to the moves we have seen in the treasury market and lose perspective. In the last five weeks, though, we’ve witnessed an 80 bps increase in the yield on the 10-year US Treasury which ranks as the largest increase during that span in more than 10 years! As shown in the chart below, going back to 1990, there have only been ten other periods where the yield on the 10-year rose 75 bps or more in a five-week span. So moves like this are pretty uncommon, and while we could have gone back further in the analysis, prior to 1990, the yield on the 10-year was consistently much higher, so a 75 bps move was a lot less dramatic. Even in the 1990s, when the 10-year yield averaged more than 6%, a move in the yield of the magnitude we have seen in the last five weeks would have been less dramatic than it has been off the low base of the current period.
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