Nov 6, 2024
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“I think we just witnessed the greatest political comeback in the history of the United States of America.” – JD Vance
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
We’ve been saying for quite some time now that half of the country would be waking up disappointed this morning and based on the results of the election so far, it appears to be slightly less than half of the country. Former President Donald Trump has been projected as the winner of the 2024 Presidential election, and he is also modestly ahead in the popular vote as well. Like it or not, when you look back at the last few years, objectively speaking, it’s hard not to agree with VP-elect JD Vance that this has to rank right up there as one of the biggest political comebacks in US history.
For the last several months now, we’ve been documenting the correlation between market performance and President Trump’s numbers in national polls and betting markets. It comes as no surprise, therefore, that equity markets are sharply higher given the fact that we have results this morning and they went in the Republican party’s direction. The S&P 500 shot higher overnight, and the S&P 500 tracking ETF is on pace to gap up over 2% which would be the largest upside gap since December 2022.
The move in small caps has been even more notable. Take a look at the chart below. The iShares Russell 2000 ETF (IWM) is trading up over 5% this morning, which would be the largest upside opening gap since “Pfizer Monday” on 11/9/2020 when the company announced the results of its vaccine trials. Today would be just the sixth time in the history of the iShares Russell 2000 ETF (IWM).
As equities rally this morning, bonds have tanked as yields surge. The yield on the 10-year has surged to 4.45%, which is the highest since early July. With that move, the iShares 20+ Year Treasury ETF (TLT) is poised to gap down 3.35%. That would rank as the largest downside gap in the history of the ETF and is one of just four times that it gapped down 2.5% or more. The others were 9/19/08 (-3.29%), 3/24/20 (-2.86%), and 5/10/10 (-2.53%).
Nov 5, 2024
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“The ignorance of one voter in a democracy impairs the security of all.” – John F. Kennedy
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
It’s finally over. The votes are counted, and the results are in. In the words of one CEO involved, “While the past few months have been difficult for all of us, we are all part of the same team. We will only move forward by listening and working together.” Yes, the Boeing strike is over. Wait, you didn’t think we were talking about the election? For that, the votes are still coming in and need to be counted, and one thing we can be confident of is that once we do finally have a winner, there will be very little ‘listening’ and ‘working together’ with the other side. Not if past experience is any indication of future results!
Heading into today’s session, equity futures are modestly higher. Outside of Palantir (PLTR) which is up by double-digit percentages, much of the earnings news overnight was weak, and this morning’s only economic report is ISM Services which is forecast to come in at 53.8 from 54.9 in September. Europe and Asian markets were mostly higher overnight, while Treasury yields and crude oil have also joined in on the upside.
If the betting market odds are to be believed (big if) when the dust all settles, former President Trump will be the 47th President, Republicans will take over the Senate, and Democrats will retake control of the House. Wouldn’t that be an interesting mix?
Based on numbers from electionbettingodds.com, there have been some notable moves in the betting markets over the last few weeks. After trailing late in the summer and into early September, former President Trump saw his odds steadily improve from around 45% in mid-September to roughly 63% in late October. From there, VP Kamala Harris saw her odds rebound briefly into this past weekend, but as we headed into Election Day, her odds have pulled back again and now stand at 41.0% versus 58.5% for Trump. While a nearly 20-point gap in the betting markets looks wide, it’s a smaller lead than it seems and indicates only a modestly better than coin-flip chance in favor of the former President. Nothing is close to guaranteed at this point.
As Trump’s odds rallied from mid-September before peaking out in late October and subsequently pulling back into the weekend, there were also some notable moves in the equity market. The table and chart below compare sector performance from 9/18 to 10/29 (when Trump’s odds were improving) to performance from 10/29 to 11/4 (when Harris’ odds rallied).
When the market started to price in a Trump win sectors like Technology, Communication Services, Financials, Consumer Discretionary, and Industrials all rallied over 3% while Health Care, Consumer Staples, and Real Estate fell over 1%. When Harris’ odds started to improve, Energy was the only sector with gains (1.82%) while Technology was the worst-performing sector. As shown in the scatter chart, it’s not a perfect relationship but many of the best-performing sectors during the period when Trump’s odds were rising were some of the weaker performers when Harris’ odds improved and vice versa.
Before finishing, we wanted to leave off with one last snapshot of sector performance heading into the election results from our Trend Analyzer. It’s a mixed picture. Most sectors are down over the week, and while there were four overbought and two oversold sectors a week ago, today, Communication Services is the only overbought sector while Consumer Staples, Health Care, and Real Estate are all oversold. Relative to their 50-day moving averages, six sectors are above and five are below. You can’t get much more neutral than that! Don’t forget to vote.
Nov 4, 2024
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“The person who is the star of previous era is often the last one to adapt to change, the last one to yield to logic of a strategic inflection point and tends to fall harder than most.” – Andrew Grove
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
Futures are little changed this morning but are trading with a positive bias as crude oil rallies and treasury yields move lower. There hasn’t been a lot of earnings or economic news, but with the election tomorrow, polls are a major focus, and news over the weekend, showed the race getting much closer. Just a few more hours left!
While not the most notable news of the weekend, Friday evening’s announcement that Intel (INTC) would be removed from the Dow Jones Industrial Average (DJIA) in favor of Nvidia (NVDA) represents another milestone in the transition of the old to new guard in the semiconductor sector. INTC entered the DJIA 25 years ago in November 1999, and the addition followed what had been a rally of over 900% in the prior five years. If you think that’s impressive, NVDA’s rally over the last five years has been over 2,500%!
INTC’s quarter century in the DJIA was fraught with dysfunction. While the stock initially rallied sharply in the months after it was added, the honeymoon ended quickly. INTC quickly reversed course and lost over 80% of its value. While the stock rallied from 2010 through 2020, it is lower now than it was when it was added. At this point, not many tears are being shed over the end of this union.
The election is just a day away, and with the polls so close between two completely different candidates, it’s understandable to see elevated levels of uncertainty in the market like the VIX’s reading of 22.45. The chart below shows the level of the VIX on the day before every Election Day, both Presidential and Non-Presidential, since 1990. For all years since 1990, the median level of the VIX on the day before Election Day was 18.4, and while you might think that volatility was elevated in Presidential Election years, it was only marginally higher (median: 18.6). This year, the current level of 22.45 ranks as the fourth highest of the nine Presidential Election years since 1990. So uncertainty has ratcheted higher for a year where the VIX has been mostly below average as Americans head to the polls.
Regarding equity market performance, the S&P 500 tends to see positive returns to close out the year after Election Day. For all years since 1990, the median gain has been 3.3% with positive returns 25 out of 34 times. For Presidential Election years, performance has tended to be modestly stronger with a median gain of 3.9% and gains six out of eight times.
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Nov 1, 2024
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.
“The liabilities are always 100 percent good. It’s the assets you have to worry about.” – Charlie Munger
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
While yesterday ended up being the worst Halloween trading day since 2011, the S&P 500 still ended the month with a year-to-date gain of 19.6%. That’s good enough for 2024 to be the best Election Year through October since 1936!
The S&P has pulled back from overbought levels this week and now sits just above its 50-day moving average. The S&P’s 10-day advance/decline line is now oversold, however, so market internals suggest a market that’s a bit weaker underneath the surface. If the 10-day A/D line falls a little further, we’ll start looking for an oversold bounce.
Oct 31, 2024
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“Reality is an undefeated champion.” – Jeff Bezos
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
As of 7:45 AM ET this morning, S&P 500 futures were trading down roughly 0.75% as both of the mega-caps that reported after the close yesterday trade lower. Below is a snapshot of SPY trading on Halloween (10/31) since the ETF began trading back in 1993. An opening gap lower of more than 0.66% would be SPY’s biggest open lower on Halloween since 2011.
A few sectors have really taken it on the chin over the last week: Health Care, Consumer Staples, and Utilities. As shown in the snapshot below from our Trend Analyzer tool, Health Care and Consumer Staples are currently trading in extreme oversold territory, while the Utilities sector is down 3.7% since last Thursday and nearing its 50-day moving average. At the same time, we’ve seen both Consumer Discretionary and Communication Services go in the other direction and trade at or near overbought territory.
Oct 30, 2024
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.
“People never lie so much as after a hunt, during a war or before an election.” – Otto von Bismarck
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
Election Day is now less than a week away, and for those trying to keep up, below is a snapshot of where the Real Clear Politics (RCP) average of polls stand nationally and in key battleground states this morning compared to how they looked on this same day during the 2020 and 2016 Election Cycles.
As you can see, both Biden and Clinton were up significantly in most battleground states at this point in 2020 and 2016, while Trump is currently slightly ahead in all of the key states except for Michigan, which flipped back to Harris in the last day.
There are any number of ways that either side can analyze or spin the current polling numbers, prediction tools, and betting markets at this point, so we’re simply providing the numbers from RCP and leaving it at that. Anyone that feels confident that they know how things will turn out should probably just sit back and eat a slice of humble pie.
As shown below, the S&P 500 (SPY) has been mostly trending sideways over the last couple of weeks after a strong start to the month.
The sideways action has allowed the S&P’s 10-day advance/decline line to cool down and move back into negative territory.
