Bespoke’s Morning Lineup – 10/28/20 – Tell Me Something I Don’t Know

Oct 28, 2020

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.

“I believe in analysis and not forecasting.” – Nicolas Darvas

We’ve seen another strong night and morning of earnings reports with the vast majority of companies reporting better than expected earnings and revenues.  Not only that, but a large number of companies have also raised guidance.  By our count, we’ve already seen at least 13 earnings triple plays.  That’s impressive!  So what is the market’s reaction?  Who cares? Tell me something I don’t already know.

Heading into this earnings season, analyst sentiment was very positive in terms of positive versus negative earnings revisions, and as we noted in our earnings season preview, that kind of positive sentiment often sets the expectations bar high for the following earnings season making it hard for companies to get over.

Besides earnings, concerns over COVID and the upcoming election are also weighing on investor sentiment.  For many investors, the sentiment seems to be that given the uncertainty and range of possible outcomes, they would rather wait a week then make predictions as to the potential outcome.

Be sure to check out today’s Morning Lineup for a rundown of the latest stock-specific news of note, market performance in the US and Europe, key earnings data from the US and Europe, trends related to the COVID-19 outbreak, and much more.

With hopes of a stimulus deal before the election officially off the table, the hope for many has been that a Biden win next week coupled with a Democratic takeover of the Senate would yield a large stimulus.  That’s been the hope at least.  Based on recent trends in prediction markets, a blue sweep next week isn’t looking like as much as a sure thing.  Without even getting into the Presidential race (where Biden still has a comfortable lead based on the betting markets and polls), the Senate is looking closer.  According to PredictIt, the contract for Republicans keeping control of the Senate is up to 47, which is the highest level in over a month.  Of all the possible scenarios for the election outcome next week, the one that would be least ‘stimulus friendly’ would be a Biden win coupled with a GOP Senate.

Bespoke’s Morning Lineup – 10/27/20 – The Little Things That Count

Oct 27, 2020

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.

“Life is not about waiting for the storm to pass, it is about learning to dance in the rain.” – Unknown

With futures trading higher, technically you can call it a turn-around Tuesday, but based on current levels, US markets are set to only erase a fraction of their declines from Monday.  There’s been a ton of earnings reports to contend with this morning (mostly positive) as the pace nears its peak for the reporting period.

Much of the weakness over the last several days has been attributed to rising COVID case counts and the lack of a stimulus bill, but we wouldn’t dismiss the impact of earnings.  With expectations so high heading into the reporting period, the expectations bar was set so high that even with the great results we have seen so far, it’s been hard for investors to get too excited.  The fact that the most recent peak for the S&P 500 was on October 12th- the day before the major banks started to kick off earnings season- is probably not a coincidence.

Be sure to check out today’s Morning Lineup for a rundown of the latest stock-specific news of note, market performance in the US and Europe, key earnings data from the US and Europe, Korean GDP, trends related to the COVID-19 outbreak, and much more.

With Monday’s shellacking in the equity market, just about every well-known US index ETF has seen a negative return over the last five trading days.  The one exception is the S&P Small-Cap ETF (IJR) which is up a paltry 0.12%.  As shown in the snapshot from our Trend Analyzer screen, unlike most recent pullbacks where large-cap stocks held up the best while small and mid-caps lagged, in the recent sell-off it has been the complete opposite.  This time around, it’s the large-cap ETFs of the DJIA (DIA), S&P 100 (OEF), Nasdaq 100 (QQQ), and S&P 500 (SPY) that are down the most and have broken below their 50-DMAs, while most mid and small caps ETFs have outperformed and are still well over 2% above their respective 50-DMAs.

While all of the ETFs have all seen recent pullbacks of varying degrees, one common characteristic among them all is that they’re “Timing” scores all rank as Good.

Bespoke’s Morning Lineup – 10/26/20 – Changing Tides

Oct 26, 2020

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.

“Do I contradict myself? Very well then I contradict myself, (I am large, I contain multitudes.)” – Walt Whitman

With COVID cases hitting new highs in both Europe and the US and little indication of any breakthrough in a stimulus deal, it doesn’t look as though any Monday rally is in the cards.  These can’t be the only reasons for the market’s weakness this morning.  Last Friday it was already apparent that case counts were turning higher and the hopes for stimulus were also dim.

Just as important as these developments, an extremely weak earnings report from German software firm SAP (SAP) has also pulled European stocks lower.  The stock is down over 20% this morning after commenting that new lockdowns in Europe will hurt demand for the company’s products and services.  We’ll hear from the major US mega caps later this week, and any suggestions of weakness on their part will not be met with a friendly reaction.

Be sure to check out today’s Morning Lineup for a rundown of the latest stock-specific news of note, market performance in the US and Europe, key earnings data from the US and Europe, mixed economic data, trends related to the COVID-19 outbreak, and much more.

Last week at this time, we were highlighting the fact that TSA air passenger throughput had just surpassed 1,000,000 for the first time since March.  With strong numbers like that, it seemed as though the re-opening track was running relatively smooth.  Unfortunately, the seven days since last week’s million passenger reading haven’t been nearly as strong.  For seven straight days now, the total number of daily passengers on US airlines have been lower than the same day a week before.  That’s the second-longest streak of consecutive daily week/week declines since the start of the pandemic.

In terms of magnitude, the size of the week/week declines has been small on a percentage basis (average of 3%), so it’s not as though air traffic is crashing to a halt, but if the million passenger milestone was a positive trend towards reopening, the slowdown that has followed it suggests that rising case counts have caused Americans to hunker down a little bit.  That’s the kind of environment we find ourselves in these days where a real-time indicator of economic momentum can indicate a positive trend at one point and then one week later it totally contradicts itself.

Bespoke’s Morning Lineup – 10/23/20 – Around the Curve

Oct 23, 2020

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.

“When the winds of change blow, some people build walls and others build windmills.“ – Unknown

Major US indices are on pace to finish a down week on a positive note as long-term interest rates continue to rise, and the dollar is on pace to close at a 52-week low.  Earnings news has been mixed, but the notable laggard is Intel (INTC) which is down over 10% following another weak report last night after the close.

Be sure to check out today’s Morning Lineup for a rundown of the latest stock-specific news of note, market performance in the US and Europe, key earnings data from the US and Europe, mixed manufacturing and services sector PMI data, trends related to the COVID-19 outbreak, and much more.

We haven’t talked about the yield curve (which we measure as the spread between the yields on the 10-year and 3-month US Treasuries) much lately, but it deserves some attention based on recent moves.  Driven by higher rates at the long end of the curve, the yield curve stands at 77.36 basis points (bps) as of this morning.  Not since late March have we seen a steeper reading.  Back in June, the curve saw a brief surge on investor optimism of a smooth re-opening as COVID cases had been on the decline.  That spike in the curve didn’t last long as cases in the South spiked up in early Summer. This time around the steeper curve has occurred against a backdrop of deteriorating trends on the COVID front similar in magnitude to what was seen in the Summer, but with polls showing odds for the Democratic party to see a sweep in early November, the prospect of a big relief bill looks more likely, pushing long-term rates higher.   Whether that happens only time will tell, but that’s at least what polls are currently showing.

Bespoke’s Morning Lineup – 10/22/20 – Reversing a Trend?

Oct 22, 2020

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.

“It’s easy to come up with new ideas; the hard part is letting go of what worked for you two years ago, but will soon be out of date.” – Roger von Oech

The trend of the last few days has been one where the market traded with a positive bias in the morning only to give up those gains as the day went on.  Overnight, we saw a setup where futures were lower and have been gradually working their way back to even.  Could this be a signal of a reversal in the trend, or is this rally in the futures ahead of the opening bell just another pump fake to lure the bulls in?  While the failure of the market to hang on to gains recently has been disheartening, as we noted yesterday, it isn’t a particularly uncommon pattern.

In economic news, initial and continuing jobless claims both came in better than expected.  Initial claims dropped below 800K for the first time since March, and at 787K were nearly 100K below consensus forecasts of 870K.  Continuing claims were just as positive.  At 8.373 million, continuing claims were more than a million below consensus forecasts.  Even with the positive numbers, though, there has been zero in the way of a positive reaction from the futures market.

Be sure to check out today’s Morning Lineup for a rundown of the latest stock-specific news of note, market performance in the US and Europe, key earnings data from the US and Europe, trends related to the COVID-19 outbreak, and much more.

While the S&P 500 is showing signs of what looks like a double-top, conditions in the corporate bond market haven’t shown any signs of stress.  The chart below compares the S&P 500 to spreads on corporate bonds (using the BofA Corporate Master Index as a proxy) shown on an inverted basis.  Through yesterday’s close, spreads on corporate bonds actually traded to their narrowest level since early March.  Just as the corporate bond market hasn’t confirmed the recent upward moves in equities, they haven’t confirmed the weakness either. All this points to a market in consolidation mode and given an uncertain political and health outlook, can you blame the market for being indecisive?