Oct 20, 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.
“You never really know a stock until you own it.” – Walter J. Schloss
The half-life effect of headlines suggesting better odds of a stimulus deal has been shrinking. Yesterday, the positive impact was already erased by midday, and headlines overnight provided another lift to futures this morning, but most of the gains have already been given back. Providing another boost, though, is the latest data on Housing Starts and Building Permits.
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, economic data out of Japan and China, trends related to the COVID-19 outbreak, and much more.
For the last four months, the trend of stock price reactions to earnings has been steadily positive but drifting lower on a three-month rolling basis. Through yesterday, the median one-day reaction to earnings for stocks reporting over the last three months has been a gain of 0.06%, which is 0.07% above the long-term average of a 0.01% decline. This earnings season is less than two weeks old, but unless things change quickly, it won’t be long before the median one-day reaction flips negative.
Not including earnings reports after the close yesterday or so far this morning, we have seen a total of 45 companies report earnings since the start of last week. Of those companies, 80% have topped EPS forecasts, 73% have exceeded revenues estimates, and 11% have raised guidance. Overall, those are pretty healthy numbers. Don’t tell the stocks of the companies reporting that, though. In response to the better than expected results, companies reporting have declined an average of 1.06% on their earnings reaction day, and only 14 have finished the day in the black. It’s still early in earnings season, but if this trend continues, it’s going to be a long earnings season.
Oct 19, 2020
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“You can’t have a mid-life crisis in the airline industry because every day is a crisis.” – Herb Kelleher
We hope you enjoyed your weekend because while the economic calendar is relatively light this week, the flow of earnings will pick up in pace as earnings season kicks into high gear. Today, however, is on the quiet side with Homebuilder sentiment the only report scheduled and just a handful of companies reporting earnings.
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, Chinese economic data released over the weekend, trends related to the COVID-19 outbreak, and much more.
The airline industry may always be in crisis but yesterday marked a big milestone for the industry as US total passenger throughput crossed back above the one million level for the first time since March 16th.
Yesterday’s increase in passenger traffic wasn’t just a one-day blip either. On a seven-day average basis, daily passenger traffic has also been steadily rising. Ten days ago, the seven-day average jumped back above the prior post-COVID high of ~780K from early September. Since then, we have seen a steady increase to the current level of ~872K which is nearly 100K above the prior high.
While airline passenger traffic has seen a steady increase off its lows, why aren’t the airline stocks doing better? The reason is that while passenger traffic has been steadily rising, we still have a LONG way to go before things get anywhere near back to normal. The chart below compares the performance of the airline ETF (JETS) to the y/y change in passenger traffic on a seven-day average basis (blue line). The trend is higher but still down by a lot. Yesterday’s million total, for example, was still down over 60% from the same day last year.
Oct 16, 2020
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“My main life lesson from investing: self-interest is the most powerful force on earth.” – Jesse Livermore
Retail sales have helped to push a modestly positive tone in the futures market even higher. Headline retail sales showed growth of more than double economists forecasts (1.9% vs 0.8%), and ex Autos as well as Ex Autos and Gas, the beat relative to expectations has been even stronger.
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 week is looking to finish off on a positive note, performance over the last week (since last Thursday’s close) sure has been mixed. The sector snapshot from our Trend Analyzer shows that while six sectors have moved higher in their trading ranges over the last week, five have declined. Tech has been the clear leader on the week rising more than 2.5%, followed by Consumer Discretionary (1.61%), Consumer Staples (1.41%), and Communication Services (1.33%). On the downside, the only two sectors that are down more than 1% over the last five trading days are Real Estate and Energy (what else is new?).
Relative to their trading ranges, Industrials and Utilities are the only two sectors that are trading at ‘Extreme Overbought” levels, while Technology, and both Consumer sectors are merely overbought. Every other sector is neutral and Energy is the only sector below its 50-day moving average.
Oct 15, 2020
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“If a business does well, the stock eventually follows.” – Warren Buffett
It’s not looking like a good day for the bulls this morning as the S&P 500 is on pace to open down over 1%. Mixed economic data also hasn’t done much to help. In terms of jobless claims, initial claims came in higher than expected (898K vs 825K) while continuing claims dropped more than expected, falling to 10.018 million versus forecasts for 10.55 million. In terms of manufacturing activity, the Empire report for October missed expectations (10.5 vs 14.0) while the Philly Fed more than doubled expectations (32.3 vs 14.8).
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, economic data out of Europe, trends related to the COVID-19 outbreak, and much more.
The chart below is from page three of our Morning Lineup and shows that through yesterday the S&P 500 was continuing to hold at its uptrend that has been in place for the last three weeks. With today’s weakness in the futures, the S&P 500 will be poised to open below that uptrend. When the S&P 500 last broke this uptrend earlier in the month (when Trump tweeted that he had instructed his team to stop stimulus negotiations) was quickly met with buying. Will the buyers be as quick to step in again? Stay tuned.
Oct 14, 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.
“A few solid pros are more powerful than dozens of cons,” – Steve Jobs
Bulls are looking to get back on track this morning following Tuesday’s weakness. Futures are trading modestly higher in the pre-market and have been building on those gains as we approach the open. In economic news, PPI came in hotter than expected on both a headline and core basis, rising 0.4% m/m versus expectations for growth of just 0.2%.
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, industrial production in Europe, trends related to the COVID-19 outbreak, and much more.
It’s been a positive morning for earnings reports this morning. Of the eight companies reporting so far, the only one to miss EPS forecasts was Wells Fargo (WFC), while the only one to report weaker than expected sales was Bank of America (BAC). On the upside, Goldman (GS), PNC, and UnitedHealth (UNH) all had the biggest EPS beats while Goldman also saw a healthy beat on the revenue front as well.
All these strong results should set the market up for some strong performance this morning, right? Well, not necessarily. Yesterday we saw a similar story with a number of solid reports from S&P 500 companies, but when the stocks opened for trading, all but one traded lower for a median decline of over 2%. Hopefully, for the broader market, this doesn’t become a trend, but we’ll be watching it in real-time.
Oct 13, 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.
“Grow or die, that’s what I believed, no matter the situation.” – Phil Knight, Shoe Dog
With earnings season kicking off in earnest this morning, the above quote is probably the mantra of most CFOs of public companies. If you can’t show growth, kiss your stock price goodbye. Thankfully for the market this morning, the results we have seen so far as of this writing have been positive. With the exception of Fastenal (FAST), which reported inline EPS and AZZ, which missed revenue forecasts, every other company that has reported this morning has topped both EPS and revenue forecasts. Sure, it’s only eight companies, but it’s a good start.
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, major earnings releases, economic sentiment, trends related to the COVID-19 outbreak, and much more.
Outside of the US, emerging market equities have generally lagged the S&P 500, but in the recovery off the September lows, emerging market equities have the distinction of taking out their early September highs before the S&P 500. Not only that but just yesterday, the Emerging Market ETF (EEM) managed to also make a marginal new 52-week high as well. If it can build on those gains in the days ahead, the breakout will be confirmed.
Speaking of breakouts, EEM has essentially been range-bound for the better part of thirteen years. Since making an all-time high in 2007, EEM has seen multiple rallies to the low to mid-$50s area only to pull back. EEM closed yesterday at $46.23, so it’s nowhere near testing resistance at multi-year highs yet, but it’s something to keep on the radar. When and if it makes new highs in the months ahead, it will mark a notable long-term breakout more than a decade in the making.
