Jan 10, 2019
We were bound to have at least one down day. After four straight days of gains and the biggest 10-day rally since 2009, futures are setting up to take a breather today. If equities can manage to turn things around following some very disappointing results from Macy’s that really will be impressive. Jobless Claims were just released and came in better than expected (216K vs 227K). Read today’s Bespoke Morning Lineup below for major macro and stock-specific news events, updated market internals, and commentary.
Bespoke Morning Lineup – 1/10/19
It hasn’t only been the equity market seeing tremendous gains in the last two weeks. Check out high yield. Since the lows in late December, the Merrill Lynch High Yield Master Index has seen a total return of 3.9%! That may not sound like much, but it takes the index all the way back to levels last seen in early November. For perspective, when high yield was last at these levels, the S&P 500 was more than 5% higher than yesterday’s close.
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Jan 9, 2019
After trailing off a little bit earlier, US equity futures are drifting back towards their highs of the morning. These gains come despite the fact that the World Bank lowered its 2019 global growth forecasts and Apple is reportedly cutting iPhone production by another 10%. Rallies on bad news are certainly a change in tone from what we became accustomed to in the fourth quarter of 2018. Read today’s Bespoke Morning Lineup below for major macro and stock-specific news events, updated market internals, and commentary.
Bespoke Morning Lineup – 1/9/19
In a B.I.G. Tips report yesterday, we highlighted the recent compression in high yield spreads and how it had reached extreme levels. Following up on that report, we wanted to note that high yield spreads continued to tighten in yesterday’s trading and have now come in by 79 basis points in the last three trading days. The chart below shows the historical three-day change in high yield spreads based on the Merrill Lynch High Yield Master Index. Since 1997, these types of moves haven’t been particularly common.
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Jan 8, 2019
Through yesterday’s close, the S&P 500 is up 8.66% off its intraday lows from December, and with futures trading higher in the pre-market, we’re nearing the 10% point in terms of the equity market’s recovery. President Trump was just out with a tweet that Chinese trade talks are going very well, and while the impact of these types of tweets is not as strong as it once was, futures have gotten an extra lift. Read today’s Bespoke Morning Lineup below for major macro and stock-specific news events, updated market internals, and commentary.
Bespoke Morning Lineup – 1/8/19
Small business sentiment for the month of December was released earlier this morning and showed a smaller than expected decline falling from 104.8 down to 104.0 versus expectations for a decline to 103.0 (more in the Morning Lineup pdf). While the decline wasn’t as large as expected, since peaking four months ago in August, small business sentiment has now dropped in each of the last four months for its largest four-month decline since December 2012. Not a trivial decline.
As for the issues that have been the biggest problems for small business owners, Taxes saw a large decline falling from 19% down to 13%, while Quality of Labor dropped from 25% down to 23% but is still the biggest problem. Filling in the void for those declines, Cost of Insurance saw the largest increase followed by Business Competition.
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Jan 7, 2019
Unlike what we have grown accustomed to recently, this week is kicking off rather quietly as US equity futures are indicating just a modestly positive open. The only major economic indicator being released today is the ISM Services report at 10 AM. In the Health Care sector, though, things are pretty busy as the annual JP Morgan Healthcare Conference kicks off today. Read today’s Bespoke Morning Lineup below for major macro and stock-specific news events, updated market internals, and commentary.
Bespoke Morning Lineup – 1/7/19
Chinese equities saw another positive session overnight with a gain of just over half of one percent. In the last two days now, the CSI 300 is up just over 3% as optimism over the US-China trade talks increases, especially after Xi’s top trade official unexpectedly attended the latest round of trade talks. While it’s nice to see strength in equities both here and in China, we would note that the latest two-day rally is just the latest in a series of other two-day rallies of 3% plus that all took place at higher levels than the current one.
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Jan 4, 2019
It’s taken until the third trading day of the year, but it looks like the market may finally have its first positive open of the year. ‘May” is the key word here as we still have to get through the December jobs report coming out shortly. The key driver behind this morning’s gain, so far, is the move by the PBoC to cuts the reserve requirement by 100 basis points. Over in Europe, inflation date came in weaker than expected while PMIs for the services sector were mixed. Read today’s Bespoke Morning Lineup below for major macro and stock-specific news events, updated market internals, and commentary.
Bespoke Morning Lineup – 1/4/19
Now that the S&P 500 is down 2.35% just two trading days into the year, the US equity market is off to its worst two-day start since 2000. It is also just the sixth time in the index’s history that it has seen a decline of 2% or more in the first two trading days of the year. In other words, it’s not often that it gets worse than this! Look on the bright side, though, we could only be down 1.35%!
What are we talking about? The table below lists every year since 1928 where the S&P 500 was down 1% or more YTD two trading days into the year. For each year, we also show the S&P 500’s performance over the following day, week, the rest of January, and the rest of the year. At the bottom of the table, we list the S&P 500’s average return for all of the dates listed as well as just the shaded years where the S&P 500 was down more than 2%. Obviously, it’s a small sample size, and we wouldn’t put a ton of weight into the results, but the average and median returns following years where the S&P 500 started the year down 1%+ are considerably less than the returns following years where the index kicked off the year with a decline of more than 2%.
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Jan 3, 2019
Looks like another bad start to the trading day, and bulls can only hope that today’s outcome is as positive as yesterday’s. We’ll find out in a bit over seven hours when the curtains close on the S&P 500’s second trading day of 2019.
Read today’s Bespoke Morning Lineup below for major macro and stock-specific news events, updated market internals, and commentary.
Bespoke Morning Lineup – 1/3/19
What a difference three months makes. Following last night’s warning, AAPL is indicated to open down 8.5% versus yesterday’s close and 38% from its 52-week high exactly three months ago today. To put that decline in perspective, AAPL is now down as much from its high as Facebook (FB) is from its all-time high last July.
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