Dec 4, 2018
Well, that didn’t last long. The shelf life of news headlines these days is increasingly short, and the weekend’s positive trade headlines between the US and China are just another example. Less than 24 hours after a strong positive opening Monday morning, when we combine the decline off the highs yesterday and this morning’s weakness, US equities are on pace to give up 40% of their initial gains after the S&P 500 failed to make a higher high in its rally yesterday. Read today’s Bespoke Morning Lineup below for major macro and stock-specific news events, updated market internals, and detailed analysis and commentary:
Bespoke Morning Lineup – 12/4/18
While the reported trade truce between the US and China over the weekend was supposed to remove a cloud of uncertainty over the economy, the yield curve (10yr vs 3m) didn’t seem to think so. While the curve steepened initially on Monday morning, it steadily flattened throughout the trading day and has continued to do so overnight and today. Today’s 8 bps flattening of the curve is the largest one day decline in over six months, and at the current level of 55 basis points, the curve is the flattest it has been since January 2008. While flat yield curves aren’t necessarily signs of economic weakness, they don’t suggest a whole lot of confidence in growth either.
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Dec 3, 2018
US equities are set to surge at the open this morning, kicking off the month of December on an incredibly positive note. The obvious catalyst today is new developments in the ongoing trade dispute between the US and China and a 90-day halt to any new tariffs. How long the positive impact of these headlines lasts is up for debate. Read today’s Bespoke Morning Lineup below for major macro and stock-specific news events, updated market internals, and detailed analysis and commentary:
Bespoke Morning Lineup – 12/3/18
Just as important as the positive trade-related headlines this morning is the fact that market breadth has been holding up pretty well. While the S&P 500 made a lower low on a closing basis in November, its cumulative A/D line held up much better and actually saw a positive divergence from price. In fact, closing out the week, it was only 450 below its all-time high from September. All it would take for the cumulative A/D line to make a new high would be two good days in a row.
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Nov 30, 2018
US equity futures are lower heading into the open, but we’ve seen a real rebound in the last few minutes, and now futures are only indicating the slightest of negative opens as we close out the last trading day of the month. Read today’s Bespoke Morning Lineup below for major macro and stock-specific news events, updated market internals, and detailed analysis and commentary:
Bespoke Morning Lineup – 11/30/18
Strong performance of US duration has continued with another day of bull flattening. Granted, the long end of the curve is down less than 2 bps on the day, but that’s still enough to put rates at a 10-week low. Notably, the 50-DMA looks like its starting to roll over and the 200-day is also slowing. There’s no trend shift yet for 10s, but given dour sentiment on the global economy and a less hawkish Fed, anything is possible.
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Nov 29, 2018
For much of the last several years, whenever there has been any doubt regarding the strength of the recovery, jobless claims were always there to act as a security blanket. This morning’s report, though, has frayed the yarn slightly. While economists were expecting first time claims to come in at 220K, the actual reading was 234K, which was the highest level in six months! To be sure, 234K is still low by historical standards, but it’s not the type of sub 225K reading that we’ve been used to seeing lately. Read today’s Bespoke Morning Lineup below for major macro and stock-specific news events, updated market internals, and detailed analysis and commentary:
Bespoke Morning Lineup – 11/29/18
Yesterday’s 2%+ gain in the major US averages was a welcome relief for bulls and helped to push the S&P 500 into positive territory for the month. Since the lows of the Financial Crisis in March 2009, yesterday’s gain was the 66th time that the S&P 500 has gained more than 2% in a single day. Of those prior occurrences, the index’s average performance the following day was a decline of 0.1% with positive returns just under half of the time.
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Nov 28, 2018
Don’t look now but the S&P 500 is currently on pace for its third straight day of gains, and with the MTD decline now at just over 1%, there’s actually a possibility of a green November! Before getting too far ahead of ourselves, however, Fed Chair Powell is set to speak right at noon today, and the tone of his speech could play a big role in how the afternoon goes. Read today’s Bespoke Morning Lineup below for major macro and stock-specific news events, updated market internals, and detailed analysis and commentary:
Bespoke Morning Lineup – 11/28/18
There doesn’t seem to be a more consensus trade these days than that interest rates are going to rise. A prime example is yesterday’s Consumer Confidence report for the month of November. In reference to a question regarding the direction of interest rates, 74.4% of those surveyed expect interest rates to rise (highest since July 2006), while just 5.5% expect rates to decline. At a spread of 68.9 percentage points, you don’t often see sentiment skewed so far to one side. While it’s not always the case, often when you see such lopsided levels of sentiment, things have a way of going the other direction.
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Nov 27, 2018
After a strong start to the last week of November on Monday, it’s looking like we’ll give back half of those gains this morning. The culprit today? Trade. What else is new? There’s a lot of Fedspeak on the calendar, though, so we’ll be watching for any signs of a change in tone.
Two sectors of the market we continue to watch religiously are the homebuilders and semis. Both of these groups started to see significant weakness well ahead of the broader market, so if they can stabilize, it stands to reason that it would be a good sign for the market in general. Looking at the two charts below, we have seen some somewhat encouraging signs that the groups are stabilizing, but they are hardly out of the woods yet.
In the case of homebuilders, that group made a successful test of its late October lows in the last week or so, but still hasn’t made a higher high or traded back above its 200-DMA. Until either of those developments unfold, the group could just as easily roll back over.
Semis don’t even look as encouraging as the homebuilders. For now, the group looks to be attempting to establish a double-bottom, but it has yet to show much in the way of a bounce.
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