Jun 3, 2025
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“In 1989, we were at a crossroads to see what kind of society China would have. Now it’s settled: You can get rich, but you can’t open your mouth.” – Adi Ignatius
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
US equity futures were under pressure before the sun came up on the East Coast this morning. As the sun rose, though, so too did prices, and based on where things stand now, the S&P 500 and Nasdaq are on pace to open just modestly lower. In China overnight, the manufacturing PMI for May dropped back below 50 for the first time this year, indicating ongoing weakness as the trade war weighs on the manufacturing sector. In Europe, inflation was below the ECB’s 2% target as May CPI rose at just 1.9% y/y.
In the US, the only reports on the calendar are Factory Orders (expected to fall 3.1% y.y) and JOLTS (7.1 million), and the OECD lowered its 2025 GDP growth forecast for the US down from 2.2% to 1.6. On the earnings front, the only major movers this morning are Dollar General (DG) and Signet (SIG), and both stocks are trading up over 10%. While not related to earnings, shares of Constellation Energy (CEG) are also sharply higher after announcing a multi-year deal to supply Meta (META) with nuclear power.
Today also marks the 36th anniversary of the Chinese military’s crackdown on the pro-democracy protest in Tiananmen Square. Even if it has been ‘forgotten’ by the Chinese internet, who can forget the picture of “Tank Man” defiantly standing in front of a row of Chinese tanks? As Adi Ignatius, who covered the protests for the Wall Street Journal, put it, Tiananmen Square was a crossroads in history where citizens had the opportunity to get very rich as long as they could just keep their mouths shut. Jack Ma knows this all too well.
While the government’s actions in 1989 were a big blow to democracy and saw individual freedoms get crushed, China has seen a major surge in its wealth. In 1989, per capita GDP in China was less than $311. Today, it’s $12,614, representing an increase of 3,950%. Over that same period, US per capita GDP increased by less than 260%.
Comparing per capita GDP in China to the US shows how the gap has narrowed. While US per capita GDP is still 6.5 times the level of China, in 1989, US per capita GDP was more than 70 times China’s! While China has narrowed the gap in a big way, its rate of growth relative to the US has slowed considerably in recent years. In the ten years leading up to Xi Jinping becoming President in 2013, the ratio of US to Chinese per capita GDP shrank from 30.6 to 7.6. Since Xi became President in 2013, the ratio has declined from 7.6 to 6.5.
The slowing growth of China has also been reflected in the performance of Chinese stocks. While the iShares MSCI China ETF (MCHI) has seen some big moves, both up and down over the last 10+ years, its price is essentially unchanged from where it was 14 years ago.
Jun 2, 2025
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“Every strike brings me closer to the next home run.” – Babe Ruth
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
Another month has come and gone, and we’re now at the two-month anniversary of the “Liberation Day” ceremony at the White House Rose Garden. The event set off a massive roller coaster in global financial markets, even though markets are little changed from a point-to-point basis. With earnings season largely behind us, economic data and the President’s Truth Social account will be the most closely watched items of the week. While the scheduled start will be at 10 AM with the release of May’s ISM Manufacturing report and the April report on Construction Spending, the timing of headlines related to trade is as predictable as a thunderstorm in the summer. You never know when one will pop up, but you know they always will.
It’s hard to believe that even as the S&P 500 was on the cusp of a bear market in early April, the index’s total return over the last 12 months has been better than average. With a total return of 13.5%, the S&P 500’s gain over the last year outpaced the long-term average by 1.5 percentage points. Over the last two and five years, annualized returns have been even stronger at 20.6% and 15.9%, respectively. Both of those returns are also well above the historical average of about 10.5% for all periods since 1928. Even over the last 10 years, the 12.9% annualized gain is still more than two full percentage points better than average. You have to go out to the 20-year window to find a timeframe where returns are below average, and even there, the 10.5% annualized gain is only slightly less than the long-term average of 10.8%.
The chart below shows how the current one, two, five, ten, and twenty-year returns stack up relative to the long-term average. While the one-year gain is only slightly above the 50th percentile, the S&P 500’s two- and five-year performance is above the 75th percentile.
May 30, 2025
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“If you don’t occasionally make a mistake, you’re not doing your job.” – Jim Sinegal
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
There wasn’t a lot of action going on in the markets this morning. That was up until just a few minutes ago when the President started “truthing” about China, and said “No more Mr. Nice Guy!” Futures on both the S&P 500 and Nasdaq quickly went from unchanged to down about 0.5%. European stocks were higher but have given up some of their gains, while Asian stocks fell on the on/off/now back on Trump tariffs. Like the equity market, treasuries are little changed. Crude oil is one of the bigger movers this morning with a gain of just over 1% while gold, the dollar, and crypto are all in the red.
It may be Friday, but there’s a busy batch of economic data on the calendar with Personal Income and Spending, PCE, Chicago PMI, and Michigan Sentiment.
One of the more high-profile earnings reports since yesterday’s close was Costco (COST), which reported better than expected EPS on inline sales and an 8% increase in comp sales. COST is trading marginally lower in response to the report, with the stock on pace to gap down about 0.5% at the open. What’s notable about this morning’s weakness is that it continues a trend that has been in place for the stock since the start of 2022. As shown in the table below, not including this morning, shares of COST have gapped down in reaction to 11 of its last 13 earnings reports. Another negative open today would make it 12 out of the last 14!
May 29, 2025
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“No technology has ever had the opportunity to address a larger part of the world’s GDP than AI.” – Jensen Huang
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
To see yesterday’s CBNC interview, click on the image below.
The biggest report of the earnings season has come and gone, but as Nvidia CEO Jensen Huang said on last night’s call, “This is just the beginning.” At least that’s what NVDA bulls are hoping. Based on pre-market levels, shares of NVDA are looking at an upside gap of over 5%. That would be the stock’s biggest upside gap in reaction to earnings since last May, and as we highlighted in Tuesday’s Chart of the Day, would extend its streak of positive reactions to May reports to four.
NVDA’s current pre-market levels are at the high end of the range the stock has traded in since the DeepSeek news first hit markets in late January. If NVDA can build on these gains during the trading day, it would be notable for two reasons. First, it would indicate a breakout from the post-DeepSeek range (shaded area in the chart below). More importantly, it would help to reverse a trend where the stock has repeatedly capped rallies with intraday negative reversals (see arrows in the chart below).
This trend has also been evident on the stock’s recent earnings reaction days. Following the last three earnings reports, the stock has sold off from the open to close, including in February when it sank 11% after initially gapping up nearly 3%.
May 28, 2025
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“Most ways of making big money take a long time. By the time one has made the money one is too old to enjoy it.” – Ian Fleming
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
Today’s the day. The second most valuable company in the world, and the most important company when it comes to AI, reports after the close, and there will be a lot of attention on what Nvidia (NVDA) has to say when the company reports. Ahead of this afternoon’s report, it’s so quiet in the futures market, you can hear a pin drop as markets digest Tuesday’s big gains to kick off the week. The only economic report on the calendar this morning is the Richmond Fed Manufacturing report at 10 AM, while the Minutes of the last FOMC meeting will hit the wires at 2 PM Eastern. While NVDA is this afternoon’s main earnings event, we’ll also get reports from HP (HPQ) and Salesforce (CRM).
Heading into this afternoon’s report from NVDA, the stock has had a wild ride. Although it’s trading right at levels it was at a year ago, the stock has been all over the place, trading from above $140 late last spring to just above $90 early last August. From there, it rallied back to new highs and above $150, but less than two months ago, it was back below $90 amid the chaos of the Liberation Day tariffs. Then, yesterday, it closed back up near $140. For a large-cap stock to see back-and-forth fluctuations of declines over 35% followed by gains of over 60% is wild enough, but when swings like this occur in what is one of the most valuable companies in the world from a market cap perspective, it’s nuts.
May 27, 2025
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“Corrupt politicians make the other ten percent look bad.” – Henry Kissinger
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
After President Trump ‘truthed’ comments last Friday morning threatening to lay 25% tariffs on iPhones imported into the US and 50% tariffs on goods imported from the EU, the S&P 500 fell 0.7% and the Nasdaq declined 1%, helping to contribute to the worst week for the S&P 500 since April. Over the weekend, President Trump dialed back on some of his threats from Friday, saying he would delay the threatened 50% tariff on EU imports from June 1st to July 9th. When futures opened for trading following the weekend break, futures rallied on the news, and both the S&P 500 and Nasdaq are on pace to gap up 1.4% to kick off the week. If you’re following along at home, we went from no threat of a 50% tariff at the close on Thursday afternoon to the threat of a 50% tariff beginning on July 9th, and the S&P 500 is up a net of roughly 0.7% relative to where it was at the close on Thursday. With that kind of logic, you can see why the President keeps dialing up the threats and walking them back!
The S&P 500’s 2.5% decline last week continued a global trend that has been in place all year between US and international stocks. While the S&P 500 fell, every other G7 equity ETF finished the week higher, adding on to what have already been big gains for the year. As shown in the snapshot below, besides Japan, every other G7 equity ETF is up by double-digit percentages YTD, even as the S&P 500 remains fractionally in the red. SPY is also the only ETF of the ones listed that didn’t finish last week at overbought levels, although that will change at the open today.
