Feb 10, 2025
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“To become good at anything you have to know how to apply basic principles. To become great at it, you have to know when to violate those principles.” – Garry Kasparov
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 equities sold off throughout the trading session on Friday on concerns that there would be another round of tariff headlines over the weekend that would send stocks lower to kick off the week. Well, we did get another round of tariff headlines (25% tariff on all steel imports to the US and the potential for reciprocal tariffs later in the week). Still, equity futures have taken the news in stride so far, and the major averages are all indicated to open with gains of between 0.4% and 0.7%. As the Super Bowl showed us last night, while the Chiefs were favored and everyone was expecting a close game, outcomes don’t always match expectations.
For just about everyone on the planet, it’s been nearly impossible to stay on top of everything going on in Washington over the last few weeks. And for those who have been trying to keep up, it’s been exhausting. In the Old Testament, even God rested on the seventh day! Since the Inauguration, though, whether you love or hate him, we can all agree that President Trump’s second term has started with a nonstop fire hose of news and headlines.
Amid the backdrop of a nonstop news flow, the market has been surprisingly calm. Over the last 100 trading days, the S&P 500 ETF (SPY) has traded in a relatively narrow range of less than 10%, and Friday’s close was essentially right where the market was just days after the election.
10% may sound like a wide range, but it ranks in just the 13th percentile of all 100-trading day periods dating back to SPY’s inception in 1993. Back in Covid, this reading spiked above 50% and during the Financial Crisis, it widened even more, peaking above 75%!
In the post-Covid era, the current narrow range is even more extreme. As shown in the chart below, there have only been two other times when the 100-trading day range dipped below 10%, and the current level of 9.4% is the lowest of any of them. Let this be a word of advice, the market may seem volatile now, but you can guarantee that things will get more volatile in the weeks ahead.
Feb 7, 2025
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“If your work is so smart that only smart people get it, it’s not that smart.” – Chris Rock
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
Whether it’s earnings season or the non-stop whirlwind of activity coming out of Washington, it doesn’t seem like there has been nearly as much attention being placed on this month’s employment report as other recent reports. Last month’s report was a major thud on the market as the S&P 500 declined 1.5%, but did mark a short-term low as the change in non-farm payrolls came in 91K stronger than expected.
The stronger-than-expected labor market last month raised fears among investors that the economy was too strong and would cause the Fed to ratchet back the pace of rate cuts in 2025. The ironic part about this scenario is that just four and five months earlier, weaker-than-expected employment reports in August and September spooked the market on concerns that the economy was sliding into a recession. On 8/2, the S&P 500 fell 1.8% when non-farm payrolls came in 61K below forecasts, and on 9/6, the S&P 500 fell 1.7% when payrolls were 21K weaker than expected.
Like many Americans towards the end of the year, the Health Care sector came down with a case of something around the holidays. We didn’t know if it was a cold, Covid, the flu, RSV, or whatever else was floating around, but not many of us were feeling 100%. For the Health Care sector, things were going around too – sentiment towards the insurance companies, the incoming Trump Administration, RFK being nominated as the HHS secretary, being a defensive sector during a market rally, etc. – and the result was a sharp Q4 decline. From its September high to its December low, the sector was down over 13% during a period in which the S&P 500 was up!
Since that low in December, the sector has been on the mend rallying more than 8%, and its YTD gain of just under 7% ranks as the third best-performing sector of the year behind Communication Services and Financials. A look at the chart of the Health Care sector shows that after moving above resistance levels in the last couple of weeks, the sector has been consolidating just above its 50-DMA and levels that had acted as resistance in the first half of 2024 and most recently late last year.
Feb 6, 2025
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“Status quo, you know, is Latin for ‘the mess we’re in’.” – Ronald Reagan
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
Given the sheer volume of earnings reports at this point in the reporting period, it’s hard to keep track of everything hitting the tape. But going through the various headlines since yesterday’s close, we’ve noticed a pickup in the number of companies lowering guidance. Since yesterday’s close, we’ve seen 22 companies lower forecasts going forward compared to just six raising guidance. It’s only one day, but we’ll watch to see if this starts becoming more of a trend. Despite the generally weaker tone from individual companies, equity futures are modestly higher on the day, although they are well off their overnight highs.
Along with equity prices, gold has also been strong. Prices are up again this morning, and if these gains hold throughout the trading day it would be the sixth straight day of record closing highs for the SPDR Gold Trust ETF (GLD) which would be tied for the longest streak of record closing highs since 2011. If you think the stock market has done well over the last year, GLD has rallied over 40%! In the shorter term, after breaking out of its three-month range in late January, GLD has traded higher every day since then.
Given the strength in the commodity, it’s no surprise that gold mining stocks have been strong, but maybe not quite as strong as you would expect. Over the last year, the VanEck Gold Miners ETF (GDX) has rallied 50%, but unlike GLD, it is still well below its 52-week high from late October, when the commodity peaked before the most recent consolidation phase. So, in some ways it has some catching up to do!
From a long-term perspective, gold mining stocks have underperformed the commodity. The chart below shows the relative strength of GDX vs GLD over the last ten years. From 2016 through 2022, gold miners were pretty consistent outperformers of the commodity, but since the middle of 2022, there’s been a shift where the commodity has started to outperform.
Feb 5, 2025
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“The reason we are so excited about the AI opportunity is we know we can drive extraordinary use cases because the cost of actually using it is going to keep coming down” – Sundar Pichai
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 are lower this morning but off their overnight lows. Weakness is concentrated in the Nasdaq where negative earnings reports are weighing on some notable names. Crude oil and Treasury yields are lower on the morning while gold makes a run for $2,900 per ounce.
For Alphabet (GOOGL), the last two months must feel like Charlie Brown trying to kick the football. For several weeks, the stock made multiple attempts to break above $200, and each time it got there, the rug was pulled out from under it and it finished back below that level by the end of the day. Last week, GOOGL finally got and stayed above $200. Yesterday, the stock traded up more than 2.5% to a record high. Then the Q4 earnings report hit.
While the company reported better-than-expected EPS, revenues came in slightly weaker than expected due to slower-than-expected growth in its cloud services business. The company also shocked the street by saying that it plans to spend approximately $75 billion on cap ex this year, up over 40% from 2024 and significantly above forecasts of around $59 billion.
While company officials attributed the slowdown in cloud sales growth to a problem with capacity rather than demand, and most other divisions within the company saw better-than-expected results, shares of GOOGL immediately traded lower in after-market trading. While the stock is modestly off its overnight lows, it’s still down 7.2% relative to Tuesday’s close. As shares open for trading this morning, rather than being at record highs, shares of GOOGL will be struggling to hang on to their 50-day moving average.
Feb 4, 2025
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“I think that people just have this core desire to express who they are. And I think that’s always existed.” – Mark Zuckerberg
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 are flat this morning after a wild Monday that saw the major indices gap down 1%+ but recover about half of that during the trading day. While Mexico and the US came to an agreement to delay tariffs by 30 days around lunch time, Canada and the US didn’t agree to their short-term truce until just after the close.
Today is the 21st birthday of Facebook, which was launched by Mark Zuckerberg in his Harvard dorm on 2/4/2004. Below is a snapshot of one of the first versions of the Facebook profile, which was entirely used on desktops and laptops at that point because the iPhone was still a few years away.
It took eight years from launch for Facebook (now META) to IPO. Below is a look at the growth of a $10,000 investment in META at its IPO price back in May 2012. $10k at the IPO held through yesterday’s close would now be worth roughly $184,200, but it certainly didn’t get there in a straight line.
Recall that META went “all-in” on the metaverse in the early 2020s, which, combined with a nasty bear market for growth stocks, resulted in a 76% drawdown from September 2021 to November 2022.
At its lows in late 2022, a $10k investment at META’s IPO in 2004 had fallen from more than $100k at its 2021 peak all the way down to just $23,400.
Zuckerberg reversed course on the metaverse to try and stop the bleeding, and he dubbed 2023 the “year of efficiency” for the company. Around the same time, ChatGPT came along to start the AI Boom. Since its lows in 2022, META has rallied nearly 700% and currently sits at all-time highs.
Feb 3, 2025
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“As has been often noted but seldom heeded, selling during a selling panic is rarely an effective strategy.” – Bill Miller
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
Last Monday it was DeepSeek, this Monday it’s tariffs that have US equity futures trading down 1-2% ahead of the open. With President Trump ordering tariffs on imports from China, Mexico, and Canada over the weekend, below are price charts of ETFs covering these three countries plus the US (SPY). We include where each ETF is currently trading in the pre-market so you can see how big this morning’s declines are relative to the last six months of action. Yes, all four are set to open quite a bit lower, but all four will also still be above their lows seen over the last month or so. Mexico (EWW) is the only ETF of the group that will be near six-month lows if it opens at current levels.
