Nov 19, 2024
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 trial to Bespoke Premium. CLICK HERE to learn more and start your trial.
“And like most other overnight successes, it was about twenty years in the making.” – Sam Walton
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
What was looking like a positive morning for equities turned murkier in the last few hours as Russian President Vladimir Putin updated the country’s nuclear doctrine in response to President Biden’s move giving Ukraine the go-ahead to launch attacks on Russian targets deep inside the border. Under the new policy, a spokesperson for the Kremlin said that Russia now “reserves the right to use nuclear weapons in the event of aggression using conventional weapons against it and/or the Republic of Belarus.”
Before the comments, Asian stocks were higher, with fractional gains across the board overnight. European stocks also opened flat to slightly higher but then steadily sold off in the wake of the updated doctrine. The STOXX 600 currently sits down about 0.75%, as even a small increase, however unlikely, of an escalating conflict can understandably cause investors to become more risk averse. It’s also worth highlighting that Putin made similar comments over the weekend that supplying Ukraine with long-range missiles would cross a red line.
Given the tensions, Treasury yields are lower as the 10-year yield is back below 3.4%, crude oil is fractionally lower, and gold and bitcoin are up nearly 1% each with the latter trading firmly above $92K. In terms of economic data, Building Permits and Housing Starts for October were just released and both headline readings came in modestly lower than expected.
Shifting from macro to the micro, Walmart (WMT) marked the unofficial end to earnings season this morning reporting better-than-expected EPS and sales and reiterating its full-year guidance. This was the tenth straight quarter that the company reported better than expected EPS and sales, and in response, the stock is poised to gap up 3.5% which would be the fourth time in a row that the stock gapped up in reaction to earnings. Shares of WMT have already been on a monster run for the last year after dropping below $50 late last year, but this morning the stock is at record highs around $87. One thing to be aware of is that on each of its last six earnings reaction days, the stock has traded down from the open to close.
Nov 18, 2024
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“It is a very sobering feeling to be up in space and realize that one’s safety factor was determined by the lowest bidder on a government contract.” – Alan Shepard
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
Two headlines on the front page of the Wall Street Journal stood out to us this morning. The first was “Investors Are Betting on a Market Melt-Up.” There’s not much to say about this except that if you are bullish on the market, given the election results and other factors, you’re not alone. That’s not to say that the market has to go down, but gains could be harder to come by. The beach is always much better when it’s less crowded.
The second headline concerns the still-awaited nomination from President-elect Trump over who should become Treasury secretary (“Jockeying To Lead Treasury Spills Out In Public”). Heading into the weekend, it looked like it was a two-person race between Scott Bessent and Howard Lutnick, but now it appears that the lobbying has annoyed Trump, and he is now expanding the potential field from more than just those two. This pick is easily the most important remaining pick of the future President’s cabinet, and depending on who “gets the rose” it would impact US trade policy and the dollar’s direction.
Markets hate uncertainty, and perhaps some of the increased uncertainty over who will lead the Treasury Department has shown up in the performance of gold and bitcoin this morning, as both are trading higher.
Starting with gold, after an 8% pullback from its late October high and breaking its uptrend that had been in place since earlier in the year, the SPDR Gold Trust (GLD) is trading up over 1% this morning after bouncing near support levels coinciding with its late summer base. If you’re long GLD, seeing a bounce after six days in a row of losses is nice. The real test will come in the days ahead as it looks to get back above that former uptrend line.
It’s hard to attribute a daily 1% move in Bitcoin to anything specific as it’s such a volatile asset. But even after many assets that surged in the immediate days after the election have started to pull back, bitcoin remains within 1% of its record high last week.
Nov 15, 2024
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 trial to Bespoke Premium. CLICK HERE to learn more and start your trial.
“The American press is a shame and a reproach to a civilized people.” – General William T. Sherman
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
If you think antipathy towards the press is a new aspect of the current zeitgeist, think again. The quote above is from Civil War General Sherman who had plenty of disdain for the media in his writings and comments. He also once commented that if every reporter in the world was killed, “I am sure we would be getting reports from Hell before breakfast.” Loathing the press among many of the subjects it covers is nothing new. We bring up Sherman this morning because 160 years ago today, he led more than 50,000 soldiers across the state of Georgia from Atlanta to the coast in Savanah destroying nearly everything in its path. The purpose was to kill both the morale of Southerners as well as the supply lines of the Confederate Army, and it ultimately led to the end of the war. Now, on to the markets.
Heading into halftime for the month, equity futures are firmly lower again this morning as the S&P 500 is indicated to open down about half a percent while the Nasdaq is even weaker. The Nasdaq’s weakness can be chalked up to Applied Materials (AMAT) which is down about 8% after a cautious earnings report. Economic data as far this morning has been much stronger than expected with Empire Manufacturing, Retail Sales, and Import Prices topping expectations. Still ahead this morning, we’ll get Industrial Production and Capacity Utilization at 9:15. Yields are basically unchanged, crude oil is up fractionally, gold is trying to rebound from an 8% decline from its recent highs, and bitcoin is back to flirting with $90K after dropping down as low as $88,000 overnight.
In Asia, Japanese stocks finished the week just like they started it with modest gains sandwiching three days of losses in between. The same couldn’t be said for China where the Shanghai Composite fell over 1% taking its losses for the week to 3.5%. Offshore Chinese stocks fell even more for the week declining over 6%. Every other major benchmark also finished the week lower, and Australia was the only country to skate by with declines of less than 1%. The Chinese government released several notable economic reports, and the numbers were mixed with Industrial/Manufacturing data missing forecasts. Measures of the consumer (Retail Sales and Unemployment), however, came in better than expected.
European stocks are closing out the week on a more subdued note as the STOXX 600 is down less than half a percent putting its week-to-date performance into the red. UK GDP was weaker than expected while inflation data in Germany and France came in slightly higher than expected echoing the trend in the US where inflation has proven to be stickier than most economists had hoped.
In yesterday’s email, we noted that neutral sentiment plunged in the latest week as investors have seemingly become a lot more decisive now that the election has passed. Looking at sector performance, the market has also started to discern between winners and losers. The snapshot below from our Trend Analyzer shows where sectors finished the day yesterday relative to their short-term trading ranges. Of the eleven sectors, six settled at overbought levels, four were overbought, and just one – Utilities – was oversold. We touched on this Monday, but as the week has progressed, the dispersion has only become more extreme.
Nov 14, 2024
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“I know not all that may be coming, but be it what it will, I’ll go to it laughing.” – Herman Melville, Moby Dick
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
Shares of Disney (DIS) spiked up about 9% in the pre-market after the release of better-than-expected earnings and a management outlook forecasting double-digit EPS growth over the next two years. The strength in DIS has helped to push futures to their morning highs, although the magnitude of the gains is modest. After yesterday’s inline CPI report, the headline PPI for October was right in line with expectations, although Core PPI was a tenth higher than expected. Initial jobless claims were 3K lower than expected, but continuing claims were in line with estimates.
Crude oil prices are modestly higher, but WTI remains below $70 per barrel. Meanwhile, gold is down another 1%, taking the total decline from its recent peak to more than 8%. Along with gold’s decline, silver is 2% lower, while copper is also down 1% for the fifth day in a row. Physical gold has been weak lately, but the rally in ‘digital gold‘ continues this morning as Bitcoin sits above $91,000 after briefly touching $93,000 in the last 24 hours.
The positive tone in the US counters a weak overnight session in Asia. After Japan’s Nikkei 225 had a modest gain to kick off the week on Monday, it’s been down three days in a row now after last night’s decline of 0.6%. Chinese stocks were even weaker during the session as the Shanghai Composite fell over 1.7% and Hong Kong’s Hang Seng fell 2.0%. Australian stocks bucked the negative trend even as October employment growth rose less than expected. European stocks have had a much more positive tone this morning as the STOXX 600 is up nearly 1% with German stocks leading the charge (+1.4%) despite an inline Q3 GDP report.
With stocks surging to record highs post-election, it should come as no surprise that investor sentiment has turned more optimistic, and that’s exactly what we saw in the latest numbers from the American Association of Individual Investors (AAII) sentiment survey. Over the last week, bullish sentiment spiked to 49.8% from 41.5%. While that’s a sizable jump, bullish sentiment remains below 50% and is lower than it was in September. Meanwhile, along with the rise in bullish sentiment, bearish sentiment also ticked slightly higher rising from 27.6% up to 28.3%.
What was most notable about this week’s numbers was the sharp drop in neutral sentiment which fell from 30.9% down to 21.8%. That’s the lowest level since the bear market lows in October 2022. With the election behind us, investors suddenly became a lot more decisive, and they shifted to the bullish camp.
Nov 13, 2024
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“The punishment of every disordered mind is its own disorder.” – St Augustine
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
Asian stocks closed with notable declines for the second day in a row, as Japan, India, and South Korea all fell at least 1%. However, China bucked the trend, with the Shanghai Composite rallying 0.5%. The region’s key data point was the October PPI in Japan, which rose 0.2% m/m and took the y/y reading up to 3.4%. Both readings were higher than expected.
In Europe, this morning’s trading remains much more subdued relative to Asia and the STOXX 600 is down a relatively modest 0.4%. News in the region has been on the quiet side as French Unemployment was right in line with expectations. In Germany, the country’s ECB governing council member Joachim Nagel warned that potential tariffs under the incoming Trump Administration could cut overall growth by 1%, warning that “If the new tariffs actually materialize, we could even slip into negative territory”.
With global markets trading lower, US futures have also seen a downside bias, and US Treasuries have caught a modest bid as the iShares 20+ Year Treasury Bond ETF (TLT) trades modestly higher in the pre-market (0.36%). That does little, however, to put a dent into the 10.2% decline that the ETF has seen since mid-September shortly after the Harris-Trump Presidential debate when the President-elect’s odds in the betting markets bottomed out.
For this morning’s gain in TLT to have legs, this morning’s CPI report will need to cooperate, and we have seen less of that in recent months. While overall trends in inflation continue to move in the right direction, in recent months we have started to see an uptick in the number of higher-than-expected CPI reports.
Starting with headline CPI, after bottoming out at 1 late last year, the 12-month rolling total of higher-than-expected monthly readings has ratcheted up to 5. While that is well off the record-high readings of nine that we saw in 2022 and below the long-term average of 5.4, it’s still higher than it was.
Looking at core CPI, we’ve seen the same trend. After surging to a record high of 8 in October 2020, the 12-month rolling total of higher-than-expected core CPI prints dropped down as low as 2 earlier this year but has since rebounded back up to 5, and that’s higher than the long-term average of 4.8. In both cases, these rolling 12-month totals are nothing out of the ordinary, but if you want bonds to rally, you’re going to need the pace of higher-than-expected inflation prints to slow down.
Nov 12, 2024
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 trial to Bespoke Premium. CLICK HERE to learn more and start your trial.
“No one ever accomplishes your dreams for you” – Nadia Comaneci
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 view yesterday’s CNBC segment, click on the image below.
Is this the hangover from the post-election rager? There’s a downside bias to equities around the world this morning, including the US which has been surging to kick off November. In Asia overnight, equities were lower across the board with the Nikkei down 0.5% while China and India were down over 1%. In Europe, it’s the same story as the STOXX 600 is down 1% after Economic Sentiment from ZEW fell slightly more than expected while German CPI ticked up 0.4% on a m/m basis which was right in line with forecasts. The only economic indicator on the calendar this morning was NFIB Small Business Sentiment for October which came in higher than expected. Given the political leanings of this report, you can expect a much larger increase next month.
With futures pointing to a modestly lower open this morning, it would be the first day this month that the S&P 500 tracking ETF (SPY) gapped lower at the open with the last five trading days being especially strong. The snapshot from our Trend Analyzer below shows the performance of major international ETFs and where they stand relative to their short-term trading ranges. While US stocks have surged, foreign ETFs have performed much less impressively. Just over the last five trading days, SPY has rallied over 5%, while the next closest performer of the group shown has been the FTSE Pacific ETF (VPL) which is only up a bit more than 1%. SPY’s rally also makes it the only one of the six ETFs trading above its 50-day moving average (DMA). Additionally, while SPY closed more than two standard deviations above its 50-DMA yesterday putting at ‘extreme’ overbought levels, three of the five other ETFs shown closed in oversold territory yesterday, including the FTSE Europe ETF (VGK) which settled in ‘extreme’ oversold territory (2+ standard deviations below its 50-DMA).
Below we show one-year price charts of each of the six international regional ETFs summarized above. While most of the charts look similar, SPY stands out from the rest.
