Jun 26, 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.
“I’m afraid what will happen to Europe if it does fail.” – General Lucius D. Clay
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
In the corporate world, you often see scenarios where a company that has done well will use its inflated stock currency to buy beaten-down assets on the cheap. Based on this logic, you would expect US companies, which have steadily outperformed their European peers for years, to be on the prowl in Europe for some cheap bargains. Over less than 24 hours, though, we have seen two major headlines showing the opposite trend. Last night after the close, VW and Rivian announced a deal where the German carmaker will invest up to $5 billion in Rivian. Now, this morning German manufacturing firm Bosch is considering a bid for US appliance maker Whirlpool (WHR)!
The seesaw action in the markets of late is showing up again this morning, and this time, it’s technology, and specifically Nvidia (NVDA) rallying while most of the the rest of the market languishes. One exception in the old economy is FedEx (FDX). Shares are up over 15% this morning following its better-than-expected earnings report after yesterday’s close. On the revenue side, results ended a streak of eight straight weaker-than-expected reports, and it was the first time in seven quarters that sales grew on a y/y basis.
Overnight, equities in Asia were mostly higher even as reports surfaced that the BoJ will consider rate hikes at all of its upcoming meetings and is also expected to announce a reduction in its monthly asset purchases. The yen also fell to its lowest level since Christmas 1986! In Europe, the tone is weaker as the STOXX 600 is down fractionally following weaker-than-expected sentiment reports in Germany and France.
Divergences haven’t just been confined to the stock market lately. In the energy sector, we’ve also seen oil and natural gas follow different patterns. Starting with crude oil, while prices have rallied off the lows from June, the commodity’s price chart has carved out an iron cross formation where the downward sloping 50-DMA crosses down through the 200-DMA which is also sloping downward. Technical analysts view these patterns as a negative technical pattern.
Natural gas, on the other hand, is on the verge of a golden cross, which occurs when the 50-DMA crosses up through the 200-DMA as both are rising, and technical analysts view these patterns as bullish.
To continue reading the rest of today’s morning note, where we show how both crude oil and natural gas performed following iron crosses in crude and golden crosses in natural gas. You’ll also find much more analysis of global equities and economic readings released this morning, so read today’s full Morning Lineup with a two-week Bespoke Premium trial.
Jun 25, 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.
“We do not inherit the Earth from our Ancestors, we borrow it from our Children.” – Crazy Horse
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 Futures are being led higher by the Nasdaq as Nvidia (NVDA) looks to rebound from its three-day decline of over 10%. After a quiet day of economic data yesterday, today’s calendar looks a little busier with the Chicago Fed National Activity Index which was just released and came in better than expected at +0.18 versus expectations for a decline of 0.3. Still to come, the FHFA House Price Index will be released along with the Case Shiller numbers at 9 AM followed by Consumer Confidence and the Richmond Fed at 10 AM.
Fed Governor Michelle Bowman (a voting member of the FOMC) spoke in London this morning. She noted that it may become appropriate to “gradually lower the federal funds rate” if “incoming data indicate that inflation is moving sustainably toward our 2% goal” but she went on to qualify that statement with the comment that “we are still not yet at the point where it is appropriate to lower the policy rate.” She even left the door open for future increases in the fed funds rate “should progress on inflation stall or even reverse”. While most of her comments were in line with recent commentary from other Fed officials, she took a hawkish turn when she said “I don’t see any rate cuts for 2024”.
With the caveat that market pricing of future levels in the fed funds rate has been extremely inaccurate over the past year, we wanted to look at where traders are positioned ahead of future meetings based on the CME’s FedWatch tool. Starting with the next meeting, a rate cut at the July meeting is basically off the table as the market is priced for an 89.7% likelihood that rates will be left unchanged.
The Fed has historically shied away from changing rates in the months leading up to a Presidential election, but for the September meeting, there is a slightly better than two in three chance of a cut at that meeting.
Two days after this November’s election, the FOMC will conclude another meeting, and hopefully, we’ll know who came out ahead in the Presidential election. If the Fed has historically avoided changing rates leading up to an election, the market expects them to make up for lost time at the November meeting. Not only is there a nearly 80% likelihood of at least one rate cut by then, but the market has also priced in a 30% chance that the fed funds rate will be at least 50 basis points lower. Then, for the December meeting, the market is pricing in better than a 50/50 chance of at least two 25 bps rate cuts and only a 4.7% likelihood of Bowman’s view that there will be no rate cuts by the end of the year.
To continue reading the rest of today’s morning note, where you’ll find much more analysis of global equities and economic readings released this morning, read today’s full Morning Lineup with a two-week Bespoke Premium trial.
Jun 24, 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.
“A champion is someone who gets up when he can’t.” – Jack Dempsey
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 futures are pointing to a flat to slightly negative open this morning on what is going to be a quiet day of economic data. The only report on the calendar is the Dallas Fed Manufacturing report at 10 AM which is expected to come in slightly less worse than last month’s reading of -19.4. European markets started the week on a strong note with no specific news to act as a catalyst, but that doesn’t diminish the fact that the STOXX 600 is up a respectable 0.5%.
Like many stocks, Bitcoin has also found itself treading water for the last several months trying to hang on to the gains from the late 2023/early 2024 rally. This morning, prices are down another 4% near the $60,000 level. After peaking above $70,000 in March, prices have been drifting lower in a sideways range, and if the April lows in the $57,000 range don’t hold, it could be a long summer.
From a longer-term perspective, $65,000 seems to be a level that Bitcoin just can’t shake. In early 2021, it briefly flirted with that level and then quickly erased more than half of its value. Later that year, it got there again and managed to stay there for a few days before crashing over 75%. It took two years and a few months to get back there again, and this time Bitcoin managed to hang around $65,000 again and even take out $70,000, but that level has failed to hold again.
While the recent pullback in Bitcoin looks steep on an absolute basis, relative to its history, 17% is nothing. The chart below shows historical drawdowns in Bitcoin from a record high, and the average since 2011 has been 48%, meaning that on a little less than half of all days since 2011, Bitcoin has been down 50% or more from a prior all-time high.
To continue reading the rest of today’s morning note, where you’ll find much more analysis of global equities and economic readings released this morning, read today’s full Morning Lineup with a two-week Bespoke Premium trial.
Jun 21, 2024
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“Saying that you don’t care about privacy because you have nothing to hide is no different from saying you don’t care about freedom of speech because you have nothing to say.” – Edward Snowden
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
From where markets stand now, equities would finish the week with gains, after breadth in the S&P 500 came in positive yesterday for the third day in a row. That may not sound like much, but the last time the S&P 500’s A/D line was positive for three or more days was in the first week of May. To stay positive on the week, though, we’ll have to get through flash PMIs for the Manufacturing and Services sectors 15 minutes after the opening bell and then Leading Indicators and Existing Home Sales at 10 AM. In Europe this morning, flash PMI readings generally were weaker than expected while UK Retail Sales rose more than expected. Equities on that side of the Atlantic are down between 0.5% and 1%, but the losses still aren’t enough to fully erase the week’s gains.
You’ve probably heard a lot lately about how the end of June can be a tough time for the equity market, and below we show how the numbers have played out since 1980. Usually, the S&P 500 declines from the close on 6/20 through month-end. The S&P 500’s median change during the period has been a decline of 0.09% with positive returns just 44% of the time. Even in years when the S&P 500 was up sharply YTD heading into the last days of June, performance was still on the weak side as the S&P 500’s median change from the close on 6/20 through month end was a decline of 0.23% with gains just 43% of the time.
The silver lining? Over the last four years, the S&P 500 has been up during this period each time, and in the last three years, it has rallied 3.1%, 3.0%, and 1.4%, respectively. As strong as certain seasonal tendencies can be over time, there are always exceptions.
To continue reading the rest of today’s morning note, where you’ll find much more analysis of global equities and economic readings released this morning, read today’s full Morning Lineup with a two-week Bespoke Premium trial.
Jun 20, 2024
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“Why pay a dollar for a bookmark? Why not use the dollar for a bookmark?” – Steven Spielberg
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
While the US was closed in observance of Juneteenth, stocks worldwide were mostly higher, and US futures are playing catchup this morning as the Nasdaq and S&P 500 are indicated higher. At the same time, the Dow, which doesn’t include Nvidia (NVDA), is modestly lower. A bunch of economic data just hit the tape, and it was mostly weaker than expected. While jobless claims were only slightly higher than expected on an initial and continuing basis, Building Permits and Housing Starts were significantly weaker than expected. Those two reports covered the month of May, but the June Philly Fed Manufacturing report also came in weaker than expected, although it remained in positive territory.
Tech stocks are leading the charge again this morning as the ETF that tracks the sector (XLK) trades up more than 0.65% in the pre-market. Heading into today, the sector was already riding an eight-day winning streak, the longest since last November and the 31st such streak since the start of 1990. If the sector rallies again today, it would be the longest streak since September 1, 1990, and just the 17th such streak since 1990. In the chart below we show where each of the prior streaks that ended at eight days and those that stretched on to nine days occurred. Surprisingly, during the late 1990s, these types of streaks were pretty much non-existent.
While the Technology sector has had no problems hitting new highs this month, the same can’t be said for other sectors. Using June 18th as an end date, the chart below shows how many calendar days it has been since each sector’s 52-week high. The only other sector with a 52-week high in June is Communication Services. For three other sectors, their respective 52-week highs were just over a month ago, but for the majority of sectors, their 52-week highs were more than two months ago, including Real Estate where its high over the last year was nearly six months ago in late December!
To continue reading the rest of today’s morning note, where you’ll find much more analysis of global equities and economic readings released this morning, read today’s full Morning Lineup with a two-week Bespoke Premium trial.
Jun 18, 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 greatest danger occurs at the moment of victory” ― Napoleon Bonaparte
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
It’s only Tuesday, but futures are little changed ahead of what may feel like a Summer Friday as markets are closed tomorrow in observance of Juneteenth and the northern parts of the country bake in the first heatwave of the summer season. Between now and the closing bell, investors will still have to contend with Retail Sales at 8:30, Industrial Production and Capacity Utilization at 9:15, and then Business Inventories at 10 AM. How these reports come in relative to expectations will go a long way in determining whether the Nasdaq can stretch its current winning streak to a lucky seven. The first wave of these reports was just released as Retail Sales came in weaker than expected across the board, and April’s numbers were revised lower.
Overnight in Asia, Japan bounced from yesterday’s 1%+ decline with a gain of 1% while most other major indices in the region rallied by smaller amounts. In Australia, the RBA left rates unchanged at 4.35%, and Chinese Premier Li wrapped up his visit to the country and expressed optimism that the two countries could improve their ties. The tone in Europe is also positive this morning with the STOXX 600 up about 0.5%. CPI for May came in at 0.2% which was in line with expectations and down from April’s reading of 0.6%, but the ZEW Economic Sentiment Index showed a much smaller than expected improvement.
Just when the conversation over the divergence between the S&P 500’s price and breadth reached a fever pitch, the S&P 500 kicked off the week yesterday with a gain of 0.77% and a breadth reading of positive 214, the strongest daily breadth reading of the month! The lack of strong breadth readings would have been understandable in a steadily declining market. This month hasn’t been weak, though; more than half of all trading days have seen record highs!
Even after yesterday’s positive breadth reading, there have still been seven trading days over the last four weeks (20 trading days) where the S&P 500 traded higher on a day when more stocks finished lower than higher. That’s one of the largest number of negative divergences in four weeks since at least 1990, and the most since August 2020 when there was a record of eight days where the S&P 500 traded higher and breadth was negative. Back then, the narrative was that the mega-cap tech stocks would benefit the most from the lockdowns and the new world of working from, learning from, eating from, socializing from home, etc. Four years later (can you believe it’s already been four years?), these same (and some different), mega-caps are now seemingly the only ones with the scale to benefit from AI.
To continue reading the rest of today’s morning note, where you’ll find much more analysis of global equities and economic readings released this morning, read today’s full Morning Lineup with a two-week Bespoke Premium trial.
