Jul 11, 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.
“People generally see what they look for and hear what they listen for.” – Harper Lee, To Kill a Mockingbird
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 didn’t see yesterday’s segment on CNBC, you can view it here.
Bulls are taking a breather this morning as futures traded modestly lower ahead of the June CPI. We’re starting to get the first batch of earnings results for the season with reports from Pepsi (PEP), Delta (DAL), and Conagra (CAG), and the first impressions aren’t particularly positive. All three stocks are down at least 2% with DAL leading the losses with a decline of 8%.
The big report of the morning, though, was CPI which came in lower than expected at a level of negative 0.1% m/m. That’s the lowest level since May 2020. On a core basis, CPI increased 0.1% which was the lowest level since February 2021. Jobless claims were also lower than expected. While the earnings data left a lot to be desired for bulls, you couldn’t have asked for results in the economic data. In response, futures have erased their earlier losses and are now positive while the 10-year yield plummets to 4.20%. Thinking back to the surge into yesterday’s close, did somebody know something?
In a typical year, a net daily breadth reading of +311 for the S&P 500 wouldn’t raise much in the way of attention, but in 2024 which has been a year when leadership has been extremely narrow, a reading that positive stands out as one of the most positive breadth readings of the year. As shown in the chart below, there have only been six other trading days this year where the net daily advance/decline reading for the S&P 500 was higher. If it wasn’t for yesterday’s surge in the final 15 minutes of yesterday’s session, the breadth reading would have been much weaker at a level closer to +250.
Yesterday was also the sixth straight day that the S&P 500 closed at a record high which now ranks as the longest streak since an eight-day streak that ended in November 2021. Since late 1953, when the five-day trading week in its current form started, the current streak is the 23rd streak of six or more days with the longest being an eleven-day streak that ended on 7/10/1964.
With six record closing highs in a row, the total for 2024 is starting to pile up. With just one record closing high in 2022 (the first trading day of the year) and none in 2023, so far in 2024, there have already been 37 record closing highs. That already ranks as tied for the 14th most since 1954, but if the current pace keeps up between now and year-end (a big if), there would be 70 record closes which would be tied with 2021 for the second most trailing only the 77 records from 1995.
Jul 10, 2024
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“Constantly seek criticism. A well thought out critique of whatever you’re doing is as valuable as gold.” – Elon Musk
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
The S&P 500 will look to extend its current winning streak to seven days as markets approach the kickoff to earnings season later this week. Lower yields have provided a tailwind for stocks as the 10-year yield falls three basis points to 4.27%, Crude oil is also lower which doesn’t hurt. Powell will head to the House today for his second day of testimony, but the message will be the same as yesterday.
China released June PPI and CPI data, and as we highlight in today’s Morning Lineup, the country is exporting disinflation worldwide. In Europe, it’s been a quiet morning for data, but stocks are higher with the STOXX 600 up 0.6% and every major benchmark in the region up at least 0.5%.
Less than three months ago, shares of Tesla (TSLA) were down over 44% for the year and trading below $140 per share as sentiment towards the company and EVs in general took a major shift. In the 53 trading days since then, the stock has rallied 89%, yet they’re only up 5.5% YTD. In 2017, Elon Musk promised to build a roller coaster inside the company’s factory to shuttle employees from place to place. Musk may not have delivered on an actual roller coaster, but he’s given his shareholders one.
TSLA hasn’t had a down day yet in July, and you have to go back to June 24th for the last day the stock traded lower. That ten-day winning streak now ranks as tied for the third longest in the stock’s history, trailing only a 13-day streak that ended on June 13th last year and an 11-day streak that ended on January 8th of 2021. In those three prior streaks that lasted at least ten days, shares of TSLA were higher a month later all three times for a median gain of 7.9%, and three months later, the stock was higher two out of three times with returns of +99.1% (April 2020), -17.0% (Jan 2021), and 5.8% (June 2023).
This morning, shares are higher in the pre-market, and we think if there’s any stock that should take its streak “to eleven“, TSLA would be the most fitting. A seven-day streak for the S&P 500 and an eleven-day streak for TSLA? Why do we suddenly have an urge for a Slurpee?
Over that span of ten trading days, shares of TSLA have rallied more than 43% which also ranks as one of the largest 10-day gains in the stock’s history. Over that time, the stock has added more than $250 billion to its market cap, and surprisingly that doesn’t even rank at the top of the list. Back in late 2021 and early 2022, there were three different periods where the stock experienced larger increases in market cap over ten days.
Jul 9, 2024
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“In business, people are judged on results. In Washington, people are measured by their ability to get reelected.” – Ross Perot
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
Even with Senate testimony from Fed Chair Powell looming over the market, the S&P 500 and Nasdaq are poised to trade at record highs again this morning. Asian stocks were higher overnight led higher by Japan where the Nikkei jumped 2%. It’s a weaker tone in Europe, though, where the STOXX is down fractionally on little news. Here in the US, small business sentiment from the NFIB came in higher than expected after unexpectedly rising a point relative to last month. In earnings news, the only report of note was Helen of Troy (HELE), but the stock is getting slammed in the pre-market with a decline of 25% as the company noted weak consumer spending.
As the S&P 500 and Nasdaq hit new record highs again yesterday, volatility has been hanging out right near their lowest levels since the Covid pandemic. In a year where Presidential candidates on every side of the aisle have warned that the “future of the country” is at stake, do you think the market would be more edgy?
The fact that volatility isn’t even a teenager is unique. As shown in the chart below, since 1992, the VIX has been higher than its current level of 12.5 as of July 9th in every single election year. In 2020, the VIX was more than double its current level, but that was largely a factor of the Covid outbreak. Before 2020, though, the VIX was also uncharacteristically low in the summer heading into 2016.
The VIX is not only low for this time of year in an election year, but it’s also low relative to all years as of July 9th. As shown in the chart below, the median VIX reading for July 9th since 1990 has been just under 16 and is the lowest for this time of year since 2017 (11.2). It’s also the 6th lowest reading for this time of year since 1990. While low now, though, there’s a good chance that the VIX will move higher leading up to the election. Since 1990, the median maximum increase in the VIX during the four months following July 9th has been 8.9 points whereas in election years, the median increase over the following four months has been 13.1 points.
Jul 8, 2024
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“No matter who you are, the grass is never greener on the other side.” – Venus Williams
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
The winds of a negative start to the week have shifted overnight, and futures have turned positive as we approach the opening bell. Major Asian indices were lower last night, but Europe has traded positively. In the French elections, parties aligned with the left were able to outdo Le Pen’s far-right party, and with no party winning an outright majority, the extremes of each side will never materialize. Outside of Europe, cease-fire talks in the Israel-Gaza war have pushed oil prices lower. Back here at home in the US, there’s still a lot of uncertainty over whether President Biden will stay in the race, but calls for him to step aside have been slowly growing. From a market perspective, there seems to be little concern at this point
The economic calendar is quiet this morning with the New York Fed Survey of Consumer Expectations scheduled for 11 AM. Traders will be watching that report for inflation expectations, but unless there is a big move in the number, it shouldn’t have much of a market impact. There’s also not much on the earnings calendar this morning, although Corning (GLW) preannounced better-than-expected Q2 numbers citing strength in AI. Looking ahead, Friday marks the unofficial start to earnings season when the major banks report, but between now and then, we’ll hear from Delta (DAL), Pepsi (PEP), Conagra (CAG), and Progressive (PGR) which all report on Thursday.
Venus Williams may claim that the grass is never greener on the other side, but try telling that to small and mid-cap stocks. The snapshot below from our Trend Analyzer shows where US indices stand relative to their trading ranges. Whether you look at YTD returns, the last five trading days, or where each index finished off last week relative to its 50-day moving average (DMA), it’s a market of large and mega caps and everything else.
Of the fourteen index ETFs shown, seven are up over 15% YTD, were up at least 1% in the last five trading days, and are all at least 4% above their respective 50-DMAs. What do they all have in common? They’re all dominated by mega-cap stocks. The other seven index ETFs have fared much more poorly on both a YTD basis and over the last five trading days, and the key theme across all but one of these ETFs is the complete absence of any large-cap stocks let alone any mega-caps. The one exception is the Dow (DIA), and while mega-caps like Microsoft (MSFT), Apple (AAPL), and Amazon.com (AMZN) are all in that index, their combined weighting is ‘only’ 14% and other stocks like Nvidia (NVDA) and Alphabet (GOOGL) have no showing.
Investors have been waiting for months for the pendulum to shift back in favor of small caps, but like many lawns this summer, any signs of green have quickly faded.
Jul 5, 2024
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“Maintain a firm grasp of the obvious at all times.” – Jeff Bezos
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
Work on the day after July 4th? Life just isn’t fair is it? While many of us out here would prefer to use July 5th as a day to extend the July 4th holiday out an extra day, or even rest off a July 4th barbeque hangover, that wasn’t Jeff Bezos in 1994. Instead of going to the beach or taking an extra day, on this day thirty years ago Bezos started Abracadabra, which ultimately became known as Amazon.com (AMZN). In less than 30 years, this company has become one of the most valuable in the world. Thirty years to become the fifth largest company in the United States may sound impressive, but of the four that are larger, Microsoft (MSFT) and Apple (AAPL) are older after being founded in the mid-1970s, but NVIDIA (NVDA) is only a year older, and Alphabet (GOOGL) is four years younger.
Futures were little changed heading into the Non-Farm Payrolls report, as you would expect given the quasi-holiday, and the same went for Treasuries and crude oil. The market area seeing the most volatility this morning is in the crypto space where the release of assets tied to the Mt. Gox bankruptcy has raised fears of a wave short-term supply hitting the market.
The Non-Farm Payrolls report was just released, and just like last month, the headline reading came in stronger than expected while the Unemployment report was higher than forecast at 4.1%, the highest level since November 2021. Add to that, May’s originally reported number of an increase of 272K payrolls was revised down to 218K, so the blistering pace of the employment sector from a year ago no longer remains the case. As you might expect, treasuries caught a bid on the news and the 10-year yield is down 5 bps to 4.30%.
On the political front, major media outlets like Bloomberg are calling it a “Make-or-Break” weekend for the President saying that “most crucial for Biden will be an interview on Friday with ABC News, offering voters and allies the first unscripted, high-pressure look at the president since he faltered in his showdown with former President Donald Trump.” Whatever your politics, can we all agree that in this country’s nearly 250-year history, the bar for a “Make-or-Break” moment in a President’s administration has never been much lower than a taped interview?
If a monthly employment report drops on the Friday after July 4th when most people took the day off, does it count? That depends on the report. Today, we’ll get another answer as it will be just the fourth time in the last 25+ years that an employment report was released on the Friday after July 4th. In the chart below, we show the S&P 500’s intraday performance on the day of each of those prior three days, and based on that small sample size, you may want to be on the lookout for some volatility – at least more than a sub-13 reading in the VIX would suggest. In two of the three days, the S&P 500 was up at least 1%, while on the third and most recent occurrence (7/5/19), stocks fell 0.20%. Given the 1%+ daily moves on two of the three days, you would think that the reports deviated from expectations by a wide margin, but in 2002, the headline reading in Non-Farm Payrolls (NFP) was just 45K weaker than expected while in 2013, it came in 29K higher. Ironically, it was the 2019 report, when NFP deviated the most from expectations (+65K), that the S&P 500 had its smallest move. And what’s the deal with the shortened session in 2002, and who decided it was a good idea to make today a full trading day since then? Based on where futures are trading now, the S&P 500 looks to be following the low-volatility path of 2019, but there’s still a full session of trading left to go. Thanks, NYSE!
Jul 3, 2024
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“Prudence, indeed, will dictate that Governments long established should not be changed for light and transient causes.” – Thomas Jefferson, Declaration of Independence
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
S&P 500 futures are unchanged as we type this, and Dow and Nasdaq futures are also barely on either side of the unchanged line. That follows what was a positive night in Asia and morning in Europe. In Asia, China was the only country that traded lower as the Caixin Services PMI came in more than two points weaker than expected (51.2 vs 53.4). In Japan, the Services PMI was also weaker than expected but much closer to expectations (49.4 vs 49.8) while India’s PMI for the sector was slightly better than expected and firmly in expansion territory (60.5 vs 60.4). In Europe, all major equity benchmarks are in the green following a stronger-than-expected services sector PMI for the entire region, although Germany’s reading was weaker than expected.
There’s a lot of economic data on the calendar today, but the only reports released so far are the ADP Employment report and jobless claims. All of these reports were modestly weaker than expected which has caused some downward bias in futures, but the 10 AM reports on the Services sector and Durable Goods could move things further.
For those of us who will be working on Friday, we looked at historical market performance on July 5th. The chart below shows the performance of the S&P 500 every July 5th that the market was open since 1954 (when the five-day trading week in its current form first started). Overall, the day after our nation’s birthday, the S&P 500’s median performance has been a fractional gain of just 0.092% with positive returns only 58% of the time, so it’s not too much of a positively biased trading day.
This July 5th is also a Friday, and Fridays after a holiday are notoriously illiquid given the propensity to extend the weekend to four days. In the chart below, the bars shaded in dark blue indicate days when July 5th fell on a Friday. Of those nine days, the upside bias has been stronger with a median gain of 0.40% and gains two-thirds of the time.
Illustrating the potential illiquidity of these days, the largest daily decline and gain both occurred on July 5th Fridays. Ironically, the worst was in 1996 when the S&P 500 was up over 10% heading into July 4th and fell 2.2% on July 5th while the best day was in 2002 when the S&P 500 was down 16.3% heading into the July 4th holiday but then rallied 3.7% the next day. Whatever the market’s direction this Friday, a lot will depend on how the June Employment report shakes out. Don’t forget about that!
