Jun 5, 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.
“If you put the federal government in charge of the Sahara Desert, in 5 years there’d be a shortage of sand.” – Milton Friedman
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
This morning, we’re seeing a modestly positive tone in equity markets as treasury yields have barely moved. The risk-on mentality can be seen in Bitcoin where prices cracked back above $70K yesterday and now sit right around $71K. Overnight in Asia, India bounced over 3% while Japan and China both traded down nearly 1%. Service sector PMIs for both countries were better than expected. In Europe, the tone is more positive as Services sector PMIs were close to expectations indicating a modest expansion in that sector.
Back here in the US, the ADP Employment report for May just came out, and it came in weaker than expected at 152K versus forecasts for a reading of 175K. As shown below, the monthly reading has been right around these levels for ten months now, but it is well below the four-year average of 308K. With ADP out of the way, the only other report on the calendar is ISM Services at 10 AM.
Investors are closely watching a stream of employment data this week, including the just-released ADP report. But another insightful source often flies under the radar: Indeed’s job posting report.
This report provides valuable details on various employment trends, as we explored in last night’s Closer. One metric we find very useful is the percentage of industries on Indeed with job postings below their pre-pandemic baseline.
In the wake of COVID, job postings plummeted across all industries. However, from summer 2020 to summer 2021, this percentage steadily decreased. Remarkably, from August 2021 to early 2023, no industries fell below their baseline, reflecting an exceptionally tight labor market.
Over the past year, however, the labor market has begun to loosen. In recent weeks, the percentage of industries with below-baseline postings has reached 32%. While that means two-thirds of industries still have above-normal job postings, the trend suggests easing.
This aligns with other labor market indicators – employment remains strong but not strengthening. If the trend in Indeed job postings over the last several months continues, over half of all industries could see fewer job postings by year’s end compared to pre-pandemic levels.
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 4, 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.
“Never make excuses. Your friends don’t need them and your foes won’t believe them.” – John Wooden
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
Futures continue to show weakness from Monday as the S&P 500 and Nasdaq are indicated to open down by about 0.25%. Overnight in Asia and this morning in Europe, stocks also traded lower even as CPI in South Korea rose less than expected and employment data in Europe was weaker than expected. While the losses in Mexico on Monday were notable, stocks in India fell over 5.7% for the worst day since May 2020, more than erasing Monday’s gain of nearly 4% as initial optimism over the margin of victory for Prime Mister Modi receded.
We called it the Mexico Massacre in yesterday’s Closer report, which wasn’t an overstatement. Following the landslide victory for Claudia Sheinbaum and big gains for the Morena party, investors sold the peso and Mexican stocks on fears that the ruling party will pass constitutional reforms without any checks from the opposition leading to a less business-friendly environment.
Stocks in Mexico responded as you might expect, posting sharp declines. In local currency terms, the S&P/BMV IPC benchmark index tanked 6.11% for its worst day since the Covid crash and its 12th worst day on record.
After adjusting for the declines in the peso, US investors in Mexico lost 10% in a single day, or at least pretty darn close at 9.99%. That was also the worst day for the index since 3/9/2020 and the 12th worst since 1994.
It may not have been the worst day on record for Mexican stocks, but when the dust settled, Mexican stocks closed 4.43 standard deviations below their 50-day moving average (DMA), which works out to the most oversold level for the index on record!
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 3, 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.
“My father was frightened of his mother; I was frightened of my father, and I am damned well going to see to it that my children are frightened of me.” – King George V
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 an unusual surge into the close on Friday, futures have seen some follow-through this morning with Nasdaq futures leading the way as Asia and Europe traded higher overnight and this morning. It’s a busy week for economic data, so we should get a good read by the end of the week whether the economy is really starting to see a summer slowdown or starting to reheat after a cooldown. That in turn will greatly impact the thermostat for interest rates.
As mentioned above, Friday’s late-day surge was unusual as the S&P 500 was slightly lower heading into the final half-hour of trading but then surged 0.90% to close the session.
Since 1990, Friday’s last half-hour gain of 0.90% was the 132nd time that that index rallied 0.75% or more in the final 30 minutes of trading which isn’t uncommon. What is unusual, however, is the environment it occurred in. While these types of moves are commonplace during volatile periods like the Financial Crisis or Covid, it was the first time it ever occurred when the VIX was under 15. Including Friday’s move, the average VIX reading on these days was 37.5!
Not only was it the first time there was a rally of 0.75% in the last half hour when the VIX was under 15, but it was only the fifth time a rally of that magnitude occurred when the VIX was under 20. The table below shows the S&P 500’s performance following each of the prior four days. Unfortunately, if you are looking for a pattern following these prior occurrences, there isn’t one. A year later, the S&P 500 was down once, up modestly once, and up by double-digit percentages twice.
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.
May 31, 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 could stand in the middle of 5th Avenue and shoot somebody, and I wouldn’t lose voters.” – Donald Trump
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
Just kidding. We’ll keep the political discussion to a minimum. While last night’s verdict in the Trump hush money trial made for a big news event, its impact on the market has been negligible. Futures are modestly lower in the pre-market, but that’s likely more a factor of the 16% decline in Dell (DELL). There are also several notable economic reports at 8:30, including Personal Income, Personal Spending, and the PCE Deflator. Then, at 9:45 we’ll get a read of the manufacturing sector in May with the Chicago PMI. How these reports shake out relative to expectations will have a larger impact on the last trading day of May than last night’s verdict.
The verdict is only 15 hours old, but Trump’s odds of winning the November election have only declined modestly according to the site electionbettingodds.com. He still holds a 50.1% to 40.9% lead over President Biden in a head-to-head matchup, but on a generic party vote, the betting markets are much closer at 52.1% to 46.9%. These numbers are still very close, and the betting markets have about as much accuracy as Fed forecasts, so keep that in mind. However, whether you find yourself ecstatic or downtrodden over the results, there are still 158 days between now and Election Day, so find a hobby to keep yourself occupied.
Yesterday, Salesforce (CRM) had a reservation with the woodshed, and today it is DELL’s turn as the stock plunged over 15% in reaction to its earnings report after the close. At current levels, it ranks as the sixth worst one-day reaction among S&P 500 companies to earnings since earnings season started in April.
Concerning DELL itself, if the current pre-market decline holds, this will be the stock’s worst one-day reaction to earnings since May 2012. If it declines just a little bit more during the trading day, it could go down as the worst one-day reaction to earnings for the stock in its history as a public company since 2001.
CRM’s decline exacerbated what was already a period of weakness for the stock, but shares of DELL were on fire heading into the report. The stock had doubled since late February and was trading at ‘extreme’ overbought levels, so expectations were lofty, to say the least. Even after today’s decline, it is still well above its 50 and 200-day moving averages and is only back to levels it was trading at last week.
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.
May 30, 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.
“Finally, The End of Software is here.” – Marc Benioff, 2008
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’re just looking at futures on the major indices, things look a lot worse than they seem. That’s because a 15% decline in Salesforce (CRM) following its earnings results after the close yesterday makes its presence felt, especially on the Dow (more on that below). Outside of that report, investors remain defensive following a surge in rates earlier this week. Rates are lower this morning, but until we get through this week’s inflation data, it will be hard for investors to breathe any easier. In Europe this morning, stocks are generally higher led higher by Spain while the overnight tone in Asia was weaker with both the Nikkei and Hang Seng down over 1%.
A lot of economic data just hit the tape including GDP, Personal Consumption, PCE, and Jobless Claims. Overall, there were no major surprises, and on a positive note, the inflation aspects of the data were generally lower than expected.
Earnings season may have unofficially ended two weeks ago when Walmart (WMT) reported earnings on 5/16, but there have still been plenty of notable reports. Yesterday’s report from Salesforce (CRM) may have been one of the most notable. While the company reported better-than-expected earnings, it had a rare revenue miss and lowered guidance. The revenue miss was the first time the company missed since 2006! That was enough to send the stock plunging after hours, exacerbating what has already been a steady downtrend since its peak in early March. With the stock down over 15% in the pre-market, CRM is poised to close the gap higher from when it reported earnings late last November.
Within the S&P 500, CRM’s weight is just under 0.60%, so even with a decline of 15% in the pre-market, its impact on the index will be a negative hit of around 0.1%. Where CRM’s decline hurts, though, is on the performance of the Dow where its 4.6% weighting will cause a negative hit of around 275 points, or around 0.7%. As we noted yesterday, the DJIA is already underperforming the S&P 500 by a historically large margin YTD, so today’s move will widen the gap even more.
With today’s decline, CRM is also on pace to have its second-worst one-day reaction to earnings as a public company. The worst drop occurred in response to an earnings report in August 2008. Furthermore, the stock has only declined by 10% or more in reaction to earnings four other times in the last 20 years.
While it is not uncommon to see smaller companies react poorly in reaction to earnings, it’s unusual among large-cap companies in the S&P 500. Since the start of April, CRM will be just the 24th S&P 500 company to decline more than 10% in reaction to earnings and just the tenth to fall more than 15% if its current declines hold into the close. Of those companies listed below, though, CRM would be just the fifth to gap down more than 15% on its earnings reaction day.
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.
May 29, 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.
“It is not the mountain we conquer, but ourselves.” – Edmund Hillary
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
Tech led the way higher for the S&P 500 and Nasdaq yesterday, but the tone is more subdued this morning as futures move lower across the board. While no particular catalyst can be cited for the weakness, higher rates and higher oil prices never help. Following yesterday’s weak Treasury auctions, traders will have their eyes glued to the $44 bln offering of 7-year notes to see how that gets received.
Seventy-one years ago today, Edmund Hillary and Tenzing Norgay became the first known people to reach the summit of Mount Everest. Given the anniversary, it’s only fitting that yesterday was the first ever day that the Nasdaq “conquered” 17,000. Despite the Nasdaq’s achievement, if it was a mountain, measured in feet, 17,000 doesn’t even crack the world’s tallest 100 peaks and would be less than two-thirds the height of Everest.
The table below lists each 1,000-point threshold that the Nasdaq has crossed in its history. Yesterday’s cross of 17,000 was just a 6.3% gain relative to 16,000, but the 921 days that elapsed between the first cross of each threshold was the third longest span between 1,000-point thresholds in the index’s history. Besides the 8,928 days it took from inception to cross 1,000, the only two others that were longer were the 1,095 days between 1,000 to 2,000 and the 6,256 days between 5,000 to 6,000. You can argue that the Nasdaq has reached lofty levels, but since 11/19/21, it has rallied less than 6.3% which works out of 2.3% annualized. Cherry-picking? Maybe. But it does help to put things in perspective.
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.
