May 1, 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.
“You don’t need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beats the guy with 130 IQ.” – Warren Buffett
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
Many global markets are closed in observance of May Day today, and here in the US, most investors are close to crying “Mayday” after futures are firmly lower following yesterday’s sharp declines. It’s another busy day of earnings and economic data, and the big report overnight was from Amazon.com (AMZN) which is trading modestly higher. Several other smaller but notable companies like Super Micro Computer (SMCI), Starbucks (SBUX), and Skyworks (SWKS) are all trading lower, though. And that’s just the companies that begin with ‘S’! On the economic calendar, the ADP Payrolls report came in modestly higher than expected, but we still have JOLTS, ISM, and Construction Spending on deck. Also, don’t forget the Fed at 2 PM and Powell’s presser at 2:30.
April has historically been a positive month for stocks but not this year. The S&P 500’s 4.2% decline was only the weakest April since 2022 (-8.8%), but it was one of only seven Aprils since WWII where the S&P 500 declined more than 4%. Not only was the S&P 500 down in April, but it also broke a five-month streak of gains.
Five-month streaks of gains for the S&P 500 haven’t been uncommon. Since WWII, there have been 31 prior periods where the S&P 500 posted positive returns for five or more straight months. What made the recent streak unique is that every positive month was a gain of at least 1%, and there have only been nine of those since WWII.
In the charts below, we summarize the performance of the S&P 500 in the one, three, six, and twelve months following the first down month that ended prior streaks. While futures are lower this morning, and the S&P 500 is entering what has historically been a weak period in terms of returns, bulls can take some solace in the fact that median returns following the end of the prior 31 five-month winning streaks along with the median performance following five-month streaks of 1%+ gains have been better than the average for all one, three, six, and twelve month periods since WWII.
Speaking of a weak period for the market, like the recently ended streak, there have only been three other periods where the S&P 500 was up for at least five straight months and then declined in April. It’s a small sample size, but on a positive note, the S&P 500 was higher one, three, and six months later. One year later, though, performance was mixed with declines once, a paltry gain of just 2.4% another time, and a massive gain of over 22% following the streak that ended in April 1986.
Read today’s entire Morning Lineup.
For 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.
Apr 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.
“It was the best of times, it was the worst of times.” – Charles Dickens
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 were already lower ahead of the 8:30 release of the Employment Cost Index (ECI), and things have gotten worse since then as the report came in higher than expected (1.2% vs 1.0%). This year started with a high probability of multiple rate cuts as inflation was expected to decline. Now, the probability of even one rate cut has been marching toward zero as inflation remains stubbornly high. Still on the docket for today, we have the FHFA House Price Index at 9 Am followed by the Chicago PMI at 9:45 and Consumer Confidence at 10 AM. Outside of November 2023, which looks more and more like an aberration, the Chicago PMI has been below 50 since the fall of 2022, and with economists expecting a reading of 45.0 today, it’s not expected to get back into growth mode anytime soon.
After an impressive rally last week, push is coming to shove as the major averages face their first major test of the bounce in the form of the 50-DMA. While the S&P 500 finished the day higher yesterday, it didn’t quite have enough momentum to close back above its 50-DMA even though it traded briefly above that level intraday.
The picture for the Nasdaq looks similar as it closed just shy of its 50-DMA as well.
One reason for the S&P 500 and the Nasdaq not reclaiming their 50-DMAs is the fact that Microsoft (MSFT), the largest company in both indices, traded down 1% and finished close to its lows for the day.
It wasn’t all bad news from a technical perspective yesterday, though. After coming up just shy of the 50-DMA on Friday, the Philadelphia Semiconductor Index (SOX) opened just below that level on Monday and managed to break through to the upside on an intraday basis and remain there through the close.
While MSFT has been having its troubles recently, shares of Apple (AAPL) have caught a break over the last six trading days, and the former largest company in the world has rallied over 5% taking it back above its 50-DMA for the first time since late January ending what was the longest streak of closes below the 50-DMA since late 2015.
Read today’s entire Morning Lineup.
For 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.
Apr 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.
“Endure what is difficult to endure and to suffer what is difficult to suffer.” – Hirohito
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 been a quiet start to the trading week as equity futures trade modestly higher and US Treasury yields are modestly lower. The only economic report on the calendar for the day is the Dallas Fed Manufacturing report which is expected to improve slightly from last month’s reading of -14.4. Just because the week is starting quietly, though, doesn’t mean it will stay that way. In terms of earnings, this week is the second busiest of the reporting period, and the economic calendar is also jam-packed with Consumer Confidence, both the ISM Manufacturing and Non-Manufacturing reports as well as the Employment report on Friday.
While Japanese equity markets were closed for Showa Day, the yen has seen some wild moves overnight. When FX markets opened for trading last night, the yen sold off hard and the USD/JPY cross quickly crossed above 160 for the first time since 1990. It didn’t stay at those levels for long, though, and buyers stepped in and the yen rallied. After briefly dropping below 155, the cross is currently trading right around 156. As shown in the chart below, after breaking above 152 just over a month ago, the yen has become unhinged.
It’s not often that the USD/JPY cross sells off more than 1% in a session and then reverses all those losses and more to finish the day with a rally of more than 1%. Since 1989, that’s only happened seven other times. In terms of where in the yen’s cycle the seven prior reversals have occurred, there hasn’t been a clear pattern. The two in the late 1990s came during periods of yen strength (decline in the USDJPY cross), but the more recent occurrences were all clustered right around the end of a sharp rally in the cross (weaker yen).
Continue reading today’s Morning Lineup.
For 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.
Apr 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.
“Lots of companies don’t succeed over time. What do they fundamentally do wrong? They usually miss the future.” – Larry Page
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
Did you feel the breeze yesterday just after the close? Wall Street breathed a collective sigh of relief after the close yesterday, and instead of Alka-Seltzer coming to the rescue it was Alphabet (GOOGL) and Microsoft (MSFT) which both reported strong Q1 results. The gains in these stocks (and others) have helped offset the indigestion from Meta Platforms (META) after the close on Wednesday and Thursday morning’s whiff of stagflation. The only thing standing between now and a good finish to the week for equities was the 8:30 release of Personal Income, Personal Spending, and the PCE Deflator, and then after that, the 10 AM release of the UMich Sentiment report. Regarding the 8:30 data, Personal Income was in line with forecasts (0.5%), Personal Spending was higher than forecasts (0.8% vs 0.6%), and the PCE data was in line with forecasts. Bulls have taken the inline PCE data and run with it as investors had been positioned for a hotter reading.
24 hours ago, we were talking about how the decline in META was on pace to be one of the largest ever single-day declines in market cap on record. Today, it’s the opposite as the 12% gain in Alphabet (GOOGL) is on pace to be the second largest single-day increase in market cap ever. The chart below shows the largest ever single-day market cap increases in individual stocks on record and is based on data from a Bloomberg story in late February when Nvidia (NVDA) set the single-day record with a one-day gain of $277 billion. If these in GOOGL hold throughout the day, it will be the stock’s first entry on the top ten list compared to the four for Apple (AAPL), two for NVDA, and one each for Meta Platforms (META), Amazon.com (AMZN), and Microsoft (MSFT). MSFT is shown in the chart twice, but if the gains in GOOGL hold, the MSFT entry from 4/26/23 will fall off the list.
With its 12% increase this morning, shares of GOOGL are trading at an all-time high of $175. That’s not bad for a company whose critics have been saying fthat the company missed the AI future.
Shifting focus from Technology to the world of Industrials and real “stuff”, Caterpillar (CAT) got plowed yesterday after reporting weaker-than-expected revenues and noting that Q2 sales would be lower than they were in the same quarter in 2023. The stock fell over 7% and closed below its 50-DMA for the first time since November 30th.
Yesterday’s decline ended a streak of 99 trading days that the stock closed above its 50 and 200-day moving averages. That ranked as tied with three other periods for the sixth-longest streak of closes above both moving averages in the last forty years. We couldn’t help but notice that five of the eleven streaks shown lasted longer than 90 trading days but shorter than 100. Something about those streaks not being above to get into triple-digit lengths!
Continue reading today’s Morning Lineup.
For 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.
Apr 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.
“Move fast and break things. Unless you are breaking stuff, you are not moving fast enough.” – 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.
After three days of gains, a fourth doesn’t look likely today. The largest drag this morning is Meta Platforms (META) which is down over 15% after the company announced that Q2 revenues would be at the low end of prior forecasts and that expenses would rise more than expected. META isn’t in the Dow, so it’s not to blame for the 300+ point decline in those futures, but a 4% decline in shares of Caterpillar (CAT) and a 9% drop in shares of IBM are making their presence felt.
Besides the slew of earnings reports last night and this morning, we also have a lot of economic data to contend with. At 8:30, Q1 GDP, Personal Consumption, Core PCE, Wholesale Inventories, and Jobless Claims were all released. While jobless claims were better than expected, GDP came in weaker than expected (1.6% vs 2.5% estimate) but inflation readings were higher than expected, and that was followed by another leg lower in the futures. At 10 AM, the latest update on Pending Home Sales will be released followed by the 11 AM report on manufacturing from the KC Fed.
When it comes to breaking things, one thing Mark Zuckerberg has broken more than a few times is his company’s stock price. Based on where the stock is trading today, the market cap of META is on pace to decline by more than $100 billion for the third time in 2018 and the second time since the start of 2022. While all but a small number of companies in the world could only dream of reaching a market cap of $100 billion, META loses that much money in market cap about once every other year! That’s not to say that shareholders are upset with these declines- at least they shouldn’t be. Shareholders are feeling a bit bruised this morning, but from the start of 2018 through yesterday’s close, META’s stock is up 180% which is just about double the gain in the S&P 500. That margin of outperformance is narrower this morning, but there’s still a wide gap.
The chart below shows the one-day change in market cap in reaction to META earnings reports since the start of 2018. As mentioned above, today’s decline will be the third time that the company lost $100 billion in market cap in a single day. That includes the largest ever one-day decline for any US stock ($232 billion) in February 2022 (according to Investopedia). Besides the big one-day declines, META also owns the bragging rights to the second-largest ever single-day increase in market cap (according to Bloomberg) when it saw its market cap increase by $197 billion this past February. The only company ever to see a larger one-day increase in market cap was Nvidia (NVDA) when it added $277 billion also in February.
In pre-market trading, shares of META are around $423 per share which is down sharply from its recent highs, and also right in the middle of its gap from February. To fill that gap, META would have to trade down an additional 3%.
Given its enormous market cap, META’s decline is contributing to a decline of nearly 1% in the Nasdaq 100 this morning. That would only take the ETF back to a level it was trading at on Monday, and the next level of support doesn’t come into play until about $412, or about 2.5% below current levels. With stocks like Alphabet (GOOGL) and Microsoft (MSFT) due to report earnings after the close today, we should find out soon if those support levels will come into play.
Continue reading today’s Morning Lineup.
For 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.
Apr 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.
“Any product that needs a manual to work is broken.” – 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.
Equities are looking to make it three in a row, but skeptics aren’t holding their breath just yet. Driving the gains this morning is Tesla (TSLA), which is up more than 11% in reaction to what pundits have called a “terrible” report. The report was so terrible that this morning’s gap higher at the open will be the largest since October 2019. Whether that’s a reflection of what the pundits know or just how oversold the stock was heading into the report, we’ll leave it for you to decide. The economic calendar is quiet this morning with Durable Goods at 8:30 being the only report. Tomorrow will be a lot busier, though, so enjoy the calm while it lasts. The pace of earnings has been busy and will only get busier after the close when we’ll hear from Chipotle (CMG), Ford (F), IBM, Meta (META), and ServiceNow (NOW) to name a few.
A two-day rally of 2% may not sound that impressive based on how the market traded from November to March but compared to what we have seen so far in Q2, we aren’t turning our noses up on it. While the S&P 500 has rallied over 2% so far this week, on an equal-weighted basis, it’s up just 1.70%. Below we summarize the performance of individual stocks by sector. Not surprisingly, Technology stocks have experienced the most upside with an average gain of 2.50%, and right behind, stocks in the Health Care and Consumer Discretionary sector have seen average gains of over 2%. The only other sectors that have experienced better than average returns are Industrials (1.97%) and Real Estate (1.95%). To the downside, Materials is the only sector where the average stock is lower (-0.58%), but every other sector has averaged gains of at least 1%.
Continue reading today’s Morning Lineup.
For 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.
