Apr 23, 2024
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Looking for deeper insight into markets? In tonight’s Closer sent to Bespoke Institutional clients, we kick off with a rundown of all the latest earnings (pages 1 and 2). We then recap today’s new home sales data (pages 3 and 4) in addition to showing how orders and backlogs look from recent homebuilder earnings (page 5). We finish with a review of today’s 2 year note auction (page 6) and an update of our Five Fed Manufacturing composite (page 7).
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Apr 23, 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 speak an infinite deal of nothing.”– William Shakespeare
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 missed yesterday’s segment on CNBC’s Overtime, check it out here.
Some of the positive tone from yesterday’s gain has followed through to this morning as equity futures are modestly higher and gold and oil both continue to give up ground. Yields are higher, so we couldn’t quite get the trifecta, but two out of three isn’t bad. Earnings reports have finally taken the spotlight, and this morning’s results have been positive with encouraging reports from General Motors (GM) and UPS. After the close, we’ll hear from Tesla (TSLA), Texas Instruments, and Visa (V). On the economic calendar, today’s reports include S&P PMIs for the Manufacturing and Services sector, New Home Sales, and the Richmond Fed reports.
A lot of the noise coming from the market is ultimately meaningless, but investors crave to find a cause for every effect. Analysts have blamed everything from the tax deadline to geopolitics, higher rates, or an overbought market. The fact that gold and the dollar – two of the biggest haven assets – both rallied throughout much of the decline suggests that geo-political concerns could have been a large factor. If, as gold’s price suggests, these anxieties are easing, it could bode well for future market performance.
Whatever the cause, 5% pullbacks in the stock market are incredibly ordinary. Since WWII, there have been 230 different periods where the S&P 500 declined 5% or more on a closing basis without a gain of 5% in between. That works out to once every four months, and besides the one we’re dealing with now (so far), every one of them has been followed by a new high. Some new highs took longer than others to achieve, but eventually, the market got there.
Yesterday was an interesting day for the market. The S&P 500 opened higher, quickly sold off in the morning, gave up nearly all its early gains, and then rallied into early afternoon only to drift lower into the close. For a nervous investor watching every tick, the emotional swings probably went something like the comments in the chart below.
We have no idea whether Friday’s close was the low point of this month’s decline, but what we can tell you is that yesterday’s intraday pattern is very common and the type of action you often see as the market is coming out of a low point in the decline. Going back over the last 30 years, we looked at the intraday performance of the S&P 500 tracking ETF (SPY) on the first trading day after the closing low of each of the 106-prior 5%+ S&P 500 declines. On a median basis, SPY has gapped up 0.58% at the open, but at some point, the market tended to dip and shake out the weak hands. At the intraday low, SPY’s median decline was 0.18% versus the prior day’s close, but it tended to finish the day with a median gain of 1.75%. Even though that first trading day after a closing low was positive, the median decline at the close from the intraday high was 0.36%. In other words, roller coaster patterns like Monday’s intraday chart frequently follow a market low.
Continue reading today’s Morning Lineup.
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Apr 22, 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 people who were trying to make this world worse are not taking the day off. Why should I?” – Bob Marley
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
Can we finally get an up day today? Equity futures are higher this morning, but as the last week has shown, that means nothing. There’s not much of a catalyst for the rally this morning, besides the market reaching short-term oversold levels. The only economic report on the calendar is the Chicago Fed National Activity Index, and even though this week’s earnings calendar is jammed-packed, today is relatively quiet with Verizon (VZ) and Truist (TFC) being the only major reports so far. After the close, things will also be relatively quiet, but we will get reports from SAP (SAP), Nucor (NUE), Cleveland-Cliffs (CLF), and Ameriprise Financial (AMP).
The S&P 500 had its worst week in over a year (-3.05%), so you would think that pretty much everything was down on the week. That wasn’t the case, though. In the S&P 500, there were actually 179 stocks that finished higher on the week (35.8% of the index), and four of the eleven sector ETFs finished the week higher. Utilities (XLU) and Consumer Staples (XLP) were both up over 1%, Financials (XLF) were up nearly 1%, and Health Care (XLV) was marginally higher. Granted, these aren’t the leadership sectors that market rallies are made of, so you know it’s a tense environment whenever you see defensive sectors leading, but it does show that investors aren’t just exiting equities en masse.
On the downside, the big drag was Technology. With a drop of over 6%, the sector had its worst week since early November 2022 just as the sector was bottoming. Behind Technology, Consumer Discretionary (XLY) and Real Estate (XLRE) were both crushed with declines of over 3.5%.
Technology is the biggest sector in the market, and its chart has started to show signs of breaking down. After last Monday’s break below the 50-DMA, the sector hasn’t been able to come up for air since, and it’s now trading closer to its 200-DMA than its 50-DMA. One potential silver lining is the fact that last Friday’s decline came to a close right at levels that coincide with the high before the late December peak that was followed by a brief but sharp pullback of nearly 5%. For comparison, the current decline in the sector has been nearly twice that at roughly 9%.
Continue reading today’s Morning Lineup.
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Apr 21, 2024
Welcome to Bespoke Brunch Reads — a linkfest of the favorite things we read over the past week. The links are mostly market-related, but there are some other interesting subjects covered as well. We hope you enjoy the food for thought as a supplement to the research we provide you during the week.
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On This Day in History:
The Surgeon’s Photograph: On April 21st, 1934, 90 years ago today, the Daily Mail published the “Surgeon’s Photograph” depicting the Loch Ness Monster. Captured by Dr. Robert Kenneth Wilson, a London gynecologist, the photograph showed what looked like the head and neck of a serpent-like creature emerging from the waters of Loch Ness in Scotland. For decades, the picture captivated the public and fueled speculation about the existence of a mysterious aquatic creature. Depending on your perspective, fortunately, or unfortunately, a hoax. The photograph is really a toy submarine attached to wood putty in the shape of a sea serpent’s head, but tough to tell in a low-quality photo from the thirties! We’ve come a long way with media and image quality, especially with smartphones and the introduction of AI. So, how tough would it be to pull something like this off today?
Microsoft’s AI Copilot Is Starting to Automate the Coding Industry (Bloomberg)
Microsoft’s AI Copilot, developed by GitHub using OpenAI’s GPT-4 technology, is revolutionizing the coding industry by automating routine tasks and allowing software engineers to focus on more complex problems. The ability to complete and translate code across programming languages is saving engineers hundreds of hours each month. This tool has garnered over 1.3 million users, including businesses like Goldman Sachs and Ford, helping GitHub stay competitive against rivals like Amazon and Google. Despite its benefits, Copilot still has limitations, such as occasionally generating outdated or buggy code, and requires careful usage by developers. [Link]
Crucial connection for ‘quantum internet’ made for the first time (Phys.org)
Researchers have successfully produced, stored, and retrieved quantum information for the first time. Quantum information is a bit like the data stored in your computer but operates under the rules of quantum mechanics, which allows it to behave in ways that regular computer data can’t. This breakthrough overcomes a big hurdle. Usually, quantum information gets lost or degrades when sent over long distances, just like a phone call might drop out in a tunnel. By using devices compatible with each other, information can be sent through existing telecom fibers, showing that it’s possible to build networks that can effectively handle this special type of information. [Link]
If you’ve got an EV, Google Maps is about to become much more valuable (Washington Post)
Google has announced updates to its Maps app to improve support for EV drivers, including a new tool to locate nearby charging stations with real-time availability and charging speeds. If you drive an EV, you know that “range anxiety” can be a real thing. Well, the updates also feature route planning for long trips with integrated charging stops and detailed navigational aids for locating chargers in complex places like parking garages and hotels. [Link]
Google who? Gen Z is searching on TikTok, YouTube instead (Axios)
Gen Z is turning its back on Google Search and instead using social media platforms like TikTok and Reddit for searches. This shift highlights their preference for quick, relatable content and their skepticism towards Google’s algorithm, which often prioritizes sponsored content. While Google still leads in overall search usage, the trend among younger users (18-24 years old) suggests a significant change in how information is accessed online. Have you tried some of the AI features out there in place of Google like ChatGPT, Snapchat’s AI, or even Meta’s brand-new Llama 3? [Link]
Meta adds its AI chatbot, powered by Llama 3, to the search bar across its apps (TechCrunch)
Speaking of Meta’s brand-new Llama 3, the social media giant has integrated its latest language model into the search functionalities of its primary apps including Facebook, Messenger, Instagram, and WhatsApp. Alongside this, Meta has introduced a new website, meta.ai, for easier access to its AI chatbot, and added features like faster image generation and the ability to transform images into GIFs. However, the widespread use of AI across its platforms raises concerns about content moderation, given the potential for AI to generate misleading responses. [Link]
Jamie Dimon Has a New Vision for Money in an AI World (BNN Bloomberg)
JPMorgan’s CEO, Jamie Dimon, envisions a future where AI enhances every aspect of the banking industry from trading, research, equity hedging and customer service, often as a “co-pilot.” Comparing AI’s impact to historical innovations like the printing press and electricity, JPMorgan is integrating AI to boost productivity and improve the quality of life for workers, but some jobs will be lost according to Dimon. Despite the push for a financial “super app” similar to those in China, Dimon foresees a trend towards multiple specialized apps in the US. When it comes to picking stocks though, Dimon doesn’t see AI being able to replace humans and pick flawlessly. [Link]
Wait, When Did the Schlubs of Silicon Valley Learn to Dress? (WSJ)
The tech industry has been known for its “disruptive” persona embodied by the style choices of executives like Mark Zuckerberg and Jeff Bezos. Meta’s CEO, Zuckerberg, has long opted for a look that is about as dressed down as it gets, but recently, he’s been appearing in much more conventional and refined attire for those of his status. Perhaps the change in appearance has to do with increased competition and regulatory issues in the tech industry. TikTok’s Shou Zi Chew and Nvidia’s Jensen Huang are going for more mature and respectable styles as well, as a more polished appearance could help project stability and professionalism. [Link]
Environmental
Dubai’s Extraordinary Flooding: Here’s What to Know (New York Times)
Recent heavy rains in the United Arab Emirates and Oman have caused unprecedented flooding, leading to at least 21 deaths, submerged vehicles, clogged highways, and severe disruptions at Dubai’s airport. Despite the Arabian Peninsula’s low annual rainfall, it often comes in severe bursts, and global warming could make such extreme downpours more frequent and intense. The UAW also employs cloud seeding, a process that attaches tiny particles to clouds to enhance rainfall, but its impact on these specific storms remains unclear. The flooding of cities in arid regions like Sharjah shows how they are often ill-prepared for so much rainfall, lacking adequate drainage systems. [Link]
Record breaker! Milky Way’s most monstrous stellar-mass black hole is sleeping giant lurking close to Earth (Video) (Space.com)
The Milky Way has revealed a new stellar-mass black hole, discovered close to Earth and named Gaia-BH3. Found using the European space telescope Gaia, this black hole is 33 times the mass of our sun and is just 2,000 light-years away, making it the second-closest black hole to Earth ever discovered. Unlike the supermassive black holes, Gaia-BH3 formed from the collapse of a massive star, offering unique insights into the population of dormant stellar black holes in our galaxy. [Link]
Economic Trends
Million-Dollar Analyst Jobs at Risk in China Research Pullback (Yahoo Finance)
Due to a prolonged market downturn and stricter regulations in China, firms are cutting costs by reducing staff, slashing bonuses, and imposing stricter performance metrics. For example, Guotai Junan Securities saw several senior analysts resign rather than accept pay cuts, and another brokerage in Shenzhen laid off 40% of its analysts. That’s a sharp U-turn from previous years when brokerages were expanding and offering high salaries to attract top talent. Additionally, policy changes that reduce trading fees and restrict paid research have further pressured the industry. These challenges are compounded by a general wariness among investors toward Chinese stocks, leading to a decreased demand for equity research. [Link]
Investments
The Headache at the End of the Costco Gold Rush (WSJ)
We’ve discussed the Costco gold bars here before, but selling them proves to be much more challenging than buying them. One buyer bought a gold bar for $2,000 and struggled to sell it close to market value, eventually settling for $1,960. Despite high consumer interest in gold as a hedge against inflation, the reality is that gold is not very liquid, and sellers often face immediate losses due to transaction fees and market discounts, nor does Costco offer buybacks or returns on its gold bars! [Link]
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Have a great weekend!
Apr 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.
“The best kept secret in the investing world: Almost nothing turns out as expected.” – Harry Browne
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 has formed a downtrend that is clear as day over the last three weeks, as shown in the 15-day intraday chart of the index below:
As we noted in last night’s Closer, the S&P 500 ETF (SPY) has opened higher and then closed down from that opening level for four straight trading days. This is a reversal from the intraday strength that we generally saw during the slow-and-steady rally seen from last October through March.
This morning, at least, it looks like SPY is set to open lower, and bulls will be looking for that gap down to be bought.
We discussed the Israel/Iran conflict in more detail in this morning’s Commentary, but notably, oil prices have pulled back significantly after an initial spike on news that Israel was indeed retaliating against Iran last night. Oil popped 4% on the news last night, but it’s down 5% from those levels and now trading lower on the day. You can see this action in the candlestick chart of oil below. For now, oil’s 50-day moving average has still not been breached.
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.
