It’s been the worst of times and the best of times for the Nasdaq 100, which marked the two-year anniversary of its record high from 11/19/21 over the weekend.  After falling over 35% from the record high through the October 2022 low, the Nasdaq 100 has since rallied over 50%, leaving it down just over 5% from its record high.  Like a QB scrambling all over the field only to end up getting sacked a few yards short of the line of scrimmage, the Nasdaq 100 has expended a ton of energy with little to show for it over the last two years.

While the Nasdaq 100 itself is down just over 5% from its record high, stocks in the index are down slightly more than that since 11/19/21 with an average decline of 6.3%. Among individual stocks, though, there have been some big winners and losers. Starting with the winners, the table below lists the 20 Nasdaq 100 stocks that have rallied 20% or more since the November 2021 peak.  Leading the way higher, shares of Vertex Pharma (VRTX) have rallied just shy of 92%, followed by Broadcom (AVGO), PACCAR (PCAR), Diamondback Energy (FANG), and O’Reilly Automotive (ORLY), which are all up over 50%.  We were surprised to see that while NVDA has been one of the top-performing stocks this year, since the 2021 peak, its 49.5% gain ranks only as the seventh-best performance.  Lastly, in terms of sector breakdown, Technology leads the way with six followed by Consumer Discretionary with four, and Health Care and Industrials with three each.

While there are just twenty stocks in the Nasdaq 100 that are up 20% since its peak two years ago, 21 of the index’s components are down 30% or more.  We list them in the table below.  Topping the list of losers, shares of Lucid (LCIC) have lost their charge with a decline of over 90%.  Behind LCID, though, there are another nine stocks that have been cut at least in half, including pandemic darlings Zoom Video (ZM) and Moderna (MRNA).  Some of the more notable names on the list include Tesla (TSLA), Netflix (NFLX), and QUALCOMM (QCOM).  Finally, at the sector level, just as they topped the list of winners, both Technology and Consumer Discretionary also top the list of losers with seven and five components, respectively. The only other sectors with more than one component were Health Care (4) and Communication Services (3).

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:

Four Score and Seven Years Ago: On November 19th, 1863, US President Abraham Lincoln delivered the famous Gettysburg Address. The 272-word speech, a cornerstone of American history, was given at the dedication of the Soldiers’ National Cemetery in Gettysburg, Pennsylvania four and a half months after the pivotal battle during the Civil War. President Lincoln redefined the war as a struggle not only for the Union but for the principle of human equality. He emphasized the ideals of democracy and liberty and ensured the “government of the people, by the people, for the people, shall not perish from the earth.” Of course, the Gettysburg Address did not receive universal acclaim at the time. In fact, the immediate reaction was largely divided. As history now remembers, the speech resonates as one of the greatest in the nation’s history and remains one that encapsulates its very meaning.

The Environment & Fossil Fuels

Drought Leaves Midwest Towns ‘Drier Than the Dust Bowl’ (WSJ)
Towns in Mid-America are experiencing severe water shortages due to a prolonged drought. Caney, Kansas, may run out of water by March, prompting conservation measures like a shortened school week. In Iowa, Belle Plaine and Osceola face significant water production declines and restrictions. The crisis is attributed to changing rainfall patterns and climate patterns, compounded by small towns’ limited capacity for major water infrastructure projects. Solutions being considered include emergency wells, water treatment plants, and potentially recycling wastewater, but challenges like aging infrastructure and funding constraints complicate efforts. [Link]

Analysis: China’s emissions set to fall in 2024 after record growth in clean energy (Carbon Brief)
China’s CO2 emissions are expected to decline in 2024 due to a substantial increase in low-carbon energy sources, particularly wind, solar, and hydropower. This follows a temporary rise in emissions in 2023, largely driven by a rebound in oil demand and sectors affected by pandemic policies re-started. This trend, while welcome, will be tough to maintain given the ongoing expansion of coal power capacity in the country. [Link]

U.S. and China Agree to Displace Fossil Fuels by Ramping Up Renewables (NYT)
The United States and China, the world’s two largest polluters, have agreed to increase renewable energy use to reduce fossil fuel dependence. This agreement does not commit China to phasing out coal use but sets goals for renewable energy expansion and emissions reductions. The deal, significant for the upcoming COP28 climate talks, shows both nations’ intent to transition to cleaner energy sources. [Link]

Housing & Real Estate

A town that became ‘one giant Airbnb’ is now facing a reckoning (Business Insider)
Hochatown, Oklahoma, a small town with a population of just 219, has experienced a dramatic transformation due to the influx of Airbnb rentals. Before the pandemic, the town had about 400 rental properties, but now it boasts 2,400, turning it into a major vacation destination. This growth has brought significant tax revenue but also challenges, such as a lack of professional public services and infrastructure issues like unpaved roads and unreliable water supply. The surge in Airbnb properties has led to concerns about an “Airbnbust,” where an imbalance between supply and demand impacts profitability for property owners. [Link]

The Share of Americans Who Are Mortgage-Free Is at an All-Time High (Bloomberg)
The number of Americans owning their homes outright has risen significantly, with nearly 40% of homes being mortgage-free by 2022, a 5% increase from 2012. This trend is driven by baby boomers, many of whom have refinanced to shorter-term mortgages, enabling faster loan payoff. The total number of mortgage-free homes grew by 7.9 million from 2012 to 2022. West Virginia leads with almost 53% of homes owned outright as older homeowners, if not choosing to stay in their current homes, move to more affordable areas. The news comes as new homebuyers get crushed by steep rates. [Link]

Lawler: New Census Long-Term Population Projections Are MASSIVELY Lower Than Previous Projections (CalculatedRisk)
The US Census Bureau’s 2023 long-term population projections for the United States are significantly lower than their 2017 projections. The main reasons for this stark difference are lower projected birth rates, higher projected death rates, and reduced expectations for net international migration. The updated projections will likely have significant implications for housing market analysis. [Link]

What the $2 Billion Realtor Lawsuit Means for Homebuyers and Sellers (US News)
A jury ruled against the National Association of Realtors (NAR) and major real estate brokerages in a class-action lawsuit (Sitzer v. NAR) alleging collusion to inflate agent commissions. The industry may see changes in commission models, moving towards referral fees or separate payments for buyer and seller agents. This shift could lead to more transparency in real estate transactions and a possible decrease in commission rates. [Link]

Automobiles

Hyundai to be First Automaker to Sell New Cars on Amazon (WSJ)
Hyundai and Amazon are partnering to sell new vehicles on Amazon’s platform, signifying a shift towards online car buying, a trend accelerated by the COVID-19 pandemic. Hyundai cars will also feature Amazon’s Alexa technology. The trend, pioneered by Tesla, is being adopted by other car manufacturers, with Ford planning transparent, online-based sales models for EVs. This partnership reflects the automotive industry’s evolution towards e-commerce and changing consumer buying habits. [Link]

The Myth of ‘Slowing’ EV Sales (Heatmap News)
Is EV demand really declining? This article suggests that EV sales are actually growing robustly, with a 60% annual increase in purely electric vehicle sales. The narrative of slowing sales mainly pertains to traditional automakers like Ford and GM, who are adjusting their strategies in response to Tesla’s price cuts and rising interest rates. Although there have been some major production issues, the market is becoming more competitive and affordable, with the average EV price decreasing and new models expanding the market. [Link]

Sweden’s Tesla Blockade Is Spreading (Wired UK)
Swedish workers, including mechanics, cleaners, electricians, and dockworkers, are striking against Tesla for its refusal to sign a collective agreement, crucial to Sweden’s labor norms. This escalating labor dispute involves various unions and actions like refusing to unload Tesla cargo, stopping cleaning services at Tesla locations, and halting deliveries. Former Prime Minister Stefan Löfven has publicly criticized Tesla for ignoring Swedish labor practices, but the impact on Tesla’s operations in Sweden, a key European market, is yet to be determined. [Link]

“Greedflation”

The ‘greedflation’ question: what have we learnt? (Financial Times)
The concept of “greedflation,” suggesting corporate greed contributed to recent inflation, has sparked some debate. While some attribute inflation to the pandemic, Ukraine war, and government stimulus, others argue that corporate power and supply chain bottlenecks also played a role. Some studies indicate that industries with more pre-pandemic pricing power were able to raise prices more easily amid supply disruptions. This suggests that while corporate efforts to boost margins may not be the sole cause of inflation, it is a factor worth considering in understanding the economic situation. [Link]

Flying Horses

Plane turns back to JFK after horse escapes on board (CNN)
Just last Thursday, November 9th, a Boeing 747 flying from JFK in New York to Belgium, had to return after a horse got loose in the cargo hold. The horse, which was one of fifteen being transported, became spooked by turbulence and jumped, getting trapped in its stall. Despite efforts to secure the situation, the horse suffered severe injuries and was euthanized after landing. The plane, after dumping fuel, returned to JFK and continued its journey to Liege with a delay. [Link]

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Have a great weekend!

The past couple of weeks have seen some relief in mortgage rates and a rebound in weekly mortgage applications as a result, but that positive housing market development didn’t show per the latest reading on homebuilder sentiment.  The NAHB’s Housing Market Index dropped to 34 in November and is only three points above the low from last December.

In the table below, we show the readings of each sub-index of the report as well as the month-over-month change and how those readings stack up versus history.  As shown, the month-over-month declines across the report were historically large with the six-point drop in the headline index ranking in the bottom 2nd percentile of all monthly moves with each sub-index also experiencing bottom 5% moves.

Regional homebuilder sentiment was more peculiar. Again, there were historic declines in the Midwest, West, and South. The Northeast went in the complete opposite direction as sentiment rose by 7 points.  Although that does not leave sentiment at a new high, the month-over-month gain ranks in the 87th percentile of all months on record.

Among a large slate of economic data released this morning, jobless claims disappointed with both initial and continuing claims coming in higher than expected.  For initial claims, the seasonally adjusted number rose meaningfully from an upwardly revised 218K last week to 231K.  That compares with expectations of a more modest increase to 222K.  That brings claims back to the highest level since the week of August 19th, and the 13K week over week rise was the largest since the first week of August.

On a non-seasonally adjusted basis, claims have continued their steady rise as is normal for this time of year.  At 215.9K, this week’s print was slightly higher than the comparable week last year, but also below those from the several years prior to the pandemic.  In other words, claims are deteriorating, but from what are still strong levels.

Continuing claims, on the other hand, keep looking worse every week. Continuing claims have now risen for eight straight weeks, bringing it up to 1.865 million. That surpassed a high from this past April to make for the most elevated reading since November 27, 2021.

As we have noted in recent weeks, the size of the move in continuing claims over the past couple of months has been comparable to the size of increases around prior recessions.  The same can be said for the consistency of upward moves in continuing claims.  As shown below, the eight straight weeks of higher readings is the largest since the spring of 2020.  Prior to that, most streaks of that size or longer occurred in the midst of a recession with the exception of the other two most recent instances in November 2018 and December 2019.