Brunch Reads – 3/24/24
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.
While you’re here, join Bespoke Premium with a 30-day trial!
On This Day in History:
A Microbial Milestone: On March 24, 1882, Dr. Robert Koch, a pioneering German microbiologist, announced a groundbreaking discovery that would change the course of medical history. He identified the bacterium Mycobacterium tuberculosis as the causative agent of tuberculosis (TB), a devastating disease that was a leading cause of death at the time killing one in seven Americans and Europeans. Koch’s meticulous research and the introduction of Koch’s postulates established a new standard for linking specific pathogens to diseases. The discovery not only paved the way for developing treatments and diagnostics for TB, but also significantly advanced the fields of microbiology and infectious disease research. Dr. Koch went on to earn a Novel Prize in 1905 for his work.
Economic Trends
Carbone Red Sauce, Duck Breast: Walmart Tries to Lure Wealthy Shoppers (Bloomberg)
Walmart is integrating high-end products and brands, enhancing store aesthetics with wider aisles and better lighting, and featuring items like $50 silk sleep masks and deluxe comforters as it tries to attract wealthier shoppers who are traditionally more drawn to more upscale chains. With initiatives like improved lighting, the addition of mannequins, and the inclusion of luxury and on-trend brands, Walmart aims to shake off its budget-friendly reputation without alienating its core customer base. Early signs suggest the strategy might be working, with sales rising in renovated stores and a broader customer demographic, including households earning over $100,000, increasingly shopping at Walmart. [Link]
Saudi Arabia reportedly in talks with VC firms like Andreessen Horowitz to create mammoth $40 billion AI fund (CNBC)
To diversify away from oil, Saudi Arabia has been investing billions into stake purchases and joint funds with companies like Uber, Bank of America, Citi, SoftBank, and Blackstone. Now, the country is in talks with Andreessen Horowitz to establish a $40 billion fund for AI. Andreessen Horowitz is one of Silicon Valley’s largest venture capital firms and has substantial experience with AI-related investments including major companies like Facebook and close to 100 startups. [Link]
Streamers like Netflix and Disney+ have a Gen-Z problem (Business Insider)
Entertainment giants like Disney and Warner Bros. Discovery have their hands full with Gen Z, who show a strong preference for social video and live streams over traditional TV shows and movies. Deloitte’s research indicates that Gen Z’s viewing habits are driven more by social media creators than streaming service algorithms. With Gen Z also more influenced by social media ads than streaming ads, the future of streaming services may need a shift towards stronger social media engagement and creator-driven content to remain relevant to this key demographic. Sounds like more good news for YouTube! [Link]
Once America’s Hottest Housing Market, Austin Is Running in Reverse (WSJ)
Austin, Texas, which once epitomized the pandemic-driven housing boom fueled by low borrowing costs, an influx of remote workers, and companies like Tesla and Oracle relocating there, is now experiencing the most significant downturn in home prices and apartment rents in the US. Overbuilding and a slowdown in job and population growth have led to a surplus of luxury apartments and unoccupied office space, signaling a reversal from the city’s previous hot market status. Despite a national dip in the housing market, Austin’s situation is unique, with prices dropping over 11% since their peak in 2022, the largest decrease in any metro area. [Link]
AI & Technology
Elon Musk Just Added a Wrinkle to the AI Race (The Atlantic)
Elon Musk has escalated his ongoing feud with OpenAI by launching xAI and releasing Grok, its AI model, for free public use, challenging OpenAI’s GPT-4. Musk criticizes OpenAI for straying from its original open-source ethos in favor of profit. Major tech companies have started to open-source their AI models, contrasting OpenAI’s secretive approach. This movement raises questions about the balance between secrecy and accessibility in AI development, especially regarding the potential risks and ethical concerns. [Link]
Evaluating the Effectiveness of Speed Cameras on Philadelphia’s Roosevelt Boulevard (Sage Journals)
A study conducted around Roosevelt Boulevard, one of Philadelphia’s most dangerous roadways, assessed the impact of speed cameras on reducing traffic crashes, injuries, and fatalities. The study leveraged AI to identify control segments and compared the treated sections of Roosevelt Boulevard with these controls. The research found a significant decrease in crashes, injuries, and fatalities on Roosevelt Boulevard after the installation of speed cameras, with reductions on the higher end of what is typically found in the academic literature on speed cameras. [Link]
Health & Wellness
Viagra Could Be Good for Your Brain (WSJ)
Recent research from the Cleveland Clinic indicates that Viagra, known generically as sildenafil, may have the potential to prevent or reverse Alzheimer’s disease. This discovery was facilitated by AI, which helped identify sildenafil among over 1,600 FDA-approved drugs as having significant interactions with Alzheimer’s pathology. Observational studies and tests on neurons derived from Alzheimer’s patients showed that sildenafil could increase brain cell growth and decrease toxic tau levels. Further analysis of patient databases suggested a reduced risk of Alzheimer’s diagnosis among sildenafil users. [Link]
Privacy & Law
SEC Charges Two Investment Advisers with Making False and Misleading Statements About Their Use of Artificial Intelligence (SEC)
The SEC recently settled charges against Delphia Inc. and Global Predictions Inc. for making false and misleading statements about their AI usage. Both firms were accused of misrepresenting their AI capabilities in various communications, including SEC filings, press releases, websites, and social media. Delphia claimed that it “put collective data to work to make our artificial intelligence smarter so it can predict which companies and trends are about to make it big and invest in them before everyone else” while Global Predictions claimed to be the “first regulated AI financial advisor.” Both claims were false and resulted in a combined total of $400,000 in civil penalties. [Link]
General Motors Quits Sharing Driving Behavior With Data Brokers (NYT)
Following last week’s Brunch Reads article, General Motors has ceased sharing data on driver behavior with data brokers LexisNexis Risk Solutions and Verisk, which had been used to create risk profiles for the insurance industry and therefore negatively impact insurance rates for some drivers. The controversy has sparked a class-action lawsuit against GM, OnStar, and LexisNexis, highlighting concerns over privacy and the use of personal driving data. The decision to cease data sharing will help prioritize customer trust in the reversal of a controversial practice. [Link]
Sports
How one fan picked the greatest March Madness bracket ever built (ESPN)
In March 2019, Gregg Nigl, a neuropsychologist from Ohio, unknowingly set a record with the most accurate NCAA men’s basketball tournament bracket in history, correctly predicting the first 49 games. Planning to enjoy a family trip to Vermont, he filled out brackets focusing on his favorites like Michigan and Gonzaga, and even an underdog, UC-Irvine, without much expectation. Struck by illness right before the trip, he was unaware of his bracket’s success until notified by the NCAA during his vacation. His miraculous streak came to an end after 49 correct picks, but the experience led to a special trip to Anaheim for the Sweet 16 with his son. [Link]
Are you ready for Opening Day? Here’s your guide to the offseason chaos that rocked MLB (ESPN)
The 2024 MLB offseason has been one for the history books, filled with high-profile signings and a flurry of other moves to reshape the competitive landscape. Highlights so far include the Cubs hiring a rival team’s manager for a record contract, the Phillies investing heavily in their pitching duo to keep their championship window open, and the Dodgers making a splash by signing Shohei Ohtani to a groundbreaking contract (the article was written before his latest betting scandal). Other include the Diamondbacks continuing their upward trajectory with key acquisitions, and the Yankees making a bold trade to acquire Juan Soto. As Opening Day approaches, the reshuffled deck promises an intriguing 2024 MLB season. [Link]
Environmental
How a Colombian City Cooled Dramatically in Just Three Years (Reasons to be Cheerful)
In Medellín, Colombia, a pioneering “Green Corridors” project is transforming the urban landscape to combat the heat island effect. Launched in 2016 under Mayor Federico Gutiérrez, this initiative has developed 30 Green Corridors, adding over 2.5 million plants and 880,000 trees to the city. These efforts have not only cooled the city by 2°C but also improved air quality and biodiversity. It hasn’t all been easy though, as pollution, maintenance, and homelessness have all been hindrances. [Link]
Suburbia Is the Real Battleground for Electric Cars (Heatmap News)
The transition to EVs is not uniform across the United States, with urban areas adopting them at a faster rate compared to rural regions due to concerns like charging infrastructure and winter range reduction. However, the urban majority, which constitutes 83% of Americans, lives in conditions well-suited for EV use, making cities the focal point for reducing transportation emissions. In suburban America though, residents typically have higher incomes, which correlates with larger carbon footprints due to increased driving and larger homes. Suburbanites also have the potential means to afford EVs and the necessary home infrastructure for charging. As suburban areas often sit politically and culturally between urban and rural extremes, targeting these regions for EV adoption could be key to achieving broader acceptance and use of electric vehicles. [Link]
Biden to Award $6 Billion to Decarbonize US Heavy Industry (Yahoo News)
The Biden administration plans to distribute up to $6.3 billion in grants to industries that are difficult to decarbonize, such as cement, glass, chemicals, metals, and pulp and paper. Together, these industries contribute to nearly a quarter of US emissions. The grants aim to support the transition to lower-carbon technologies, aligning with the White House’s goals to significantly reduce greenhouse gas emissions by 2030 and achieve net zero by mid-century. The funding, largely from the Inflation Reduction Act, will support projects like hydrogen-based steel production and the construction of a new primary smelter for aluminum. [Link]
Read Bespoke’s most actionable market research by joining Bespoke Premium today! Get started here.
Have a great weekend!
The Bespoke Report – 3/22/24 – Was That Supposed to Happen?
To read our weekly Bespoke Report newsletter and access everything else Bespoke’s research platform has to offer, start a two-week trial to Bespoke Premium.
Bespoke’s Morning Lineup – 3/22/24 – Taking a Breather
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.
“Don’t be afraid of failing. Don’t be afraid of making an ass of yourself. I do it all the time—and look what I got.” – William Shatner
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
Everything tends to move faster these days- except in sports where time seems to stand still. Did you watch the last four minutes of any of yesterday’s games? While the NCAA tournament is only just tipping off, the first Masters in Augusta started on this date in 1934. Today, because of TV and ratings, they don’t start the tournament until April after the college basketball champion has been crowned.
The Masters may have only been pushed out by a few weeks relative to when it first started in the 1930s, but the NHL’s Stanley Cup Championship is almost a summer event. Like the Masters, the puck was also dropped on the first Stanley Cup hockey Championship series on this day in 1894. These days, the playoffs (second season) don’t even start until the second half of April and last year, the Vegas Golden Knights didn’t clinch the cup until June 13th!
The markets are still as fast as ever, but this morning is quiet in terms of data. There’s no economic data on the calendar, and after a flurry of earnings reports after the close yesterday, no reports are hitting the tapes. That leaves investors with the opportunity to think about the barrage of central bank decisions that were released around the world over the last four days and ponder the fact that despite all of it, the S&P 500 is on pace for its best week of the year. That, or you can just enjoy the basketball, complain about your busted bracket, and wonder what if the refs hadn’t blown the whistle on a phantom foul at the end of the Kansas-Samford game.
Not only is the S&P 500 on pace for its best week of the year, but the stock markets of major global economies have been rallying in unison. As shown in the snapshot from our Trend Analyzer below, the ETFs of the G7 countries are all heading into the last trading day of the week at overbought or ‘extreme’ overbought levels. They’re all sitting on comfortable YTD gains with Japan and Italy both up over 10% while the UK trails the pack with a gain of ‘only’ 2.5%. The last five trading days have seen a similar pattern play out. Five of the seven country ETFs are all up over 1% in the last week, Germany has eked out a gain of 0.51% and Kentucky France is down 0.31%.
Read today’s entire Morning Lineup.
For more analysis of global equities and economic readings released this morning, read today’s full Morning Lineup with a two-week Bespoke Premium trial.
IPO Activity Slow to Recover
The talk of the day is the debut of Reddit (RDDT) on public markets. The stock priced at the top of its expected range, and at the intraday highs traded 70% above the IPO price of $34. While Reddit’s debut places some attention on new companies, overall IPO activity remains muted. In the chart below, we show the average monthly IPO issuance on a rolling 12-month basis in terms of both the number of companies and the $-value of those stocks. Following record issuance in the first couple of years of the pandemic, IPO activity has cratered to some of the lowest levels since the Financial Crisis. While there has been some recovery in IPO activity and Reddit (RDDT) puts IPOs back into the spotlight, there is still plenty of room to recover to levels observed over the past decade.
While not a perfect measure of recent IPOs, the Renaissance IPO ETF (IPO) seeks to track the space. Even though IPO activity has been weak, the ETF has been trending higher over the past year. With the most popular IPO in some time happening today, the IPO ETF has risen to 52-week highs right off extreme overbought levels.
Bespoke’s Morning Lineup – 3/21/24 – A Flock of Doves
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.
“We live in a world defined by the rapid pace of technological change.” – Jerome Powell
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
Since yesterday’s close, we’ve seen multiple important central bank decisions from around the world (all discussed in today’s Morning Lineup), and at the margin, they have all been more dovish than hawkish with the Swiss Central Bank even announcing an unexpected rate cut. This morning’s economic data has also been positive with all three reports (Philly Fed, initial jobless claims, and continuing claims) coming in slightly better than expected. These trends have been good enough to push equity futures near their highs of the morning after stocks around the world rallied overnight.
The positive reaction to yesterday’s Fed decision and subsequent press conference was largely tied to the fact that, despite February data showing that progress on inflation has stalled, Powell showed little concern that the trajectory has changed. Within the dot plots, uncertainty over the Fed’s inflation forecasts appears to be declining, which indicates that the committee is more confident that inflation is still moving towards its 2% target. While a May rate cut, at this point, is out of the question, the market is fine with that if the ultimate direction of rates is still lower.
Yesterday’s reaction to the announcement and subsequent press conference was a complete 180 versus January. Back then, stocks were lower heading into the announcement and only fell further once Powell started talking and essentially took a cut at yesterday’s meeting off the table. Just as we live in a world defined by a rapid pace of technological change, the way the market reacts to Powell Fed meetings may also be starting to shift.
Yesterday’s reaction to the statement (purple) also bucked the general long-term “Powell plunge” on Fed days since he became chair in 2018. As shown in the chart below, whether you look at his entire tenure as Fed chair or break it up into different slices during that period, Jerome Powell has not exactly been a stock market whisperer.
With a gain of 0.89% for the S&P 500 yesterday, it ranked as the 14th best single-day performance on a scheduled Fed Day of the 48 since Powell became the chair in March 2018. Not only that, but it was also the 8th best post-decision performance of his tenure. Ironically, all the other days where the S&P 500 had a better post-meeting reaction have occurred since December 2021, essentially when the Fed started to telegraph the most recent tightening cycle.
To further illustrate how the market tide towards Fed decisions has been shifting, while the post-meeting reaction in January was one of the more negative post-meeting reactions under Powell’s tenure, the two meetings before that in November and December, were greeted warmly by the market (6th and 7th best under Powell’s tenure) and looked very similar to yesterday’s post-meeting reaction. If rate hikes are out of the equation, investors are willing to be patient with the timeline of rate cuts.
Read today’s entire Morning Lineup.
For more analysis of global equities and economic readings released this morning, read today’s full Morning Lineup with a two-week Bespoke Premium trial.
Yen Weakness Continues
Following Tuesday morning’s widely anticipated decision from the BoJ to end the era of negative interest rates, BoJ Governor Ueda reiterated his view that it was “important to keep conditions accommodative” due to his view that there is “still some distance for price expectations to hit 2%”. While the move out of negative rates was hawkish at the margin, it was also well-telegraphed in advance. Just as important, officials maintained their plans to keep policy easy. As a result of the actions and comments, the Japanese yen sold off on the news, and even though markets are closed for the Vernal Equinox today, it has continued to sell off in trading today. As shown in the chart below, the yen is once again testing the 152 level, an area where it has run into resistance multiple times in the last couple of years. The chart of the yen is starting to look a lot like a cup and handle formation which, from a technical perspective, is considered a positive pattern. This would imply that any breakout above the 152 resistance level would be followed by a weaker yen.
Taking a very long-term look at the yen, the roughly 152 resistance level has been in place for decades. The yen also weakened (rising price in the chart) towards those levels back in the late 1990s and late 1980s before rallying (falling in the chart). If the yen does manage to take out that 152 resistance level in the weeks/months ahead, there would be very little resistance between here and 200, and that would likely have some pretty major macro ramifications for capital flows in Japan and around the world.
Bespoke’s Morning Lineup – 3/20/24 – Muted Breadth
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 give up, for that is just the place and time that the tide will turn.” – Harriet Beecher Stowe
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
Happy Fed Day! After opening lower and rallying throughout the trading day yesterday, futures are more contained this morning but indicated to open slightly higher on the day as traders await the latest policy decision from the FOMC. It may sound hard to believe with the S&P 500 closing at a record high yesterday, but given last week’s hotter-than-expected inflation data, the market seems to be more worried about some hawkish commentary from Powell. Therefore, if there is no change in his commentary from prior speeches in the last several weeks, that could pave the way for some further gains.
Overnight in Asia, Japanese markets were closed for the Vernal Equinox, but that didn’t stop the Yen from continuing its post-BoJ slide versus the dollar. Other indices in the region were mostly positive with China up 0.6% and back above its 200-DMA while Korea rallied over 1%. In central bank news, BoJ governor Ueda said that easy monetary policy will remain in place for the bank to reach its inflation target, while in China, the PBoC kept its one and five-year loan rates unchanged.
In Europe this morning, it’s been a mixed back with Germany trading up about 0.30% while France is down 0.5% with most other major countries somewhere in between. There was some good news on the inflation front as both German (PPI) and UK (CPI) data came in below forecasts, and this comes after comments yesterday from ECB Governor Kazaks who said he was comfortable with where the market was on rate cuts this year (three).
The S&P 500’s advance-decline (A/D) wasn’t particularly extreme yesterday, but relative to the last several weeks of subdued readings, it stood out. As shown below, at +269 yesterday’s A/D line was the largest single-day reading in just over a month (2/15). While strong daily breadth readings have been hard to come by lately, significantly weak daily breadth readings have been uncommon in recent weeks. Last Thursday’s daily reading of -281 was also the lowest single-day reading in over a month (since 2/13). As shown in the chart below, while these two daily readings were extreme relative to the last month, they hardly stand out from a long-term perspective. In fact, over the last five years, the S&P 500’s average daily breadth reading was +/-212, so readings in the 200s have hardly been extreme.
The fact that breadth has been subdued on both the upside and downside means that overall market breadth has remained on a solid footing. As shown in the chart below, just like the S&P 500, its cumulative A/D line also made a new high as of yesterday’s close.
Read today’s entire Morning Lineup.
For more analysis of global equities and economic readings released this morning, read today’s full Morning Lineup with a two-week Bespoke Premium trial.
Bespoke’s Morning Lineup – If at First You Don’t Succeed
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.
“Destiny is not a matter of chance, it is a matter of choice; it is not a thing to be waited for, it is a thing to be achieved.” – William Jennings Bryan
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 not a pretty morning for risk assets as two of the areas of the financial universe that had been the subject of the most investor enthusiasm – AI and crypto – are getting hacked this morning. In the AI space, after Jensen Huang’s keynote speech yesterday, investors are taking a sell-the-news reaction. Despite countless companies issuing press releases that they were “working”, “collaborating”, or “partnering” with Nvidia (NVDA), the stock is down just over 2% in the pre-market. The sell-the-news reaction also applies to Super Micro Computer (SMCI) which just announced that it was selling 2 million shares of stock. Based on yesterday’s closing price, that works out to $2 billion or just under 4% of the company’s market cap. In crypto, bitcoin is trading down over 6.4% in what would be its worst day in just over a year. Bitcoin is currently trading at just over $63,000, but overnight on one exchange (BitMex), it crashed down to $8,900 due to a large number of sell orders totaling $55.5 million. For an asset class that is worth over $1 trillion, a $55 million sell order causing a crash of that magnitude certainly doesn’t suggest a lot of liquidity.
On the economic calendar, Building Permits and Housing Starts were just released and both reports exceeded forecasts. Along with that, January’s reports were also revised higher. These better-than-expected housing numbers also follow yesterday’s better-than-expected homebuilder sentiment report.
For Williams Jennings Bryan, his destiny was clearly not to become President of the United States. Along with Henry Clay, Bryan is one of only two people to unsuccessfully run for President of the United States on the ticket of a major political party three different times (1986, 1900, and 1908). Do you know the other person? Benjamin Franklin (who it wasn’t) once said that “energy and persistence conquer all things” but for Bryan, his political career ended with “three strikes and you’re out”.
Like Bryan, the emerging markets ETF (EEM) is currently making its third attempt since the start of 2023 for a breakout above $42. There’s still time, but the last couple of days have seen the ETF’s momentum start to slow putting its ‘destiny’ of a move into the high 40s in question.
Whether or not EEM breaks above resistance will be dictated in large part by the performance of Chinese stocks which account for more than a quarter of the ETF’s holdings. Chinese stocks have been in a steady downtrend for most of the last year. For much of that period, the 50-day moving average acted as consistent resistance, but after breaking above that level after the Lunar New Year holiday, the Shanghai Composite made a beeline right for the 200-DMA. It successfully closed above that level on Monday for the first time since last August, but the ‘breakout’ didn’t last long. Last night, the Shanghai Composite fell over 0.75% and back below its 200-DMA. Unfortunately, the Shanghai Composite’s one-day above its 200-DMA wasn’t even long enough to qualify as a streak.
At 143 trading days, the Shanghai Composite’s streak of closes below its 200-DMA was the longest since November 2022 and the tenth time since China entered the World Trade Organization (WTO) in late 2001 that it closed below the 200-DMA for six months or more. While the break above the 200-DMA may sound like a positive technical development, historically it hasn’t been. In the year that followed those nine prior streaks, the Shanghai Composite’s median performance was a gain of 4.0% with gains 56% of the time.
Read today’s entire Morning Lineup.
For more analysis of global equities and economic readings released this morning, read today’s full Morning Lineup with a two-week Bespoke Premium trial.
Homebuilder Sentiment Back to Expansion
Earlier today, the National Association of Home Builders published its March reading on homebuilder sentiment. The headline index rose back above 50 and into expansionary territory. Albeit back in expansion, the index is only at the highest level since last July, and that is well below much of the past decade’s range.
The only sub-index of note was for future sales. This reading has risen month-over-month in four consecutive releases, which brings it up to match the June 2023 high.
On a regional basis, homebuilder sentiment is showing as much healthier in the Northeast and in the Midwest. While in the Northeast the index pulled back from a nearly two year high, the Midwest leaped 11 points month over month to the highest level since July 2022. That one month jump is tied for the fifth largest one month increase on record. The only larger recent increases were in June and July of 2020. As for the West and South, homebuilder sentiment rose and fell, respectively.
As homebuilder sentiment improves, the chart of the homebuilders, proxied by the iShares US Home Construction ETF (ITB), remains in its long term uptrend. Currently, the group remains overbought in spite of recently pulling back from its highs.
Finally, we would note that although homebuilders have been mostly headed higher, on a relative basis versus the S&P 500 (SPY), ITB has weakened a bit. Taking the ratio of ITB versus SPY, the homebuilders have been on an impressive string of outperformance over the past few years. However, that ratio has made a couple of lower highs since the end of 2023. While that is not to say the longer term trend is reversing, it has at least pumped the brakes so far this year.
Bespoke’s Morning Lineup – 3/18/24 – Rebound
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.
“Though the people support the government; the government should not support the people.”- Grover Cleveland
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 a slow week for stocks last week, bulls are running this morning. Overnight, Japan surged 2.7% ahead of a BoJ rate decision tonight, and China rallied 1%. European stocks are only modestly positive in early trading even as the Nasdaq is indicated to open up well over 1% and the S&P 500 is higher by about 0.7%.
It’s going to be a busy week in terms of global monetary policy, including the Fed on Wednesday. The big event for today, though, is Nvidia’s Developer conference which kicks off today with a keynote speech from CEO Jensen Huang today right after the market closes.
Although it may not necessarily seem like it, the S&P 500 and Nasdaq have now both been down for two weeks in a row. In what bulls are hoping will ultimately end up being a pause that refreshes, nearly half of all sectors have moved out of overbought territory, including Technology which was down nearly 1% last week. The sector is still up nearly 7% on the year which puts it in the number five position in terms of year-to-date performance, trailing Energy, Communication Services, Financials, and Industrials.
We touched on this briefly last week, but it’s been a pretty good couple of weeks for commodity-related stocks, and the two leading sectors last week were Energy and Materials with gains of 3.8% and 1.6%, respectively. Both sectors are at or very near ‘extreme’ short-term overbought levels, but from a longer-term perspective, they’ve forged very different paths. As shown in the one-year charts below, while the Materials sector (XLB) has been hitting 52-week highs on a near-daily basis for the last few weeks, the Energy sector is only now starting to test its 52-week highs from last fall. Does the sector still have enough gas in the tank to push through?
Read today’s entire Morning Lineup.
For more analysis of global equities and economic readings released this morning, read today’s full Morning Lineup with a two-week Bespoke Premium trial.