Since March 1st, three-quarters of companies have beaten consensus analyst estimates on the top and bottom line, while 16% have raised guidance. Given this, the number of stocks reporting a triple play—EPS and sales beat alongside raised guidance—has been back on the rise.  In the chart below we show the percentage of stocks reporting triple plays by quarter throughout the history of our earnings database dating back to 2001.  With strong beat rates over the past year, the rate of triple plays has ripped higher to unprecedented levels.  After a slight dip during the Q4 2020 reporting period, 14.1% of all earnings reports have been triple plays since March 1st.  That’s almost as high as the record reading of 14.6% seen during the Q3 2020 period.

One interesting aspect of earnings over the past year has been stock price reactions.  Perhaps due to a higher number of companies doing so, a company exceeding sales or EPS estimates or reporting a triple play has lost some of its luster.  Particularly for triple plays, historically these stocks have averaged a 5.22% rally on their first full trading day after earnings.  (For stocks that report after the close, we’re referencing its change on the next trading day.  For stocks that report before the open, we’re referencing its change on that trading day.)  In the two earnings seasons prior to the current one, the average full-day stock price reaction was not even half of that.  So far this earnings season, average reactions for triple plays remain well below the historic average, but they are improving.  Triple plays have averaged a 4.68% gain on Q1 earnings this year.  Reactions to earnings more broadly have seen the same dynamic play out.  Reactions in aggregate have been on the weak side but are recovering.

Not only have there been a higher number of triple plays with improving stock price reactions to boot, but the composition of the stocks reporting triple plays has also been changing.  In the charts below we show the percentage of stocks reporting triple plays by sector going back to 2001.  Historically, the Tech sector has dominated triple plays.  Going back to 2001, the average quarter would see 11.63% of the sector’s stocks report a triple play.  No other sector even touches double digits with the runner-up being Health Care with 7.33%.

While there are still plenty of earnings reports left on the docket this season, the reading at the moment for the Tech sector is at 23.93%. Although that is still extremely strong, more than double the historical average, it is lower for the second quarter in a row. Meanwhile, other sectors are seeing their shares of stocks reporting triple plays surge. For example, Industrials, Consumer Discretionary, and Materials currently all have a record percentage of stocks reporting triple plays.  Though not at records, Communication Services and Real Estate also have very high readings. When it comes to triple plays, the numbers are really expanding to sectors outside of Tech.  Click here to view Bespoke’s premium membership options for our best research available.

We got yet another data point on surging home prices today with the monthly release of Case Shiller indices.  These numbers are lagged by two months so they don’t exactly provide a real-time look, but at least through February, home prices continue to soar.  The table below shows month-over-month and year-over-year home price moves across the 20 cities tracked by the Case Shiller indices.  The west has seen a big jump lately with San Diego, Seattle, San Francisco, and Phoenix all rising more than 2% month-over-month.  Chicago and New York saw prices rise the least MoM at just 0.30% and 0.55%, respectively.

Nearly every city is up double-digit percentage points year-over-year.  Phoenix and San Diego are up the most YoY with gains of ~17%, while Chicago is up the least with a gain of 8.71%.  Click here to view Bespoke’s premium membership options for our best research available.

We like to look at home price trends relative to where they stood at various points during the mid-2000s housing bubble and subsequent crash.  The chart below looks at where home prices stand now versus the lows that were made in the early 2010s after the bubble burst.  As shown, the national index is now up 78% from its housing crash low, and eleven of twenty cities are up more than 100% from their lows.  Las Vegas, Phoenix, and Seattle are up the most with gains of more than 130%, while New York is up the least and the only city that’s not up more than 50%.

The better chart is the one that looks at where home prices are now relative to their high points at the peak of the prior housing bubble.  We’re now more than fifteen years removed from the prior peak for home prices in 2005/2006, and at this point only three of the twenty cities tracked have not made new all-time highs.  Those three cities are are Las Vegas, Chicago, and Miami.  Miami is the one closest to making new highs at just 2%, while Las Vegas prices are still 9% below their highs made in August 2006.  The composite indices and the seventeen other cities have all managed to take out their housing bubble highs.  Denver, Dallas, and Seattle are all up more than 50% above their prior all-time highs.

Below are price charts for all of the cities and composite indices tracked by Case Shiller.  Cities not highlighted in green are the ones still below their prior housing bubble highs.

Looking across the ETFs in the US Groups screen of our Trend Analyzer, by far the best performer over the past week has been the Solar ETF (TAN). In just five days, TAN has managed to rally 11% roughly cutting in half what had been a 20% YTD decline through last week.  Even after that rally though, after stellar returns last year, TAN is still the worst performer of this group of ETFs in 2021.  Given it had traded in oversold territory for most of the past two months, TAN’s recent rally has not even been enough to bring the ETF back above its 50-DMA.  TAN is not alone in being an ETF to see rotation in the past week after YTD weakness though. For example, biotech ETFs like the S&P Biotech ETF (XBI) and Nasdaq Biotechnology ETF (IBB) have both been strong over the last week after underperforming YTD,

Not all YTD losers have seen outsized gains in recent trading though. Both gold miner ETFs – GDX and GDXJ – are down YTD but have only seen marginal gains over the last week.

The Steel ETF (SLX) has also gone on an impressive run in the last week as the fourth best performing ETF in the screen. That has helped make it one of the strongest YTD performers putting it into extreme overbought territory as it trades 13% above its 50-DMA.

Some of these recent moves have resulted in some interesting developments in the various charts of these same ETFs which we show in the snapshot of our Chart Scanner below. Circling back to the gold miners, GDX has been in rally mode over the past couple of months resulting in it moving back above its 50-DMA and breaking its downtrend in the process. That does not mean GDX is totally out of the woods. So far the ETF has come up short of its 200-DMA which will be an interesting area of resistance to watch going forward.  Similarly, after erasing some of the huge run in 2020, TAN (bottom left) managed to find support around $81 at multiple points in the past several weeks with the most recent test of this level being exactly a week ago.  The huge 11% rally in the days since has brought it back up to its 50-DMA which it so far has failed to move back above.  Conversely, IBB had been stuck between both its 50 and 200-DMAs since late February, but the recent bounce off of its 200-DMA preceded a breakthrough of its 50-day to the upside that has taken place over the past few days.

As for the other ETFs in our US Groups screen, there are multiple ones like the North American Tech-Multimedia Networking ETF (IGN), Semiconductors (SMH), and Regional Banking ETF (KRE) that have been rallying off of their 50-DMAs and moving back up towards 52-week highs. In the case of IGN, that has resulted in what appears to be an upside break of the past few months’ wedge pattern.  There are also other breakouts to new 52-week highs like for the US Financial Services ETF (IYG) and the S&P Metals and Mining ETF (XME). Click here to view Bespoke’s premium membership options for our best research available.

Tesla’s (TSLA) much anticipated first-quarter results will be out after the closing bell this afternoon. The company is expected to report EPS of $0.73 and sales of $9.887 billion which would represent 65% YoY growth from last year. While that would be impressive growth versus a year ago, when it comes to stock price reaction in tomorrow’s session, Q1 earnings are usually somewhat underwhelming. As shown in the snapshot of our Earnings Explorer below, Q1 earnings have seen a positive reaction the least often of any quarter for TSLA with the stock finishing the day after earnings in the green only 30% of the time and down in each of the last five Q1 reports. Additionally, the average full-day gain of 0.25% is the second smallest move higher of any quarter next to the 0.1% average gain in Q4.  Although the full-day average performance has not necessarily been the worst, Q1 has averaged the worst returns from open to close with a decline of 1.93%.

Regardless of the results, the overall trends for the EV market have been pretty positive recently based on Google Trends data.  So far in 2021, searches under the Autos and Vehicle categories for “Plug-In Hybrid” have surged to record highs. Even after pulling back in April, current levels of searches are stronger than almost any point in the past.  The same goes for searches of charging stations.  Given people who already own an EV would be searching for charging stations, this would perhaps be a better read-through for the number of people who own and are using their EVs.  Even at a time of year that searches for the term are seasonally weak, the current levels of search interest are at a historically strong level meaning EVs are more popular on the road. Click here to view Bespoke’s premium membership options for our best research available.

Monday’s monthly report from the Dallas Fed showed yet another strong reading on the manufacturing sector.  The headline index tracking the region’s General Business Activity came in at the highest level in just under three years, rising 8.4 points to 37.3. Not only was that a multiyear high, but this month’s reading is also in the top 3% of all months since the start of the survey in 2004. Expectations also are optimistic with the index rising to the strongest level since September 2018.  The indices for Company Outlook similarly rose to levels not seen since 2018.

Given businesses are reporting as more optimistic, uncertainty continues to fall.  In fact, the Outlook Uncertainty Index fell to zero this month which indicates that uncertainty among the region’s manufacturers is no longer on the rise. While there is not nearly as extensive of a history of this index as the rest of the survey (only dating back to 2018), this was the first non-positive reading since May 2018.

With strong readings in broader measures of activity, the majority of indices in the report remain in the top percentiles of readings. The only exception is Inventories which is in the bottom 40% of readings after falling 3 points this month.  On the other hand, there were several indices like those for New Orders and Employment which were at the highest levels on record.  Those strong readings do come with a caveat though.  Breadth in this month’s report was a bit mixed with just over a half-dozen indices falling month over month.  Despite these indices all staying in the top decile of readings after those declines, we would note that the drops in the indices for Production, Capacity Utilization, and Delivery Times were historically large for a single month.

Taking a more granular look at these indices, demand continues to grow at a historically strong clip. Both indices for New Orders and the Growth Rate of Orders rose to record highs.  In spite of the acceleration in demand, the index for Unfilled Orders was actually slightly lower falling 1.4 points. That indicates that with surging new orders, backlogs continued to grow in April but actually at a slower pace than March. Even after that deceleration, though, Unfilled Orders sit well above the vast majority of historical readings. Shipments similarly pulled back ever so slightly in April indicating the region’s businesses are trying to match that demand.

The bigger declines came out of the indices for Production and Capacity Utilization. Again, these indices still sit at strong levels well above past years’ readings but did markedly decelerate in April.  Comments highlighted in the release help to give some anecdotal evidence as to the reasons why production has hit the brakes.   A few common themes throughout the comments include the impact of winter storms, rising prices (especially for inputs and freight), a lack of labor, and supply chain strain.

Other areas of the report back up those claims. Regarding prices, Prices Paid rose for the ninth month in a row topping 70 for the first and only time since October 2004.  Meanwhile. those price increases are being passed along as the index for Prices Received rose to a record high.

Employment was another area that was frequently flagged as a concern among reporting businesses.  Many comments noted the difficulty in hiring even with generous pay offers. Even though there seems to be trouble finding enough workers, workers are coming back at a historic rate.  The index for Employment (both current conditions and expectations) marked the highest level to date as did Wages & Benefits.  Additionally, the month-over-month rises in the indices stand in the top few percent of all months in the history of the survey. In other words, businesses are and want to continue to take on more employees and are raising pay to do so. On top of raising headcounts, Capital Expenditures also continue to grow although there was some deceleration in April. Click here to view Bespoke’s premium membership options for our best research available.

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 free trial!

Conservation

The destructive green fantasy of the bitcoin fanatics by Jamie Powell & Jemima Kelly (FT)

When you’re not assuming an outcome and backfilling whatever it takes to get to there, Bitcoin is very simply a massive, energy intensive polluter fueled by dirty coal power. [Link; paywall]

The Chip Shortage Is Bad. Taiwan’s Drought Threatens to Make It Worse. by Stephanie Yang (WSJ)

With explosive demand driving a massive chip shortage around the world, Taiwan Semi is facing a huge problem: no water, a critical input for semiconductor manufacturing. [Link; paywall]

YOLO

Robinhood, Three Friends and the Fortune That Got Away by Rachel Louise Ensign (WSJ)

Tracking the progress of three amateur investors through the pandemic and the hundreds of trades that were part of a massive boom in retail trading last year. [Link; paywall]

Welcome to the YOLO Economy by Kevin Roose (NYT)

With vaccinations available, equity markets ripping, and crypto booming, early middle-age Millennials are flipping over the carefully arranged tables of their lives to seize the day. [Link]

It’s not NBA Top Shot, Beeple or a tweet, but IBM is about to turn patents into NFTs by Eric Rosenbaum (CNBC)

IBM and intellectual property specialist IPwe are collaborating on an effort to tokenize patents via the company’s blockchain platform, though it’s not entirely clear how tokenization would increase pattern liquidity. [Link]

Credit

A $1 Trillion Liquidity Surge Is Morphing Into a Leverage Boom by Paul Seligson (Bloomberg)

Pandemic borrowing that helped companies fortify their cash position during the pandemic is being redeployed to M&A, stock buybacks, and dividend hikes. [Link; soft paywall]

Vaccines

High Efficacy of a Low Dose Candidate Malaria Vaccine, R21 in 1 Adjuvant Matrix-M™, with Seasonal Administration to Children in Burkina Faso by Mehreen S. Datoo et al (SSRN)

A new malaria vaccine produced in partnership with Novavax has been shown to be 55.8% effective, a major step towards a widely available vaccine for a disease that kills roughly 1mm people per year around the world. [Link]

Vaccines Won’t Protect Millions of Patients With Weakened Immune Systems by Apoorva Mandavilli (NYT)

While vaccines are highly effective for those with functioning immune systems, millions of people won’t be protected by them due to other conditions; for them, monoclonal antibodies may be the only option. [Link; soft paywall]

Sports

New Jersey border towns surpass Las Vegas as sports gambling hotspot by Chris Sheridan (Basketball News)

Legalized sports betting venues in Fort Lee, New Jersey are regularly pulling in more betting action than the entire state of Nevada as bettors flock in from the Empire State. [Link]

Where Do QBs Come From (ESPN)

Louisiana and New York are by far the standouts when it comes to producing quarterbacks, and while Texas may be a football powerhouse by any other definition it ranks far and away the worst of any state when it comes to players under center. [Link]

Clout

Hip-Hop Loves Cash App, and That Might Be Why Jack Dorsey Bought Tidal by Grant Rindner (GQ)

Venmo was first in the free payment app space, but CashApp has been the big winner thanks to wild popularity in the South that was spread and amplified by the affection of hip hop. [Link]

Instagram star cat dies from injuries after boy trips on leash by Craig McCarthy & Jackie Salo (NYP)

A cat with more than 33,000 on Instagram was killed this week after a boy tripped on the feline’s leash, sparking a major brawl which also included the owners’ pet dog and bird. [Link]

Scarcity

Why are Hawaii visitors cruising around in U-Hauls? Blame the pandemic. by Chelsea Davis (Hawaii News Now)

Rental cars are so scarce in Hawaii that tourists are renting U-Hauls to get around the island during visits from the mainland. [Link]

South Florida restaurant buys robots to fight staffing issues by Michael Hollan (NYP)

A crab shack in South Florida has purchased three robots to take over some front-of-house tasks that typically would be performed by human staff. [Link]

Tragedy

The Fort Bragg Murders by Seth Harp (Rolling Stone)

Fort Bragg in Fayetteville, North Carolina has hosted a rash of deaths ranging from suicides to homicides, with more than 40 troops stationed at the base dying in 2020 alone. [Link]

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Have a great weekend!

Interest rates have been steadily on the rise ever since last summer as optimism over the economy re-opening and concerns regarding ballooning federal deficits and potential inflation have pushed borrowing costs higher.  In recent weeks, we have seen a bit of a reversal in this trend as the yield on the 10-year US Treasury has dropped from about 1.75% to just over 1.5% even as economic data has continued to come in very strong.  What’s also notable about the recent decline in yields is that on Thursday, the yield on the 10-year actually closed marginally below its 50-day moving average (DMA) for the first time since August 21st.

At 166 trading days, the just-ended streak of days where the 10-year yield closed above its 50-DMA was the longest on record going back to at least 1962, eclipsing the prior record of 162 trading days from March 1966.  Also, since 1962, there have only been five other streaks that lasted even 100 trading days with the last occurring all the way back in 1984.

While the 10-year yield just ended a record streak of closes above its 50-DMA, its current streak of closes above the 200-DMA is much more ‘normal’ relative to history.  At 113 trading days, it doesn’t even rank anywhere near the top ten in terms of longest streaks.  With the 200-DMA only barely above 1%, though, that streak isn’t in danger of coming to an end any time soon.  Click here to view Bespoke’s premium membership options for our best research available.