Along with numerous interactive tools on our website that investors can use to analyze the eleven major S&P 500 sectors, Bespoke also publishes a daily Sector Snapshot for subscribers.  You can view a sample of our one-page Daily Sector Snapshot by clicking on the thumbnail image below.

Our Daily Sector Snapshot provides investors with an easy-to-read matrix of technical analysis, breadth and internal readings, and fundamental datapoints.  It’s the perfect way to get an aerial snapshot of both current readings and the way they’ve been trending for each of the major sectors.  This perspective also allows investors to see how sectors stack up versus each other as well as relative to themselves on a historical basis.

Go ahead and give this helpful report a look by clicking the image below.  The various readings should be pretty self-explanatory, but if you’d like to read a more in-depth explanation, you can do so here.  If you would like to start receiving our Daily Sector Snapshot in your inbox each morning, start a two-week free trial to our Bespoke Premium membership level.

In spite of concerns of a slowing global economy, the unemployment rates of most major economies tracked in our Global Macro Dashboard around the world still appear to be at fairly healthy levels at the lower end of the past decade’s range. As shown in the table below, Canada, China, France, Germany, Japan, Russia, Spain, Switzerland, the UK, and the US are all within the lowest 5% of readings for unemployment of the past decade.  While most other countries find themselves in more middling percentiles, only South Africa’s unemployment rate is at its highest level of the past decade at 29.1%; 7.6 percentage points above the decade’s low.  Other than that, only Brazil, Italy, and Sweden are currently more than one percentage point above their 10-year low in unemployment.

Contrary to the rest of the world, the South African unemployment rate has been on the rise consistently over the past decade.  But since 2015, unemployment has risen more rapidly bringing it to its currently elevated levels.  On the other hand, the US, UK, Germany, and China are all near or at their lowest levels of the past ten years.  While they are at their lowest levels relative to themselves, Singapore and Switzerland have the absolute lowest unemployment rates of the 23 countries tracked in our Global Macro Dashboard at 2.3%. What is interesting about these two countries is that while Switzerland’s reading is the lowest of the past decade as it sits in a downtrend, Singapore’s unemployment was much lower earlier in the decade given the rate has actually been in a slight uptrend over the past several years.

Overall, the global employment situation looks healthy with the average and median unemployment rates for the 23 Global Macro Dashboard countries near or at the lowest levels of the past decade. The only caveat to this otherwise healthy picture is that the rate of improvement has slowed lately.  As shown in the second chart below, the year-over-year change for the average of these countries actually ticked into positive territory in the past month, rising 0.02 percentage points since one year ago. That is by no means an apocalyptic sign seeing as this occurred other times this cycle; the other times being in 2016 and from 2011 to 2013.  On the other hand, the median—which would dampen effects from outlier readings from the likes of South Africa—is still showing YoY declines in the global unemployment rate.  Start a two-week free trial to Bespoke Institutional to access our interactive Global Macro Dashboard, economic indicators monitor and database, and much more.

The S&P 500’s breakout to new highs in late October has kicked off a resumption in the count of record closing highs with half a dozen in just the last twelve trading days.  With four record closing highs during the April failed breakout and then another nine in June and July, the total for 2019 now stands at 19, which is tied with 2018.  A year ago today, the S&P 500 was close to 8% below its record high, so therefore the prospect for additional highs to close out the year was low, but this year is another story altogether.  As of this writing, the S&P 500 is actually above its record closing high of 3,093.08, so not only are additional new highs likely over the next seven weeks, but we may even see one today.

The chart below shows the number of new highs for the S&P 500 by year going back to 1950.  Over the 70 years shown, the greatest number of record closing highs for a given year was in 1995 when there were 77, while 1964 saw the second most with 65.  In the current bull market, 2017 had the most record closing highs at 62.  2017 was also a year where the S&P 500 never saw a pullback of 3% or more, so therefore record highs were always within striking distance.

One interesting aspect of the chart is that there have basically been three distinct periods since 1950 where new highs for the S&P 500 were clustered together. The first was from 1954 through 1968 (there were also two years in 1972 and 1973 but there were four years between without any) and the second spanned a 21-year window from 1980 through 2000.  The latest period began seven years ago in 2013, and while it may seem like the current 10-year market run has become long in the tooth, if it’s anything like the prior two periods, it could be another few years at least before occurrences of record new highs start to dry up.  Sign up for Bespoke’s “2020” special and get our upcoming Bespoke Report 2020 Market Outlook and Investor Toolkit.

While economic data has generally leaned towards weakness in the past month, we have repeatedly highlighted that housing data has been a bright spot for the economy. Not only has this category’s macroeconomic data come in solid, but the stocks of housing-related companies have also been showing similar strength. Just this morning, homebuilder D.R. Horton (DHI) reported a strong quarter with an EPS and revenue beat and the stock traded up 3.3% in today’s session in response. Given these trends, other housing stocks in DHI’s industry, Household Durables, as well as the housing and construction-related Building Products Industry have become fairly attractive with heavy representation in this week’s Stock Scores.

Our Stock Scores takes all 1500 stocks in the S&P 1500 and ranks them based on fundamental, technical, and sentiment factors.  As shown in the chart below, of the 50 stocks with the highest total scores, Building Products and Household Durables had some of the strongest representation tied with the IT Services industry.  Within the Building Products industry, 25% of its 20 members were in the top 50 stock scores this week while 6 of the 28 members of the Household Durables industry also made the top 50

We made a custom portfolio of stocks in the Household Durables and Building Products groups that ranked in the top 50 of our Stock Scores this week, so that members can track them.  As shown below in the charts from our Chart Scanner, each of these stocks has been in solid uptrends over the past six months. Although some like KB Home (KBH) and Pulte Group (PHM) have more or less broken these uptrends, they have also still held up at their moving averages. Start a two-week free trial to Bespoke Institutional to access our interactive Stock Scores, Custom Portfolios, and more.

With just a few days left until the unofficial end of the reporting period, this earnings season is on pace to be one of the better ones of the last several years.  The S&P 500 is currently up 4.7% since 10/4 (the Friday before the first of the major banks started to report).  If we compare the current period to the prior six-week periods in other earnings seasons that encompassed the first of the major bank reports right up through Walmart’s (WMT) report, the only one with a more positive performance was the 7.6% gain in the Q4 2018 reporting period.  Before that, you have to go all the way back to the 6.4% gain during the Q3 2013 period.  The market has certainly come a long way from early October when it seemed to be a foregone conclusion that earnings results would be dismal while guidance would be even worse.

If you polled analysts/investors back in late September over which sectors would have the toughest earnings seasons, Financials and Industrials would have topped the list.  With earnings season now winding down and these two sectors up roughly 8%, though, the list that these two sectors topped is actually the best performers!  Meanwhile, the worst performers have been the high yielding defensive sectors that investors couldn’t get enough of during the summer.  Sign up for Bespoke’s “2020” special and get our upcoming Bespoke Report 2020 Market Outlook and Investor Toolkit.

Small business optimism increased more than expected in October, rising from 101.8 up to 102.4 compared to economist expectations for an increase to just 102.0.  After a sharp drop from its high in August 2018, small business sentiment hasn’t rebounded much off its lows, but it is at least showing some sign of optimism.

We have pointed out in the past how drops in sentiment among small business owners have typically peaked well in advance of recessions, and looking at a long-term chart, every prior recession was preceded by a peak in this indicator.  While that’s true, we would also note that there are also a number of periods early and mid-cycle where sentiment also declined by similar amounts but rebounded to make new highs.  Therefore, we wouldn’t put too much into the recent decline as a high confidence indicator of an impending recession.

With regards to the biggest issues small business owners are facing, labor continues to be a big problem. In this month’s survey, one in four small business owners cited Quality of Labor as the most important problem, which was up from 23% last month.  Behind Labor Quality, Taxes, Red Tape, Cost of Labor, and Competition were all cited by at least 10% of small business owners.  Way on down the list are Inflation and Interest Rates which were cited by a total of only 3% of small business owners.

Below we show the historical percentage of small business owners who cited Labor Quality as their number one problem.  Back in August, this reading hit a record high of 27%, but at 25%, it still sits at extraordinarily high levels.  While labor costs have been held in check to this point, never before have employers had so much trouble finding qualified workers.  Sign up for Bespoke’s “2020” special and get our upcoming Bespoke Report 2020 Market Outlook and Investor Toolkit.