Bespoke’s Morning Lineup – 11/7/24 – An Uneven Wave
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.
“Several commentators have reflected on the fact that this may be one of the great political victories of all time.” – Richard Nixon, 11/7/72
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
As if the Election Day and post-Election Day returns weren’t enough, equity futures are positive again this morning. Today’s early gains are only modest, though, and we just got a bunch of economic reports to go through including Non-Farm Productivity (weaker than expected), Unit Labor Costs (higher than expected), and jobless claims (roughly in line) at 8:30, so the positive tone could change between now and the open. And did we mention that there’s a Fed meeting with a decision on interest rates expected at 2 PM? Markets are overwhelmingly pricing in a 25-bps cut, but what Powell says at the 2:30 press conference will be more important than the actual decision.
Regarding post-election market returns, yesterday’s 2.5% gain in the S&P 500 was historic. Since WWII, market performance the day after Presidential elections was typically negative with a median decline of 0.4% and positive returns just 42% of the time. Yesterday’s gain was the best, surpassing the prior record of 2.2% from 2020.
Small caps had an even better day. While the Russell 2000 has only existed since the late 1970s, yesterday’s 5.8% gain ranks easily as the best, nearly doubling the 3.1% gain after Trump’s last election!
One not-so-bright spot about yesterday’s rally was breadth. Normally, when the S&P 500 rallies 2% or more net breadth for the S&P 500 is also very positive at an average of +3.83. Yesterday’s net breadth reading for the S&P 500 was just +180. Since 1990, there have been 273 days that the S&P 500 rallied at least 2%; of those, only eight had a weaker daily breadth reading. And now for the trivia stat of the day. The last time the S&P 500 rallied 2%+ and net breadth was below +200 was on 11/4/20, the day after the 2020 election when breadth was negative 32!
Bitcoin Cup and Handle Breakout
Last week we published a Chart of the Day for subscribers highlighting the multi-year cup and handle pattern that bitcoin had formed and its similarities with gold’s (GLD) technicals.
On the back of President Trump’s victory last night, bitcoin’s price has now spiked more than $6,000 to trade at new all-time highs above $75,000. The post-election move looks like a clear breakout above all prior resistance levels. From a technical perspective, this breakout essentially marks the end of the cup and handle and the beginning of the post-cup and handle leg higher. Going forward, technicians will be looking for bitcoin’s prior all-time highs in the low $70,000s to now act as support.
Like this content? We think you’ll love our premium equity market research. Below are two Bespoke membership options to choose from. Start a two-week trial to one of them today!
The Closer – Election Impact, Reverberations, 30-Year Sale Strong – 11/6/24
Log-in here if you’re a member with access to the Closer.
Looking for deeper insight into markets? In tonight’s Closer sent to Bespoke Institutional clients, we lead off with a look at a group of 33 stocks that saw large moves today with the catalyst of the election (pages 1 and 2). We then review the very strong 30-year bond auction (page 3) and close out with a petroleum stockpiles update (page 4).
See today’s full post-market Closer and everything else Bespoke publishes by starting a 14-day trial to Bespoke Institutional today!
Daily Sector Snapshot — 11/6/24
Fixed Income Weekly — 11/6/24
Searching for ways to better understand the fixed income space or looking for actionable ideas in this asset class? Bespoke’s Fixed Income Weekly provides an update on rates and credit each week. We start off with a fresh piece of analysis driven by what’s in the headlines or driving the market in a given week. We then provide charts of how US Treasury futures and rates are trading, before moving on to a summary of recent fixed-income ETF performance, short-term interest rates including money market funds, and a trade idea. We summarize changes and recent developments for a variety of yield curves (UST, bund, Eurodollar, US breakeven inflation, and Bespoke’s Global Yield Curve) before finishing with a review of recent UST yield curve changes, spread changes for major credit products and international bonds, and 1-year return profiles for a cross-section of the fixed income world.
Our Fixed Income Weekly helps investors stay on top of fixed-income markets and gain new perspectives on the developments in interest rates. You can sign up for a Bespoke research trial below to see this week’s report and everything else Bespoke publishes for the next two weeks!
Click here and start a 14-day free trial to Bespoke Institutional to see our newest Fixed Income Weekly now!
Will International Stocks Ever Outperform Again?
On the heels of last night’s election results, we’ve seen some major moves in equities on a global scale. While the S&P 500 is up over 2% today, the MSCI All Country World Ex-US Index ETF (CWI) is down slightly more than 1%. Since the CWI ETF first launched in 2007, today would be just the fifth time it fell over 1% on the same day the S&P 500 ETF (SPY) rallied more than 1%. The other days were 1/28/08, 11/9/16, 2/24/22, and 10/24/22. Even more notable is that there have only been two other days when the daily performance spread between the two ETFs (in favor of SPY) was wider – during the Financial Crisis two days after the 2008 election on 11/6/08 and the day after the Brexit vote on 6/24/16. It’s been a historic day.
Today’s performance gap begs the question of whether international stocks will ever outperform again. The chart below shows the relative strength of the US (SPY) versus the rest of the world (CWI) since the latter ETF’s launch in 2007. Outside of a few years after it first started trading when international stocks performed roughly in line with the US, it’s been a one-way move in favor of US stocks for over a decade now, and today’s move only added fuel to the US rocket ship. There will come a time when international stocks have their day in the sun, but international investors aren’t sure how long they can hold their breath.
Like this content? We think you’ll love our premium equity market research. Below are two Bespoke membership options to choose from. Start a two-week trial to one of them today!
The Day After…2016 Redux
US equity markets are up big today after President Trump’s victory in last night’s election. The average stock in the Russell 1,000 is currently up 2.17%, while the Financials sector ETF (XLF) is up more than 5% on the day.
While many market prognosticators went into the 2016 election saying that a Trump victory would be terrible for the stock market, the same upside reaction that we’re seeing today occurred on the day after Trump’s victory in 2016. (And as a reminder, Dow futures fell 1,000+ points immediately following Trump’s victory back in 2016 before eventually flipping sharply higher.)
The underlying action in the stock market today looks remarkably similar to the action we saw on this same day in 2016.
Below is a look at the average performance of stocks in the Russell 1,000 today broken out by sector versus how they performed on the day after the 2016 election.
The three sectors that are selling off today are the same three that sold off following Trump’s win in 2016: Real Estate, Utilities, and Consumer Staples.
On the flip side, the three sectors performing the best today are the same three that performed the best in 2016: Industrials, Energy, and Financials.
Notably, the three best and worst performing sectors today were also the three best and worst performing sectors on the day after Trump won in 2016.
In the middle of the pack, we’re seeing Technology and Communication Services outperform their 2016 action today, although Communication Services didn’t have some of the big social media companies in it eight years ago. And Health Care and Materials — while still up — aren’t performing as well today as they did back in 2016.
While it may be tempting to pile into the three sectors performing the best today because of Trump’s victory, the three sectors that performed the best on the day after Election Day 2016 ended up being some of the worst-performing sectors during Trump’s first four-year stint in office.
As mentioned above Financials, Energy, and Industrials were the three best-performing sectors on the day after the election in 2016, and they’re also the three best-performing sectors today. As shown below, though, Energy (XLE) would go on to fall 49% from the day after the 2016 election through the day before the 2020 election, while Financials (XLF) was the second worst sector ETF during that time frame and Industrials (XLI) was on the lower end of the performance pack. On the flip side, it ended up being Technology (XLK) and Consumer Discretionary (XLY) that performed the best between the 2016 and 2020 elections even though they weren’t big standouts on the day after the 2016 election.
As far as the action goes today, Financials are soaring. Below is a look at the 20 best-performing stocks in the Russell 1,000 so far today. 14 of the 20 are from the Financials sector, and all of them are up more than 12%. Outside of the Financials, Tesla (TSLA) is also on the list with a gain of more than 13%. Given Elon Musk’s very vocal support of President Trump this election cycle, the action in TSLA should come as no surprise.
Like this content? We think you’ll love our premium equity market research. Below are two Bespoke membership options to choose from. Start a two-week trial to one of them today!
Chart of the Day: Surging Superlatives
Bespoke’s Morning Lineup – 11/6/24 – That Was Fast!
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.
“I think we just witnessed the greatest political comeback in the history of the United States of America.” – JD Vance
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
We’ve been saying for quite some time now that half of the country would be waking up disappointed this morning and based on the results of the election so far, it appears to be slightly less than half of the country. Former President Donald Trump has been projected as the winner of the 2024 Presidential election, and he is also modestly ahead in the popular vote as well. Like it or not, when you look back at the last few years, objectively speaking, it’s hard not to agree with VP-elect JD Vance that this has to rank right up there as one of the biggest political comebacks in US history.
For the last several months now, we’ve been documenting the correlation between market performance and President Trump’s numbers in national polls and betting markets. It comes as no surprise, therefore, that equity markets are sharply higher given the fact that we have results this morning and they went in the Republican party’s direction. The S&P 500 shot higher overnight, and the S&P 500 tracking ETF is on pace to gap up over 2% which would be the largest upside gap since December 2022.
The move in small caps has been even more notable. Take a look at the chart below. The iShares Russell 2000 ETF (IWM) is trading up over 5% this morning, which would be the largest upside opening gap since “Pfizer Monday” on 11/9/2020 when the company announced the results of its vaccine trials. Today would be just the sixth time in the history of the iShares Russell 2000 ETF (IWM).
As equities rally this morning, bonds have tanked as yields surge. The yield on the 10-year has surged to 4.45%, which is the highest since early July. With that move, the iShares 20+ Year Treasury ETF (TLT) is poised to gap down 3.35%. That would rank as the largest downside gap in the history of the ETF and is one of just four times that it gapped down 2.5% or more. The others were 9/19/08 (-3.29%), 3/24/20 (-2.86%), and 5/10/10 (-2.53%).
The Closer – Election Day, Sentiment, LMI- 11/5/24
Log-in here if you’re a member with access to the Closer.
Looking for deeper insight into markets? In tonight’s Closer sent to Bespoke Institutional clients, we start with a dive into election day performance (page 1) followed by a rundown of the latest economic data including service PMIs (page 2) and the Logistics Mangers’ Index (page 3). We then review the latest investor sentiment data (page 4) before closing out with a 10-year note auction recap (page 5).
See today’s full post-market Closer and everything else Bespoke publishes by starting a 14-day trial to Bespoke Institutional today!