The Closer – Correlations, Cumulative Breadth, Tech Tracking – 8/15/24
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Looking for deeper insight into markets? In tonight’s Closer sent to Bespoke Institutional clients, we begin with a look at the historically weak correlation between the S&P 500 equal weight and market cap weighted indices (page 1). We then provide some commentary on the S&P 500’s cumulative breadth line hitting a new high (page 2) before pivoting over to some details on the divergent performance of the Tech sector versus tracking ETFs (page 3). Turning over to economic data, we then dive into the latest claims and retail sales reports (page 4), import and export prices (page 5), and industrial production (page 6).
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Bespoke’s Consumer Pulse Report — August 2024
Bespoke’s Consumer Pulse Report is an analysis of a huge consumer survey that we run each month. Our goal with this survey is to track trends across the economic and financial landscape in the US. Using the results from our proprietary monthly survey, we dissect and analyze all of the data and publish the Consumer Pulse Report, which we sell access to on a subscription basis. Sign up for a 30-day free trial to our Bespoke Consumer Pulse subscription service. With a trial, you’ll get coverage of consumer electronics, social media, streaming media, retail, autos, and much more. The report also has numerous proprietary US economic data points that are extremely timely and useful for investors.
We’ve just released our most recent monthly report to Pulse subscribers, and it’s definitely worth the read if you’re curious about the health of the consumer in the current market environment. Start a 30-day free trial for a full breakdown of all of our proprietary Pulse economic indicators.
Bespoke’s Weekly Sector Snapshot — 8/15/24
Chart of the Day – Nike (NKE): Turnaround Time
Bespoke’s Morning Lineup – 8/15/24 – Better Data
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.
“History is a set of lies agreed upon.” – Napoleon Bonaparte
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
Investors came into the day in a positive mood as gains overnight in Asia and a positive morning in Europe flowed through to the pre-market in the US. Crude oil and gold were also up about 1% with WTI trading at a lucky $77.77 per barrel.
One of the biggest catalysts for this morning’s positive tone has been in shares of Wal-Mart (WMT) which is poised to gap up over 7% in reaction to earnings. For perspective, if the gains hold through to the closing bell, it would be the first time since at least 2001 that the stock rallied more than 5% in reaction to back-to-back earnings reports.
A slug of economic data just hit the tape, and nearly all the reports came in better than expected, including Retail Sales which doubled expectations (1.0% vs 0.4%), while initial and continuing claims were better than expected. In response, futures have taken another leg higher as fears of economic weakness have been eased even as a September rate cut remains likely.
Between the monthly Retail Sales report, earnings from Wal-Mart (WMT), and other companies from the sector, it’s been a busy morning for the retail sector. On a non-earnings-related move, shares of Ulta Beauty (ULTA) are surging more than 12% following news after the bell yesterday that Berkshire Hathaway had taken a position of 690K shares worth $266 million in the company as of the end of Q2. To put that in perspective, even after Berkshire cut its stake in Apple (AAPL) by more than half this year, that position is still more than 300 times larger than its current stake in ULTA. Nevertheless, the Buffett seal of approval alone is enough for investors to flock to the stock.
Looking at the performance of ULTA over the last year, Berkshire’s purchase wasn’t the timeliest in the short term. While we have no way of knowing at what point in the quarter the stock was purchased, even after accounting for its pre-market surge, it is trading below where it traded at any point in Q2. From April 1st through June 30th, shares of ULTA traded in a range of $375.31 to $529.67. While it’s unlikely that Berkshire entered the position anywhere near the high end of that range as it only traded there for a couple of days early in the quarter, it’s just as unlikely that Berkshire bottom-ticked it. That’s because the stock doesn’t often trade more than a million shares a day, so a 690K trade would have greatly impacted the stock. The fact that Berkshire remains underwater on the stock doesn’t mean that ULTA won’t end up as a winning stock, but even when it comes to the best investors in the world, timing isn’t always perfect.
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The Closer – Electorate, Back Above the 50-Day, Best of Breed – 8/14/24
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Looking for deeper insight into markets? In tonight’s Closer sent to Bespoke Institutional clients, we lead off with some commentary on electorate demographics followed by a check in on the technicals of the S&P 500 (page 1). We then review today’s CPI data (page 2) before updating our Best of Breed basket (pages 3 and 4). We close out with a look at the near record petroleum product trade surplus (page 5).
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Daily Sector Snapshot — 8/14/24
Fixed Income Weekly — 8/14/24
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!
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Chart of the Day – Refinance Surge
Bespoke’s Morning Lineup – 8/14/24 – CPI Right on Target
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.
“Talent is never enough. With few exceptions the best players are the hardest workers.” – Magic Johnson
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
There wasn’t much going on in equity futures this morning as the market awaited the release of the July CPI which came in right on target relative to expectations. Stocks in Asia were mixed with Japan up 0.6% while China was down 0.6%. Yields in China were also lower as the government auctioned off a 20-year bond at a record-low yield. European stocks look more positive with slight gains across the board as GDP came in right in line with forecasts (0.3%) and UK inflation unexpectedly declined.
In financial markets, we almost always emphasize upcoming economic reports and/or Federal Reserve meetings too much. Invariably, the reality of the report rarely lives up to the energy of the anticipation that precedes it. Last month’s CPI report was one of those rare exceptions as market performance practically turned on a dime.
The chart below compares S&P 500 industry group performance on a YTD basis through 7/10 (the close before the June CPI report was released) versus how each group performed since then. Leading up to the report, the S&P 500 had rallied more than 18% on a YTD basis, and since then, it has declined over 3.5%. There has been a clear trend among industry groups where the best performers leading up to the report have been among the worst performers since then while the weakest groups on a YTD report have held up the best since the release.
As an example, the top five performing industry groups on a YTD basis through 7/10 all rank in the bottom ten in terms of performance since then, while three of the five worst performing groups YTD before the June PPI (Consumer Durables, REITS, and Real Estate Mgmt) rank as the top three performing groups since then.
On the upside, only two industry groups rank in the top ten in terms of performance for both periods – Insurance and Telecom Services.
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