Bespoke’s Morning Lineup – 7/16/24 – Better Than Expected Retail Sales
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.
“It’s funny. All you have to do is say something nobody understands and they’ll do practically anything you want them to.” – J.D. Salinger
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
Futures were in the green ahead of the June Retail Sales report this morning as reactions to some of the more high-profile earnings reports were mixed. Shares of Bank of America (BAC) were modestly higher, but both Charles Schwab (SCHW) and Morgan Stanley (MS) were lower. Treasury yields and oil were both lower as gold rallied to what would be a record high on a closing level. In the crypto space, Ethereum is moving modestly lower even as the greenlight was made for ETFs tracking the world’s second-largest crypto to start trading next week.
Retail Sales hit the tape, and the top-lin numbers were better than expected. Overall, sales were unchanged versus an upwardly revised May reading of 0.3%. Ex Autos, sales jumped 0.4% compared to forecasts for a gain of just 0.1% while Ex Autos and Gas, total sales were up 0.9% which was 0.7 ppt better than the consensus forecast. Building Materials saw a large rebound, rising by 1.4% after May’s decline of 0.7%. Nonstore retail (online) saw the largest increase, though, as sales jumped 1.9% on top of May’s increase of 1.1%. As you would expect, yields moved higher on the news, but not by a lot as the 10-year yield is only 2 bps higher than its pre-release level. Still on the calendar for today, we have Business Inventories and Homebuilder Sentiment at 10 AM.
While yesterday’s breadth in the S&P 500 wasn’t strong (+59), it was the fourth straight day where the S&P 500’s net advance/decline line was positive. That’s only the tenth such streak this year, and when you consider that the S&P 500 is up over 18% this year, you would expect to see more similar streaks of positive breadth. The three days that preceded yesterday did show relatively strong breadth, especially compared to other days this year, and all three of them rank in the top eleven in terms of single-day breadth readings.
While breadth readings for the S&P 500 last Wednesday, Thursday, and Friday were strong none of them were strong enough to register as an ‘all or nothing’ day where the net daily breadth reading for the S&P 500 is either +400 or above or -400 or less. That still leaves March 27th (all) and April 12th (nothing) as the only all-or-nothing days this year.
With only two occurrences so far this year, if the current pace continues, 2024 will only have four all-or-nothing days for the entire year. The last time there were fewer was in the extremely placid year of 2017 when there were only three, and before that, you’d have to go back to 2002. While this type of subdued extremes in breadth was normal in the 1990s, most people trading today aren’t familiar with the lack of extremes in day-to-day breadth. While the consistency of low readings in the VIX despite some major geo-political events has been puzzling, the lack of extremes as we have seen in breadth helps to keep the VIX grounded.
Chart of the Day – The Worst Time of the Year
The Closer – Near-Record Overbought Russell, Currency Positioning – 7/15/24
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 how the Russell 2,000 nearly closed at the most overbought level on record (page 1) followed by some commentary on Powell’s interview at the Economic Club of Washington (page 2). We then preview this week’s Treasury sales (page 3) before diving into the latest positioning data including the multiple superlatives in currency positioning (pages 4 – 7).
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 — 7/15/24
Chart of the Day: Goin’ Small
Empire Fed Contraction Streak
In a fairly light data slate this morning, the NY Fed released it’s monthly regional manufacturing survey results. The headline reading showed a minor drop down to -6.6. While down 0.6 points month over month, it was a modestly smaller decline than the expected drop to -7.6. Despite that better-than-expected reading, the still negative index would indicate that activity in the region’s manufacturing sector continues to contract. As shown in the second chart below, July marks the eighth straight month of negative readings and matches another 8-month streak from late 2015 through March 2016. The NY Fed survey began in 2001, and the only longer streak was 17 months during the Financial Crisis.
Under the hood, breadth in this month’s report was slightly positive with six indices rising and four declining month-over-month. A small handful of those moves were large as well. For example, unfilled orders moved into contraction after experiencing a significant decline of 12.2 points. Inventories similarly saw a bottom quartile month-over-month drop from expansionary to contractionary readings. Overall, most categories sit in contraction and are at the low end of their historical ranges.
As previously mentioned, the headline index has been in contraction for a long time. Playing into that has been a bad run for new orders. As shown below, the new orders index came in at its highest level since last September but is still negative as it has been for the past ten months making it the longest such streak on record.
Elsewhere in the report, this month’s survey showed mixed results regarding the labor market. For starters, the index reflecting the number of employees is near its weakest levels of the post-pandemic era. However, the average workweek picked up dramatically. The 9.8-point month-over-month increase in July ranks in the top decile of monthly increases leaving the index at its highest level since October. While the current conditions index has perked up, the 6-month expectations index is another story, falling to the lowest level since August 2022.
In addition to negative labor market readings, capital expenditure expectations also remain weak and just barely in expansionary territory. Current readings are in the 5th percentile historically.
Finally, we would note that the price indices are no longer consistent with rapidly rising inflation. Prices Paid rose to 26.5 which is a point below the historical median. Meanwhile, prices received dropped to 6.1. Outside of last July, that would make for the lowest reading since October 2020.
Bespoke’s Morning Lineup – 7/15/24 – X (Twitter) Comes of Age
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.
“Make every detail perfect and limit the number of details to perfect.” – Jack Dorsey
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
Bespoke co-founder Paul Hickey appeared on CNBC’s Squawk Box this morning to discuss potential market impacts from this weekend’s events. To view the segment, click on the image below.
Welcome to adulthood Twitter, now X. 18 years ago today, Jack Dorsey launched Twttr, which then became Twitter, and is now known as X. The social media platform has had a moody existence. As this weekend’s attempted assassination of former President Trump illustrated, though, when news breaks, the first place to find it is on X. With the good comes the bad, and there’s also no shortage of incorrect and misleading information on the platform, but that’s the case just about everywhere now. Who knows, maybe now that it’s an adult, the level of discourse on X will show some maturity. Oh, who are we kidding?
Futures are trading higher this morning as markets price in a higher likelihood of a Trump victory in November along with Republican control of the House and Senate. According to the website electionbettingodds.com, the GOP’s odds of winning the Presidential election have jumped from 60.6% early Saturday afternoon to 67.6% this morning. In the House, Republican odds have jumped from just over 50% to 55.5%. Finally, the Senate was already firmly likely to be controlled by the GOP, and those odds remain high at 76.7%. A lot can change between now and November, though. On February 3rd, 2008, the Patriots were 18-0 and looking to finish an undefeated season against the New York Giants in Super Bowl XLII, and we all know what happened. There’s a reason you still have to play the game.
If the GOP takes full control of DC following this November’s election, it will be just the fourth occurrence in the modern era. The three prior periods were the 108th (2003 – 2004), 109th (2005 – 2006), and 115th (2017 – 2018) sessions of Congress, and below we have included charts showing the performance of the S&P 500 and the 10-year yield during each two years. It’s a small sample size, but the S&P 500 and ten-year yield were up each time. The S&P 500’s median gain was 17% while the 10-year experienced a median increase of about 20 basis points (bps).
Brunch Reads – 7/14/24
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.
I’m Your Huckleberry: On July 14th, 1882, John Ringo was found dead in Turkey Creek Canyon outside of Tombstone, Arizona. For those unfamiliar with the story, Johnny Ringo was notoriously dangerous with a pistol, or rifle, in the wild west. He was involved in multiple murders in Texas before relocating to Arizona, where he stirred up more trouble with other outlaws known as the Cochise County Cowboys, infamous for their cattle rustling, stagecoach robberies, and violent encounters with the law. Fast forward some and Ringo found his name attached to the gunfight at the O.K. Corral in 1881. He had run ins with the Earp brothers, adversaries of the Cowboys in the shootout, before. Wyatt Earp was portrayed by Kurt Russell in the 1993 film Tombstone about the O.K. Corral. Val Kilmer stole the show in that movie, though, for his role as Doc Holliday, a gambler and gunslinger closely tied to the Earp brothers.
After the gunfight at the O.K. Corral, Ringo challenged Holliday to a duel, wanting to settle the score. Holliday declined. Although, in the movie, Holliday gladly accepted with famous line, “I’m your huckleberry,” before Ringo’s drunken call for blood was diffused. Some time later, Ringo was found dead with a gunshot wound to the head. It was declared a suicide, although the details remain a mystery. Wyatt Earp later claimed responsibility for his murder, further complicating the truth of what really happened to Ringo. Tombstone gives another fantastic alternative theory.
Economic Trends
Women are set to inherit trillions of dollars in the great ‘horizontal wealth transfer’ (CNBC)
The “horizontal wealth transfer” will see around $9 trillion passed between spouses and partners in the coming years, as baby boomers and older generations transfer $84 trillion to younger generations over the next few decades. Since women tend to outlive men, they are likely to inherit a substantial portion of this wealth before it moves on to the next generation. This money move is anticipated to reshape wealth management, investing, and luxury spending landscapes, as women increasingly control a larger share of high net-worth assets. Women’s growing influence is also impacting philanthropy as donations to women’s and girls’ causes increase. [Link]
Continue reading our weekly Brunch Reads linkfest by logging in if you’re already a member or signing up for a complimentary 30-day trial to Bespoke Premium today! Cancel at any time.
The Bespoke Report — Equity Market Pros and Cons — Q3 2024
This week’s Bespoke Report is an updated version of our “Pros and Cons” edition for Q3 2024.
With this report, you’re able to get a complete picture of the bull and bear case for US stocks right now. It’s heavy on graphics and light on text, but we let the charts and tables do the talking!
On page three of the report, you’ll see a full list of the pros and cons that we lay out. Slides for each topic are then provided on page four and beyond.
To read this report and access everything else Bespoke’s research platform has to offer, sign up for Bespoke’s 50/20 special today. Our 50/20 special gets you a full year of Premium for half off, then 20% off per month after the first year. SIGN UP HERE.
PLEASE READ ON BELOW…
BESPOKE’S STOCK MARKET SUMMER CAMP
If you or any of your friends or colleagues have children, grandchildren, nieces, or nephews, please take note!
Here at Bespoke we’ve been following the stock market 24/7 for more than two decades, so based on the “10,000 hour” rule, we can confidently say that we are market “pros”.
At the same time, traditional education across grades K-12 doesn’t focus on the stock market, investing, and how it all works.
For years, we’ve thought about addressing the “stock market literacy gap” for students across the country. Now, we’ve come up with a plan!
Starting this summer, we are now offering “Stock Market Camp” for students in grades 5-8 and 9-12!
Bespoke’s Stock Market Camp will run for five days from Monday-Friday with each live Zoom class lasting roughly 75 minutes. Camp will be fun, engaging, and interactive, and by the end of the week, students will have a basic understanding of how the stock market and investing works! If a live class is missed, a recording will be available.
We don’t have to tell you how valuable knowing this information at a young age can be! Instead of kids playing video games, scrolling through TikTok, or messing around on Snapchat, we think our five-day Stock Market Camp will pay major dividends down the road!
For now we are making our Stock Market Camp available to students that are referenced by Bespoke readers. We are running one week of camp for high school students (grades 9-12) from July 22nd-26th, and one week of camp for middle school students (grades 5-8) from August 12th-16th. Each weekly camp will be capped at 40 students max, so please sign up ASAP to reserve your student’s spot. You can purchase as many spots as you’d like or forward this email to colleagues and have them sign up.
SIGN UP YOUR STUDENT OR STUDENTS TODAY AS THE CAMPS ARE LIMITED TO JUST 40 ATTENDEES!
We will touch base after sign-up to gather the pertinent information. If you sign up and the student cannot attend during the dates listed above, we can either provide access to a full recording of the camp or a credit for a future camp. Refunds will be provided upon request if we are notified at least one week before the camp’s start date.
Please reach out if you have any questions about Bespoke’s Stock Market Camp. The camp is for informational and educational purposes only, and there will be no investment advice or recommendations provided. All discussions will be impersonal and historical in nature. There will be no forward-looking analysis or discussion.