Daily Sector Snapshot — 8/28/24
B.I.G. Tips – Earnings Triple Plays Recap: Q2 2024
Today we published our newest Earnings Triple Plays report. During the just-completed Q2 2024 earnings reporting period, there were a total of 126 earnings triple plays out of just under 2,000 individual quarterly earnings reports from US-listed stocks. That’s 28 more than the 96 triple plays we saw during the prior earnings reporting period.
What is a triple play? When a stock reports quarterly earnings, it registers a “triple play” when it beats analyst EPS estimates, beats analyst revenue estimates, and raises forward guidance. We coined the term back in the mid-2000s, and you can read more about it at Investopedia.com. We consider triple plays to be the cream of the crop of earnings season, and we’re constantly finding new long-term opportunities from this basket of names each quarter. You can track the newest earnings triple plays on a daily basis at our Triple Plays page if you’re a Bespoke Premium or Bespoke Institutional member. To read our newest report and see some of the triple plays with intriguing charts at the moment, start a two-week trial to Bespoke Premium!
Fixed Income Weekly — 8/28/24
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 – September Seasonality and Election Odds
The Alphabet Portfolio: Single-Letter Tickers
Most stock tickers are made up of either two or three letters. There are 676 possible two-letter tickers and 17,576 possible three-letter tickers, but there are only 26 possible one-letter tickers. Below is a look at current publicly traded single-letter tickers on US stock exchanges.
The most well-known single-letter tickers are probably Citigroup (C), Ford (F), AT&T (T), Visa (V), and US Steel (X). In all, 21 of the 26 letters in the alphabet are currently being used as stock tickers. The letters currently not in use? I, N, P, Q, and Y.
Interestingly, all eleven major sectors are represented in the “Alphabet Portfolio” shown below. Talk about diversified! Industrials and Consumer Discretionary both show up four times, while Financials shows up three times. The remaining sectors either have one or two tickers included.
In terms of the make-up of these 21 stocks, they’re more dividend-heavy. All but four of the single-letter tickers pay a dividend, and their average yield is currently 2.79%. That’s quite a bit higher than the 1.22% the S&P 500 ETF (SPY) currently yields.
In terms of recent performance, while there have been some decent gains this year (B, C, D, J, K, L, R, T), there have also been some stinkers (M, S, U, W, X). On average, this basket of stocks has posted a total return of 4.67% this year, which is well behind the 18.9% that SPY has gained. Over the last three years, the performance disparity widens even more, with single-letter tickers up just 3.1% compared to a gain of 30.4% for SPY. Unfortunately it looks like single-letter tickers = single-digit returns. At least in recent years. It would likely be a much different story if any of the mega-caps had single-letter tickers!
As always, past performance is no guarantee of future results!
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Bespoke’s Morning Lineup – 8/28/24 – The Day You’ve All Been Waiting For
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.
“Virtual reality, all the A.I. work we do, all the robotics work we do – we’re as close to realizing science fiction as it gets.” – Jensen Huang
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
It’s the day we’ve all been waiting for, at least if you were to believe the financial headlines since last weekend. Ever since Friday afternoon, every market-related story has included an obligatory reference to “investors eagerly awaiting earnings from Nvidia (NVDA) on Wednesday after the close”. NVDA’s earnings report has become the world’s most important financial news event. Federal Reserve officials must be getting nervous.
While the hype nearly never lives up to reality, when it comes to being the most important stock in the market, investors may have a point regarding NVDA. Throughout its history as a public company, the stock has averaged a one-day move of +/- 8.1% in reaction to earnings. As shown in the chart below of the 15 most heavily weighted stocks in the S&P 500, that 8.1% move ranks as tied for second (trailing the 8.3% average move in Amazon.com) regarding the most volatile stock. Besides META, the only other stocks that have experienced average one-day moves of more than 5% in reaction to earnings are Tesla (TSLA) and Alphabet (GOOGL).
While NVDA may not be the most volatile of the 15 largest stocks in the S&P 500 when you take into account its $3.2 trillion market cap and 6.7% weight in the S&P 500, its average impact on the S&P 500 in reaction to earnings towers over every other stock in the market. As shown in the chart below, the ‘average’ reaction to earnings from NVDA coupled with its market cap translates into a one-day impact on the S&P 500 of 54 basis points (bps), or 0.54%. The next closest stock based on this measure would be Apple (AAPL) at 33 bps; the only other stock with an impact of more than 25 bps is AMZN.
Now just because NVDA’s average one-day change in reaction to earnings translates to the largest impact of any other stock in the market doesn’t mean the S&P 500 will experience a move of 0.54% tomorrow. As shown in the chart below, there have been plenty of quarters where NVDA’s one-day reaction to earnings has been well less than 8%, including four of the last eight quarters where the one-day reaction to earnings was less than half of the average. Then again, there have also been three quarters during that same span where NVDA’s one-day move in reaction to earnings was well over 10%, including last May when the stock surged 24%! Based on its current market cap, a 24% move in NVDA would equate to a 1.6% move in the S&P 500 – for just one stock!
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The Closer – Real Estate Cap Rate, Staples Surge, Policy Goals – 8/27/24
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Looking for deeper insight into markets? In tonight’s Closer sent to Bespoke Institutional clients, we lead off with a dive into Real Estate cap rates (page 1) and the surge in defensive stocks like Consumer Staples (page 2). We then update our Five Fed data and the latest releases of consumer confidence and home prices (page 3). Next, we evaluate monetary policy’s success in bringing down inflation (page 4) before closing out with a 2-year note auction recap (page 5).we le
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