Chart of the Day – Valuations Rise As Earnings Fall
GLD: Heavier Than It Has Ever Been
If it seems to you like most financial assets have done nothing but go down this month, you’re right. A perfect example of this pattern is the price of Gold. The SPDR Gold Trust (GLD) has had an intraday high and low that was lower than the intraday high and low of the previous day on each of the last eight trading days (shaded area in chart), and there has only been one day this month (8/4) when GLD had a higher high and higher low relative to the previous day. August has been a one-way street, and the direction has been south.
What makes the current streak notable is that in the trading history of GLD dating back to late 2004, there has never been a longer streak of daily lower highs and lower lows. There have been three prior periods where GLD had lower highs and lower lows for seven straight days, but with yesterday’s decline, GLD’s current streak is now in a league of its own.
Bespoke’s Morning Lineup – 8/17/23 – Looking Over Their Shoulders
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.
“The only way to get ahead is to find errors in conventional wisdom.” – Larry Ellison
Below is a snippet of content from today’s Morning Lineup for Bespoke Premium members. Start a two-week trial to Bespoke Premium now to access the full report.
Investors are trying to muster an up day as futures trade modestly higher an hour ahead of the opening bell. Jobless claims and the Philly Fed Manufacturing report were just released. The former was basically right in line with expectations while the Philly report unexpectedly increased. One potential negative of the Philly report was the fact that like its Empire counterpart, the Prices Paid component showed a notable increase.
With the flip of the calendar into August, the general tone of the market shifted on a dime. Look no further than the chart of Apple (AAPL). The stock closed at an all-time high on July 31st, but since then it’s been all downhill as the stock has corrected more than 10%, erasing more than $300 billion in market cap in the process. That’s greater than the market cap of all but 20 US publicly traded companies!
At the sector level as well, the tide has gone out. The image below is a snapshot of sector ETFs from our Trend Analyzer as of the end of July. At that point, all but one sector was overbought (1+ standard deviations above its 50-DMA), and two sectors – Communication Services and Energy – were at ‘extreme’ overbought levels.
The sector picture has changed significantly in just over two weeks, though. As of yesterday’s close, only one sector – Energy – remains at overbought levels, and three have moved into oversold territory (Utilities, Technology, and Real Estate). Also notable is the fact that every sector has traded lower over the last week with all but Health Care posting declines of more than 1%.
Just as there’s nothing like a rising market to improve investor sentiment, all it usually takes is a market pullback to get investors nervous. This week’s sentiment survey from the American Association of Individual Investors (AAII) looks as though we may be starting to see that play out. Over the last week, bullish sentiment dropped from 44.7% down to 35.9% which is down over 15 percentage points from the recent peak back in late July. Certainly not a panic, but bulls are starting to look over their shoulders.
Start a two-week trial to Bespoke Premium to read today’s full Morning Lineup.
Bespoke Baskets Update — August 2023
The Closer – New Flights, Steel Deals, Argentine Elections, Fed Minutes – 8/16/23
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 begin with commentary on a range of topics including steel deals, Argentinian elections, and the Fed minutes (page 1). We then review the latest industrial production figures (page 2) before looking at today’s residential construction data (pages 3 and 4). We close out with a look at the massive increase in domestic crude production (page 5).
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 — 8/16/23
Chart of the Day – Utes: A Casualty of TIAA
Fixed Income Weekly — 8/16/23
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!
Stable Housing
The latest reads on Housing Starts and Building Permits for the month of June were released earlier this morning and showed mixed results relative to expectations (starts slightly better than expected, permits modestly weaker). The table below breaks down the report by single and multi-family units as well as on a regional basis. Two notable trends that stand out in the table concern single-family vs multi-family and regional trends. First, for both starts and permits, single-family was stronger than multi on both a m/m and y/y basis. Single-family units have more of an economic impact, so it’s good to see strength on that score. On a regional basis, we found it interesting to see that while most regions of the country experienced double-digit y/y increases in starts, permits in all-four regions were down by at least 9% on a y/y basis which would suggest that the pipeline for future starts is getting smaller.
Below are a couple notable charts worth highlighting from the report. On a 12-month average basis, both Housing Starts and Building Permits are down sharply from their early 2022 peaks, but the last few months have seen some stabilization in the pace of starts. Permits, meanwhile, remain stuck in their trend, and based on the current pace and where they were last fall, we’re unlikely to see any stabilization in this reading over the course of the next few months.
Last but not least, the chart below compares the trend in Housing Starts over a three-month rolling basis to the performance of homebuilder stocks as tracked by the iShares Home Construction ETF (ITB), and it provides a great example of how the market is always looking past the headlines. Even as Housing Starts continued to crater in the middle of 2022, homebuilder stocks began what looked like an inexplicable rally, but just as stocks in the group peaked ahead of the peak in Housing Starts in April 2022, they also bottomed well before the February low.
Bespoke’s Morning Lineup – 8/16/23 – Tentative
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.
“When things go wrong, don’t go with them.” – Elvis Presley
Below is a snippet of content from today’s Morning Lineup for Bespoke Premium members. Start a two-week trial to Bespoke Premium now to access the full report.
It’s been a tentative morning in markets following yesterday’s relatively large declines. Building Permits and Housing Starts were just released and while Permits were slightly weaker than expected, Starts were slightly better than expected although June’s reading was revised lower. The only other reports on the calendar for the day are Capacity Utilization and Industrial Production at 9:15 Eastern. Also don’t forget about the release of the Fed Minutes at 2PM.
2023 started off weak for the Industrials sector as it underperformed the broader market by a wide margin in the first five months of the year. As of the end of May, the sector was down fractionally YTD even as the S&P 500 was up over 9%. The chart below showing the relative strength of the sector versus the S&P 500 clearly illustrates this trend, but just as the sector underperformed in the first five months of the year, it has seen a rebound since then as concerns over a hard landing in the US economy shifted more to a soft or no-landing scenario. As the overall market has come under pressure in August, though, the Industrials sectors hasn’t been immune to the selling, and yesterday’s decline of 1.27% for the sector was the largest one-day decline since 5/31 when the sector’s relative strength bottomed for the year.
Unlike the S&P 500 which closed below its 50-day moving average yesterday, the Industrials sector managed to hold above that level for now and looking at a longer-term chart for the sector, it’s interesting to note that the support of the 50-DMA also happens to coincide with the sector’s highs from late 2021 and early 2022. Theoretically, these prior highs should act as support, but only time will tell.
Start a two-week trial to Bespoke Premium to read today’s full Morning Lineup.