The Bespoke Report — 5/24/24 — NVDA Booms and Prices Cut
To read our weekly Bespoke Report newsletter and access everything else Bespoke’s research platform has to offer, start a two-week trial to Bespoke Premium. We’ve got some great stats in this week’s report on how NVDA’s rally compares to prior rallies for mega-caps. We also show how the AI Boom so far stacks up versus the Dot Com Boom, and we provide a number of new stock lists for you to peruse over the long weekend.
Daily Sector Snapshot — 5/24/24
Semis – 20% in Five Weeks
Since its closing low on April 19th, the Philadelphia Semiconductor Index (SOX) has rallied over 20% in five weeks. When anything rallies that much in so little time, you can’t help but take notice, but in the case of the SOX, the current rally is already the second this year – and it’s not even June!
As shown below, the SOX rallied 21.2% in the five weeks ending on March 7th, and back in June 2023, it was also up 20% over five weeks for a third time in the last year.
The fact that there have been three separate five-week rallies of at least 20% sounds pretty remarkable. In the post-COVID environment, though, they’ve been somewhat common with eight other occurrences (besides the current one) since April 2020. That’s more than the seven total occurrences from 2003 through 2019, but from the SOX’s inception through the end of 2002, when semis were a much less ‘mature’ sector, there were a total of 20 different periods when the SOX rallied at least 20% in five weeks. As shown in the chart below, in many of those periods, the magnitude of the gain was much larger than 20%!
Bespoke’s Morning Lineup – 5/24/24 – Here Comes Summer
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 legacy of heroes is the memory of a great name and the inheritance of a great example.” – Benjamin Disraeli
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
If you commuted to work today, you already noticed that you’re one of the few, as many people decided to use the Friday before Memorial Day as a work-from-home day or even better, a day off. The data calendar is light to close the week with Durable Goods at 8:30 (stronger than expected) and the University of Michigan Sentiment survey at 10 AM. The preliminary release of this report on 5/10 came in much weaker than expected while one-year inflation expectations surged from 3.2% up to 3.5%. For today’s report, economists expect the one-year reading to recede modestly down to 3.4%.
Heading into the opening bell, equity futures are trading little changed but with a positive bias while treasury yields are little changed. In Asia, equities were lower, even as Core CPI in Japan slowed to a y/y rate of 2.2%. In Europe, stocks are trading lower to close out the week as they catch up to yesterday’s decline in the US.
This morning’s action follows a disappointing session on Thursday where the S&P 500 opened at record highs and what turned out to be the day’s high. It then traded steadily lower throughout the session, and by the time the closing bell rang, the S&P 500 SPDR ETF (SPY) finished down 0.73% and more than 1.3% from its intraday high.
In today’s Morning Lineup, we looked at prior reversals similar to yesterday’s to see where in the market cycle they tended to occur and how the S&P 500 tended to perform going forward. Were prior occurrences an ominous warning? Sign up for Bespoke Premium to find out!
To continue reading the rest of today’s morning note, where you’ll find much more analysis of global equities and economic readings released this morning, read today’s full Morning Lineup with a two-week Bespoke Premium trial.
The Closer – Securitized Losses, New Home Sales, Manufacturing – 5/23/24
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Looking for deeper insight into markets? In tonight’s Closer sent to Bespoke Institutional clients, we begin with commentary on commercial mortgage backed securities (page 1) followed by a rundown of the latest new home sales data (pages 2 and 3). Next, we update our Five Fed Manufacturing Composite with the first three inputs (page 4) before closing with a 10 year TIPS 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!
Bespoke’s Weekly Sector Snapshot — 5/23/24
The Bespoke 50 Growth Stocks — 5/23/24
The “Bespoke 50” is a basket of noteworthy growth stocks in the Russell 3,000. To make the list, a stock must have strong earnings growth prospects along with an attractive price chart based on Bespoke’s analysis. There were 8 changes to the list this week.
The Bespoke 50 is available with a Bespoke Premium subscription or a Bespoke Institutional subscription. With Bespoke Premium, you’ll receive a number of daily market updates from us along with our weekly newsletter and a portion of our investor tools. With Bespoke Institutional, you’ll receive everything that’s included with Premium plus additional daily macro analysis and more stock-specific research.
To see all 50 stocks that currently make up the Bespoke 50, simply start a two-week trial to Bespoke Premium or Bespoke Institutional.
The Bespoke 50 performance chart shown does not represent actual investment results. The Bespoke 50 is updated monthly on Thursdays unless otherwise noted. Performance is based on equally weighting each of the 50 stocks (2% each) and is calculated using each stock’s opening price as of Friday morning after publication. Entry prices and exit prices used for stocks that are added or removed from the Bespoke 50 are based on Friday’s opening price. Any potential commissions, brokerage fees, or dividends are not included in the Bespoke 50 performance calculation, but the performance shown is net of a hypothetical annual advisory fee of 0.85%. Performance tracking for the Bespoke 50 and the Russell 3,000 total return index begins on March 5th, 2012 when the Bespoke 50 was first published. Past performance is not a guarantee of future results. The Bespoke 50 is meant to be an idea generator for investors and not a recommendation to buy or sell any specific securities. It is not personalized advice because it in no way takes into account an investor’s individual needs. As always, investors should conduct their own research when buying or selling individual securities. Click here to read our full disclosure on hypothetical performance tracking. Bespoke representatives or wealth management clients may have positions in securities discussed or mentioned in its published content.
Chart of the Day – Picking Banks & Brokers
Bespoke’s Morning Lineup – 5/23/24 – Nothing Small About That
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 single most important thing for any processor is getting adoption by software developers.” – 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.
Positive earnings from Nvidia (NVDA) have US futures firmly higher this morning, and lower-than-expected jobless claims have also helped to keep things green. Later we’ll get flash PMI readings from S&P at 9:45, New Home Sales at 10, and the KC Fed Manufacturing report at 11 AM.
If there’s anyone who would know about the accuracy of the quote above from NVDA CEO Jensen Huang, it would be Jensen Huang who is riding the wave of AI using his company’s chips to heights that could never have been imagined. A big reason why is because of the Cuda software platform that accompanies those chips, and that was on full display in last night’s earnings report which blew the doors off expectations across just about every possible metric.
Given the magnitude of its beat relative to expectations in its reports last night, traders seemed surprised that Nvidia (NVDA) is up ‘only’ 7% in the pre-market. Whether that’s the ‘right’ reaction to the report, we’ll leave it to others to decide, but a 7% move is anything but small. First, let’s look at NVDA’s price chart. With the stock trading over $1,000 this morning, the stock is up 164% over the last year and 105% on a year-to-date basis. Nothing small about that.
Now let’s compare the change in NVDA’s market cap today to the market cap of individual S&P 500 companies. As of yesterday’s close, the average market cap of S&P 500 components was just under $95 billion while the median market cap was just $35.1 billion. The fact that the average market cap is 169% larger than the median shows how top-heavy the index is, but that’s a discussion for another time. Based on pre-market trading, NVDA is poised to increase its market cap by $175.2 billion. That’s over $80 billion more than the average market cap and $140 billion more than the median market cap. Not only that but that $175 billion in market cap would also rank as the 46th largest company in the entire S&P 500. That’s larger than the market caps of companies like Caterpillar (CAT), American Express (AXP), Pfizer (PFE), and Morgan Stanley (MS). Again, nothing small about that.
To continue reading the rest of today’s morning note, where you’ll find much more analysis of global equities and economic readings released this morning, read today’s full Morning Lineup with a two-week Bespoke Premium trial.
The Closer – Fed Minutes, The Chip Stock & Shipping Stocks – 5/22/24
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Looking for deeper insight into markets? In tonight’s Closer sent to Bespoke Institutional clients, we begin with a recap of the latest Fed minutes and the blockbuster NVIDIA (NVDA) earnings report (page 1). We then check in on shipping stocks (page 2) before switching over to the latest existing home sales (page 3) and housing affordability data (page 4). We finish with recaps of the 20 year bond auction (page 5) and EIA data (page 6).
See today’s full post-market Closer and everything else Bespoke publishes by starting a 14-day trial to Bespoke Institutional today!