Daily Sector Snapshot — 5/22/24
Chart of the Day – Analyst Ratings
B.I.G. Tips – Earnings Triple Plays Recap: Q1 2024
Today we published our newest Earnings Triple Plays report. During the just-completed Q1 2024 earnings reporting period, there were a total of 98 earnings triple plays out of just under 2,000 individual quarterly earnings reports from US-listed stocks. That’s 20 more than the 78 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 — 5/22/24
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!
Click here and start a 14-day free trial to Bespoke Institutional to see our newest Fixed Income Weekly now!
Bespoke’s Morning Lineup – 5/22/24 – Calm Seas and Fair Winds
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.
“Volatility is a welcome creator of opportunity.” – Seth Klarman
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 are modestly lower this morning as Asian and European stocks trade lower for the second day in a row. One of the main drivers of weaker sentiment has been a hotter-than-expected inflation report in the UK. That has lowered the odds of a June rate cut from the BoE, and treasury yields are increasing in response. We’ll finally get an economic report this week with Existing Home Sales at 10 AM, but the main event everyone has been waiting for all week is Nvidia’s (NVDA) earnings report after the close.
Last Friday’s close of 11.99 in the VIX ended a streak of 1,137 trading days where the index closed above 12. As the index closed just a penny below 12, it was hardly a convincing end to that streak, but yesterday it closed below 12 more convincingly (11.84), so we wanted to highlight it. As shown in the chart below, while the VIX traded at lower levels on an intraday basis last December, it hasn’t closed below yesterday’s level since late November 2019.
The just-ended 1,137-day streak of closes above 12 ranks as the third longest of all time and just the fifth time the index went more than a year without closing below 12. The most recent streak before the just-ended streak was also the shortest of the five lasting just 287 trading days and ending in late November 2019 not long before Covid. The longest streak was coming out of the dot-com bubble burst and lasted 2,257 trading days or the equivalent of just about 5 years.
With the VIX now so low, does the lack of volatility equal less opportunity going forward? In today’s Morning Lineup, we looked into that question and provided a summary of how markets performed going forward. To read that analysis, login or signup today
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 – Fedspeak & Returns, Single Family Starts, Credit – 5/21/24
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 begin with an update on recent Fedspeak tones and what that implies for equity performance (page 1). We follow up with a look at Canadian CPI and new single family home starts (page 2). We close out with a checkup on credit quality (page 3).
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 — 5/21/24
Crypto Rises and Shorts Shatter
As we first noted in today’s Morning Lineup, while equities are having a snoozer of a session, crypto prices are rallying. Although it has come off the high, the price of Bitcoin was above $70,000 this morning for the first time in over a month. Meanwhile, Ethereum prices are up double-digit percentage points (11% as of this writing) on renewed ETF optimism. As shown below, using the Grayscale Bitcoin Trust (GBTC) as a proxy, Bitcoin prices are currently trading at the high end of this year’s range.
Typically, it goes without being said that crypto prices are highly volatile given the asset is at one of the more extreme ends of the risk spectrum. In a similar boat are the most heavily shorted stocks. Those “meme stocks” were also recently in the spotlight as they saw a temporary resurgence last week. In the chart below, we show the relative strength line of GBTC versus an index of the 100 most heavily shorted Russell 3,000 members over the past year. For the most part, GBTC has outperformed the most heavily shorted stocks. However, beginning in mid-March that relationship swapped to those highly shorted names beginning to outperform Bitcoin. That hit a pinnacle one week ago as stocks like GameStop (GME) began giving up the ghost, and since then that relative strength line is back to favoring GBTC.
Although last week had reminiscences of the 2021 meme stock mania, one interesting difference was the relationship with crypto prices and those short squeeze names. Using the same groups as above, below we show the rolling 50-day correlation between GBTC and the most heavily shorted stocks.
As shown, for most of the past several years, Bitcoin has tended to have a decent positive correlation with price action in the most heavily shorted stocks. In other words, crypto prices and heavily shorted stocks generally moved in the same direction on a given day. That positive correlation has been present recently although it got a dent on the meme stock surge. Again, that hit to the correlation has been merely a dent as it stands in stark contrast to January 2021 (or even various other points of the past year) when the two had historically uncorrelated moves.
