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“If you can’t explain it to a six-year old, you don’t understand it yourself.” – Albert Einstein

Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.  

With some important economic data ahead (PPI, Retail Sales, and Jobless Claims), futures have been rallying this morning.  Some of the positive air has been let out of the balloon, though, as the data was, for the most part, disappointing.  We’ll start with the good news. Both Initial and Continuing Jobless Claims were better than expected.  On the downside, Retail Sales rose less than expected across the board, and to make matters worse, January’s reading was also revised lower.  PPI was also disappointing relative to expectations as the headline reading came in at double expectations (0.6% m/m vs 0.3% forecast).  Core PPI was closer to expectations at 0.3% vs forecasts for an increase of 0.2%.  As mentioned, even with the disappointing data, futures remain firmly in positive territory. As mentioned following the hotter-than-expected CPI earlier this week, while the inflation data was a disappointment, the commencement of rate cuts may be pushed out, but rate hikes still aren’t part of the conversation.

Yesterday was the 50^th trading day of the year, and although the S&P 500 finished down for the day, there have still been 17 record closing highs so far this year.  As shown in the chart below, this year’s total in the first 50 trading days of the year represents the most since 1998 when there were 20.  This year is also just the fifth time since 1953 (when was the first full year of the five-trading day week in its current form) that 30% or more of a year’s first 50 trading days had record closing highs.  Of the four prior years shown, the S&P 500 finished the year higher three times with the only exception being the 14.8% decline in 1987.

While 15 or more record closing highs in the first 50 trading days of a year is uncommon, for all 50-day periods it has been more common. The chart below shows the number of record closing highs over all 50 trading day periods since 1953.  Looking at it this way, there have been plenty of other periods where there have been as many or much more record-closing highs over a 50-trading day span. Just as recently as September 2021, there were 25 in 50 days.

In terms of performance going forward, looking back at history, short-term market returns have tended to be below average in the week and month after similar periods where there were 15 or more record closing highs over 50 days, but six and twelve months later, average returns were pretty much the same whether there were 15 or more or less than 15.

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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.

“I tend to approach bad news as a problem that can be worked through and solved, something I have control over rather than something happening to me.” – Robert Iger

Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.  

With earnings season pretty much out of the way and a sparse economic calendar, there’s not a lot going in markets this morning.  While they are off their overnight lows, futures are little changed with a slightly negative bias, and treasury yields are slightly higher. Asian stocks also lacked much conviction overnight, although India was down over 1%. Europe has a more positive tone with the STOXX 600 trading up 0.2% and is being led higher by Spain (+1.3%) and Italy (+0.6%). That strength comes even as Industrial Production on the continent fell more than expected (-3.2% vs -1.8% forecast).

Yesterday was another one of those days in the market where the market rallied, and breadth stunk.  While the S&P 500 was up 1.1%, the net advance/decline for the S&P 500 was a paltry +78, and 48 of those advancers were from the Technology sector. Just for the sake of reference, on Monday, when the S&P 500 was down fractionally, the net A/D line was slightly higher at +83!

You would prefer to see more stocks participating as the market rallies than less, but based on the last five years of trading, it hasn’t particularly mattered. Over the last five years, there have been 216 trading days where the market rallied more than 1%, and the average net A/D reading on those days was +344. In the chart below, we show the ten days when the S&P 500 rallied at least 1% that had the weakest daily breadth readings.  On these days, the daily breadth reading ranged anywhere from -54 (8/26/20) to +156 (2/2/23).  Looking at the chart, these relatively weak breadth readings weren’t a warning sign for the broader market. The only one where the market immediately fell notably was after the February 2023 occurrence, which ironically was the strongest breadth reading of the ten.

Read today’s entire Morning Lineup.

For more analysis of global equities and economic readings released this morning, read today’s full Morning Lineup with a two-week Bespoke Premium trial.