B.I.G. Tips – Death by Amazon – 2/9/24
In this note we update performance of our “Death By Amazon” and “Amazon Survivors” indices. The index of stocks that are exposed to Amazon’s business model have traded more or less in lock step with the market over the past two years. That’s a big contrast with the prior decade when they either outperformed or underperformed pretty dramatically.
The same can’t be said for our “Amazon Survivors” names which are intended to capture stocks which are resilient to the rise of Amazon’s monster e-commerce business despite competing with it. This index has generally outperformed the market as a whole.
Both flavors of index have outperformed Amazon significantly over the past five months or so. During that period, the market has broadly rallied even though large tech names like Amazon have sunk to the lowest levels of the equity bear market.
Our “Death By Amazon” index was created many years ago to provide investors with a list of retailers we view as vulnerable to competition from e-commerce. In 2016, we also created our “Amazon Survivors” index which is made up of companies that look more capable of dealing with the threat from online shopping. To see how the two indices have been performing lately and view the full list of stocks that make up the indices, please read our newest report on the subject available to Bespoke Premium and Bespoke Institutional members.
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Bespoke’s Morning Lineup – 2/9/24 – Quiet Data Day
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“How old would you be if you didn’t know how old you are?” – Satchel Paige
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
After a brief second where it traded above 5,000 yesterday before dipping back down below that level into the close, the S&P 500 is poised to open firmly above that psychological level today. Whether or not it holds into the weekend remains to be seen, but four out of five Fridays this year have been positive.
Driving the tone in futures markets this morning there have been many big reactions to earnings where stocks like Pinterest (PINS), Expedia (EXPE), and Affirm (AFRM) are sharply lower, while shares of Cloudflare (NET) have been the big pre-market winner with a gain of over 25%. Outside of the equity market, treasury yields are little changed, crude oil is modestly lower, and bitcoin is surging back above $47K.
The economic calendar i slight today as the only release is the revisions to CPI seasonally adjusted data.
While there have been some concerning trends related to market breadth lately, one indicator that remains strong is the percentage of stocks hitting 52-week highs. For three months and running, there hasn’t been a single day where more stocks in the S&P 500 hit 52-week lows than 52-week highs, which is a very impressive run. Now, if we could finally start to see some broadening of the market, maybe we could start to see an expansion in the percentage of stocks hitting new highs as well. Wouldn’t that be nice?
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The Closer – Earnings, Central Banks Abroad, Strong 30Y Auction – 2/8/24
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Looking for deeper insight into markets? In tonight’s Closer sent to Bespoke Institutional clients, we begin with a look into the earnings in the US and abroad (page 1) followed by a review of rate decisions from the Czech National Bank and Banxico (page 2). We finish with a recap of today’s refreshingly healthy 30 year bond auction (page 3)
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Bespoke’s Weekly Sector Snapshot — 2/8/24
Chart of the Day – What’s Overbought?
Bespoke’s Morning Lineup – 2/8/24 – Setting Sights on 5,000
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“I don’t play small. You have to go out and play with what you have. I admit I used to want to be tall. But I made it in high school, college, and now the pros. So it doesn’t matter.” – Spud Webb
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
After getting within pennies of 5,000 yesterday, will today be the day? Futures are mixed this morning, but the changes are small on either side of the unchanged line. The only economic data on the calendar was jobless claims, and both initial and continuing claims came in slightly lower than expected. Like equities, treasury yields are little changed, but the bias is to the upside. Outside of the US, international markets are biased to the upside, and Japan rallied over 2% following some dovish commentary from the BoJ deputy governor suggesting that he doesn’t see a path of continuous rate hikes.
Before the NFL Season stretched out until mid-February, the NBA All-Star game used to take place in late January to early February (it’s now been pushed out to the second half of the month with this year’s scheduled for 2/18). One of the most exciting aspects of All-Star weekend for a lot of kids was the slam dunk contest where the tallest and most athletic players would show off their skills on an undefended rim (you could argue that defense doesn’t exist for the whole weekend, but that’s another story). Depending on when you grew up, you probably remember MJ going airborne from the foul line flying through the air to the rim, and finishing it off one-handed. For younger fans, maybe it was Zach Lavine in 2016 going through his legs while in the air.
But back on this day 38 years ago in 1986, the unlikeliest of contestants, one Spud Webb, who clocked in at 5 feet, 7 inches (generously) stunned the crowd to win. Going against players over a foot taller, including his teammate Dominique Wilkins, Webb wowed the crowd with a 360-degree midair jam to bring the trophy home.
If only small caps could get some inspiration from Spud Webb. Over the last five weeks, the Russell 2000 has underperformed the S&P 100 (largest stocks in the S&P 500) by over ten percentage points, a margin of underperformance that has only been exceeded in a few periods. That said, it was less than two months ago that the Russell 2000 had outperformed the S&P 100 by more than ten percentage points in the prior five weeks. Given the gyrations in performance between the two indices in the post-COVID period, there’s been a lot of indecision on the part of investors, although the bias has been to mega-caps.
From a longer-term perspective, the Russell 2000 has been in a consistent period of underperformance relative to the S&P 100 for ten years now, and the ratio of the prices of the two indices is down to its lowest level in 20 years. As long as this period of underperformance has been, though, from the mid-1980s through 1999, small caps pretty consistently underperformed mega caps for a period of nearly 16 years.
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The Closer – Fedspeak, Budget Forecasts, Consumer Credit – 2/7/24
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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 tonight’s earnings and the big day of Fedspeak (page 1). Next, we dive into the latest Congressional Budget Office forecasts (pages 2 and 3) before shifting over to the latest consumer credit figures (page 4). We then review today’s solid 10 year note auction (page 5) and the latest petroleum inventory data (page 6).
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Daily Sector Snapshot — 2/7/24
Chart of the Day – Housing Still Fixated on Rates
Fixed Income Weekly — 2/7/24
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.
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