Bespoke’s Morning Lineup – 2/7/24 – Futures on the Rebound
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“If your work is so smart that only smart people get it, it’s not that smart.” – Chris Rock
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
US equity futures were flat to modestly lower up until about an hour ago, but have seen a nice bounce, and all three major US indices are indicated to open higher on the day. Once again, there’s not much economic data to steer futures, and the pace of earnings since yesterday’s close has been mixed. On the upside, Ford (F) has been one of the bigger winners as it trades 5% higher after better-than-expected earnings and announcing a special dividend of 18 cents per share. To the downside, shares of Snap (SNAP) have lost nearly a third of their value this morning following a weaker-than-expected report, putting the stock on pace to fall in reaction to earnings for seven straight quarters.
In international markets, it was a mixed session in Asia overnight as Japan saw a stronger-than-expected report on Leading Indicators. Europe has taken a modestly negative tone in early trading as most major indices in the region trade down fractionally. In Germany, Industrial Production fell more than expected while a payrolls report in France was slightly better than expected.
After Tuesday’s rally in mainland China, the KraneShares CSI China Internet ETF (KWEB) had its best day since last July as it rallied 6.7%. Investors were excited about the prospects for a major round of stimulus from the Chinese government to prop up its stock market and economy, but it’s important to realize that there have been more than a few false alarms over the last few years. Already this morning, KWEB reversed some of yesterday’s gains with a decline of over 2% in the pre-market.
The chart below shows the performance of KWEB since its inception in 2013, and the red dots indicate each time the ETF rallied more than 5% in a single day. It’s easy to see that there have been a lot more occurrences since the ETF’s peak in February 2021 than before it. Of the 58 occurrences in the ETF’s history, 42 (72%) have been in the last three years.
After big rallies in a bear market like Tuesday, it’s tempting to think that it’s the start of something bigger, but in KWEB’s case, it has not. We saw a similar dynamic at play in the US during the dot-com bust and then during the financial crisis where the response to every big move was “Is this it?” Eventually, one of the rallies does take hold, but there are a lot of false alarms along the way. In KWEB’s case, Tuesday’s rally only took the ETF back to where it was less than two weeks ago.
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The Closer – Consumer Credit, Mortgages, Logistics Leap – 2/6/24
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Looking for deeper insight into markets? In tonight’s Closer sent to Bespoke Institutional clients, we kick things off with a review of tonight’s earnings and today’s Fedspeak (page 1). We then dive into the latest consumer credit data (pages 2 – 5) before also reviewing the latest mortgage delinquency figures (page 6). After a look into the latest Logistics Managers Index data (page 7), we finish with a review of today’s solid 3 year note auction (page 8).
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Daily Sector Snapshot — 2/6/24
Bespoke Stock Scores — 2/6/24
Bespoke’s Consumer Pulse Report — February 2024
Bespoke’s Consumer Pulse Report is an analysis of a huge consumer survey that we run each month. Our goal with this survey is to track trends across the economic and financial landscape in the US. Using the results from our proprietary monthly survey, we dissect and analyze all of the data and publish the Consumer Pulse Report, which we sell access to on a subscription basis. Sign up for a 30-day free trial to our Bespoke Consumer Pulse subscription service. With a trial, you’ll get coverage of consumer electronics, social media, streaming media, retail, autos, and much more. The report also has numerous proprietary US economic data points that are extremely timely and useful for investors.
We’ve just released our most recent monthly report to Pulse subscribers, and it’s definitely worth the read if you’re curious about the health of the consumer in the current market environment. Start a 30-day free trial for a full breakdown of all of our proprietary Pulse economic indicators.
Chart of the Day – Shrinking Participation
B.I.G. Tips – Mega Cap Mean Reversions
The Triple Play Report — 2/6/24
An earnings triple play is a stock that reports earnings and manages to 1) beat analyst EPS estimates, 2) beat analyst sales estimates, and 3) raise forward guidance. You can read more about “triple plays” at Investopedia.com where they’ve given Bespoke credit for popularizing the term. We like triple plays as an indication that a company’s business is firing on all cylinders, with better-than-expected results and an improving outlook. A triple play is indicative of positive “fundamental momentum” instead of pure fundamentals, and there are always plenty of names with both high and low valuations on our quarterly list.
Bespoke’s Triple Play Report highlights companies that have recently reported earnings triple plays, and it features commentary from management on triple-play conference calls, company descriptions and analysis, and price charts. Bespoke’s Triple Play Report is available at the Bespoke Institutional level only. You can sign up for Bespoke Institutional now and receive a 14-day trial to read this week’s Triple Play Report, which features 18 new stocks. To sign up, choose either the monthly or annual checkout link below:
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Manhattan Associates (MANH) is an example of a company that reported an earnings triple play recently. As shown below, MANH has been in an uptrend since the beginning of 2023 and traded at an all-time high following its Q4 earnings report when shares moved 8.4% higher on 1/31.
Most impressive about MANH is its 8 straight earnings triple plays and 21 straight quarters of EPS and revenue beats, as shown in the snapshot below from our Earnings Explorer. In the company’s last 20 quarterly earnings reports going back to Q1 2019, 14 of those reports have been triple plays. In other words, 70% of MANH’s earnings reports have resulted in triple plays over the last 5 years. Over that time frame, since the beginning of 2019, MANH shares are up 488% including a 105% rally since the beginning of 2023. You can read more about MANH and the 17 other triple plays in our newest report by starting a Bespoke Institutional trial today.
Bespoke Investment Group, LLC believes all information contained in these reports to be accurate, but we do not guarantee its accuracy. None of the information in these reports or any opinions expressed constitutes a solicitation of the purchase or sale of any securities or commodities. This is not personalized advice. Investors should do their own research and/or work with an investment professional when making portfolio decisions. As always, past performance of any investment is not a guarantee of future results. Bespoke representatives or clients may have positions in securities discussed or mentioned in its published content.
Bespoke’s Morning Lineup – 2/6/24 – Do it for the Gipper
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.
“Government is like a baby: an alimentary canal with a big appetite at one end and no sense of responsibility at the other.” – Ronald Reagan
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
Across the S&P 500, Nasdaq, and Dow this morning, futures are pointing to modest losses with all three indices trading down 0.12% as of this writing. True to form, though, the Russell 2000 is down more than triple that at 0.37%. Outside of the US, European stocks are modestly higher, and Chinese stocks surged on hopes for more government support. The economic calendar in the US is light today as it will be for most of the week.
Today would have marked the 113th birthday of former president Ronald Reagan, and besides being the leader of the free world for eight years, Reagan’s acting career was highlighted by his role in Knute Rockne – All American, where he played George Gipp. Knute Rockne was the coach of football at Notre Dame and was famous for his ”Win One for the Gipper Speech” which he gave at halftime in a game against Army at Yankee Stadium in 1928. The team was having a terrible season and living up to their Fighting Irish nickname they were not. Inspired by the pep talk, Notre Dame came out and scored two second-half touchdowns to stun Army by a score of 12-6. If there’s any part of the market that could use a Rockne boost right about now, it’s small caps.
Well maybe not just small caps. Just when you thought it was safe to get back in the 60/40 pool, long-term US treasuries have found themselves getting bombarded in 2024. Year to date, the iShares 20+ Year US Treasury ETF (TLT) is already down over 4%. Long-term treasuries sold off throughout just about all of January, and while they rallied in the last days of January and to kick off February to get back to even, the two trading days since last Friday’s employment report have been painful. TLT has experienced back-to-back declines of over 2%, taking it back below both its 50 and 200-day moving averages and perilously close to breaking the loose uptrend that emerged from the October lows.
Consecutive declines of over 2% hurt no matter what the asset class, but the sting of two declines of that magnitude for treasuries hits hard. Since TLT started trading in late 2002, there have only been two other periods where the ETF experienced back-to-back 2% declines, and they occurred at the two most volatile periods of trading in the last two decades – late in the Financial Crisis (January 2009) and within days of the Covid lows. As everyone remembers, those two prior periods both ended up being massive buying opportunities for the equity market, but they also occurred after very large declines in stocks. Right now, the S&P 500 is within half of one percent of an all-time high. Extreme volatility in the treasury market with the VIX under 14? You don’t see that often, but then again, there’s a lot that has happened in the last four years that wouldn’t get filed in the normal folder.
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The Closer – Yield Spike, SLOOS, Treasury Auctions – 2/5/24
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Looking for deeper insight into markets? In tonight’s Closer sent to Bespoke Institutional clients, we start with a note on the surge in yields over the past couple of sessions (page 1). We then dive into the latest bank loan officer survey (pages 2 and 3). Next, we preview this week’s upcoming Treasury auctions (page 4) before finishing with a rundown of the most recent positioning data (pages 5 – 8).
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