Chart of the Day – Presidential Approval: An Inflation Referendum
Bespoke’s Morning Lineup – 9/14/23
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“Smart people focus on the right things.” – Jensen Huang
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US equity futures are up slightly this morning as investors digest a surprise rate hike from the ECB and await a slug of economic data at 8:30 AM ET, including August Retail Sales, August PPI, and weekly Jobless Claims.
Markets continue to trade heavy and small-caps continue to underperform as we work our way through what has historically been the worst month of the year for stocks. As shown below, the Russell 2,000 closed below its 200-day moving average yesterday for the first time in months as a short-term head and shoulders pattern has formed.
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CPI Gains Come and Go
The S&P 500 managed to rise 0.12% on Wednesday in the wake of the CPI release. That is the fifth month in a row in which the S&P 500 rose in response to a CPI print, and only two months over the past year (February and April) have seen negative reactions. Although the S&P has consistently risen on CPI days, the size of the moves have been less substantial than they were previously. As shown below, taking a rolling 10-day average of the S&P 500’s daily change on days that CPI is published shows the average performance remains positive but has turned lower versus a couple months ago when the average move was above 1.2%, which was some of the strongest reactions in a decade and a half.
Although S&P 500 performance has been positive on the day of CPI releases over the last year, looking one week out, the results have been less positive. As shown below, the S&P has consistently fallen in the week after CPI releases. Again taking a rolling 10-day average, one week performance has been negative for 20 months in a row, or every month since the start of 2022.
The Triple Play Report — 9/14/23
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 15 new stocks. To sign up, choose either the monthly or annual checkout link below:
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Zscaler (ZS) is an example of a company that reported an earnings triple play recently back on the evening of September 5th. As shown below, ZS’s stock struggled in 2022 but since its low in May, ZS has gained about 80%. Despite a negative reaction to the triple play news, ZS is now trading above both its 50-day and 200-day moving averages.
As shown in the snapshot from our Earnings Explorer below, ZScaler (ZS) has now posted 22 straight EPS and revenue beats since its IPO in 2018! This quarter’s triple play adds to the list, and is now its sixth trip in a row. Although the stock didn’t move in a favorable direction following the earnings report after the close on September 5th, ZS had lots to celebrate in a strong quarter that featured rapid growth of its data protection offerings. You can read more about ZS and the 14 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.
The Closer – CPI Accelerates, Record Surplus, EIA, Long Bonds – 9/13/23
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Looking for deeper insight into markets? In tonight’s Closer sent to Bespoke Institutional clients, after starting out with some commentary on bank lending appetite and passenger airline stocks (page 1). We then dive into the latest inflation data (page 2 and 3) followed by a look into Argentine rates and politics (page 4). Turning back to US macro data, we review the latest fiscal data (page 5), long bond reopening (page 6), and petroleum stockpile release (page 7).
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Daily Sector Snapshot — 9/13/23
Chart of the Day – IPO Pipeline Buildup
Fixed Income Weekly — 9/13/23
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!
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Bespoke’s Morning Lineup – Inflation Focus Shifts to Core – 9/13/23
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.
“You can spend minutes, hours, days, weeks, or even months over-analyzing a situation; trying to put the pieces together, …or you can just leave the pieces on the floor and move…on.” – Tupac Shakur
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Equity futures are taking a cautious tone heading into today’s CPI report for August where headline inflation is expected to rise by 0.6% m/m (largest increase since June 2022) and 3.6% on a y/y basis. European equity market performance hasn’t helped as most indices in the region are down by about 1% as the ECB is likely to hike rates this week by another 25 bps due to stubbornly high inflation. Not helping matters is the fact that economic data in the region including UK GDP and German Industrial Production both came in weaker than expected.
As we’ve noted numerous times in the past, the easy job has been done when it comes to headline inflation and getting it back down to levels more in line with the pre-COVID range will take time. In this morning’s report, the focus will shift to core which is expected to rise by just 0.2% m/m taking the y/y reading down to 4.3%. If the report comes out in line with expectations, it would be the lowest y/y reading in Core CPI since September 2021, and it would also represent the largest decline in the y/y reading from a 12-month high since the early 1980s.
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The Closer – 200-DMA Divergence, Short-Term Flow, ASEC, 10y Reopening – 9/12/23
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Looking for deeper insight into markets? In tonight’s Closer sent to Bespoke Institutional clients, we start out with the divergence between the percentage of stocks above their 200-DMAs versus the S&P 500’s distance from its own 200-DMA (page 1). We also show fixed income flows (page 2) before turning over to a deep dive into today’s release of the Social & Economic Supplement (pages 3 – 8). We close with a recap of the 10 year reopening held this afternoon (page 9).
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