Bespoke’s Morning Lineup – 1/3/23 – Turning the Page
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“The beginning is always today.” – Mary Shelley
Below is a snippet of content from today’s Morning Lineup for Bespoke Premium members. Start a two-week trial to Bespoke Premium now to access the full report.
It’s a new year but it’s looking like the same old market as positive futures drift off their highs into the opening bell. With treasury yields sharply lower, crude oil and natural gas also lower, and foreign equity markets firmly higher to kick off the year, it’s a positive backdrop for equity bulls to start the year. After a quiet week data-wise to close out the year, things will pick up this week with Construction Spending, ISM, and an Employment report all headlining the calendar on this shortened week.
People tend to put a lot of emphasis on first impressions, so what looks like a positive start to the year for stocks should be a welcome sign. With the S&P 500 (as proxied by SPY) poised to gap up 0.45% at the open this morning, it would be the best start to a trading year since 2020 when SPY gapped up 0.52%. If stocks manage to take out that level at the open, it would be the strongest start to a year since 2017 (0.68%). The last time SPY gapped up 1%+ to start a year was in 2013 (1.9%), and that followed a nearly equally strong start to the year in 2012 when SPY gapped up 1.8%.
So, how important are these first impressions in terms of the remainder of the year? For all years since 1994, when SPY had a larger than average opening gap to start the year, its median performance from the open on the first trading day of the year through year-end was a gain of 13.93% with positive returns 82% of the time. That’s nothing to sneeze at, but it’s actually right in line with the historical average for all years since 1994. On the other hand, in the four years when SPY gapped down to start the year (1996, 2014, 2016, and 2019), its median performance for the remainder of the year was 18.3% with positive returns all four times.
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B.I.G. Tips – 2022 Final Stat Lines for Stocks and Sectors
Bespoke Brunch Reads: 1/1/23
Welcome to Bespoke Brunch Reads — a linkfest of the favorite things we read over the past week. The links are mostly market related, but there are some other interesting subjects covered as well. We hope you enjoy the food for thought as a supplement to the research we provide you during the week.
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The Year Coming & Going
Why everyone thinks a recession is coming in 2023 (CNBC)
Consensus from economists and forecasters is for a US recession in 2023 with Federal Reserve monetary policy tightening the key driver of the slowdown. [Link]
The Year the Long Stock Market Rally Ended by Joe Rennison (NYT)
Soaring interest rates in response to high inflation have crushed the stock market this year, delivering the sort of grinding bear market that was impossible during the previous decade. [Link; soft paywall]
SBF
POLITICO Playbook: Inside the scramble to trace SBF’s dirty money by Ryan Lizza, Rachael Bade, and Eugene Daniels (Politico)
Political donations by the FTX and Alameda Research chief have spiraled outwards and look likely to have driven a straw-donor scheme that has enveloped at least one progressive think tank. [Link]
Sam Bankman-Fried’s only way out is ratting on Binance and Tether by Steven Stradbrooke (Coingeek)
A speculative account that might explain why Sam Bankman-Fried isn’t still behind bars: cooperation on an even bigger fraud fish. [Link]
Consumer Spending
Economy Has Drinkers Choosing Prosecco Over Champagne by Jennifer Maloney (WSJ)
Consumers are less inclined to shell out for premium spirits brands and are more inclined to reach for cheaper swill when they shop for hooch. [Link; paywall]
The world just doesn’t have enough planes as travel roars back (The Straits Times)
Soaring demand for travel combined with supply chain disruptions and production slowdowns during the pandemic mean the global airliner order backlog numbers nearly 13,000 planes. [Link]
Consumers Change Food-Delivery Habits by Preetika Rana and Heather Haddon (WSJ)
After booming during the pandemic, food delivery is shifting thanks to smaller discretionary budgets and high inflation. [Link; paywall]
Auto Industry
Carmakers quietly cut ties with China in supply chain shake-up by Peter Campbell, Eri Sugiura, and Edward White (FT)
Global automakers are shifting away from parts purchases in China, joining other industries in questioning reliance on the country. [Link; paywall]
Electric Vehicle Charging Investment Approaches the $100 Billion Mark by Ryan Fisher (Bloomberg)
By the end of this year investment in electric vehicle charging hardware and installation will top more than $60bn with almost half that again due for next year alone. [Link; paywall]
Toyota Chief Says ‘Silent Majority’ Has Doubts About Pursuing Only EVs by River Davis and Sean McLain (WSJ)
Early skepticism about fully battery-electric vehicles have left Toyota far behind the curve in that segment, so it’s not a surprise that management is talking down an area they lag the market. [Link; paywall]
Food
Who created chicken tikka masala? The death of a curry king is reviving a debate by Emily Olson (NPR)
The ubiquitous tomato-cream chicken is most likely not a creation of the Indian subcontinent at all but a Scottish hybrid based on tomato soup. [Link]
How Changing Diets Leave Us Exposed to War, Extreme Weather and Market Turbulence (Bloomberg)
Global diets are shifting towards the same uniform diet across countries and continents as the world eats more grain, more meat, and less local food. [Link]
Google Employees Brace for a Cost-Cutting Drive as Anxiety Mounts by Nico Grant (NYT)
Gone are the days when massive search revenues and ever-expanding cloud investment fueled huge salaries and a monstrous workforce. The vibe, as they say, has shifted. [Link; soft paywall]
Money Management
Schwab’s Investment in Dynasty Could Be the First of Many by Diana Britton (Wealth Management)
With assets flocking to the registered investment advisor space, brokerage giant Schwab is buying up a services provider that caters to the space. [Link]
China
China Estimates Covid Surge Is Infecting 37 Million People a Day (Bloomberg)
As China’s government lets COVID infections rip, tens of millions of people are contracting the virus every day in one of the largest booms in COVID cases since the pandemic began. [Link; soft paywall, auto-playing video]
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Have a great weekend!
The Bespoke Report – 12/30/22
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Daily Sector Snapshot — 12/30/22
One Year’s Loss Is Not the Next Year’s Gain
It’s finally the last trading day of what has been a tough year for most asset classes, especially equities. As of this writing, the S&P 500 is on pace to finish the year with a 19.83% loss. Over the course of the index’s history, there have only been nine other years in which the S&P 500 has fallen at least 15% for the full year. Of course, turning the page of the calendar does not mean all the issues dragging stocks lower magically go away, and a big decline one year does not in and of itself mean we’re due for a big gain the next year.
In the chart below we plot the annual percentage change of the S&P 500 versus its move the following year. Taking a linear regression shows that performance one year is not a good explainer for next-year performance with a miniscule R squared of 0.0003. Looking just at those years where the S&P fell 15%+, five times the index posted gains the next year, while four times the index posted further declines. Click here to learn more about Bespoke’s premium stock market research service.
Bespoke’s Morning Lineup – 12/30/22 – One Last Gut Punch
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.
“Hope smiles from the threshold of the year to come, whispering ‘it will be happier’…” – Alfred Lord Tennyson
Below is a snippet of content from today’s Morning Lineup for Bespoke Premium members. Start a two-week trial to Bespoke Premium now to access the full report.
In case you missed it last Friday, we emailed out our annual Bespoke Report which covers everything you need to know about the setup for financial markets and the economy heading into 2023. You can read it here.
At least we hope next year will be happier! That’s not the case this morning, though, as markets are giving the pulls one last dagger to close out the year. Nasdaq futures are currently down over 1% while the S&P 500 is indicated to open down roughly half of one percent. Besides the fact that the calendar still says 2022, there’s little in the way of catalysts driving the weakness. US Treasury yields are modestly higher on the day while crude oil trades lower. The only economic report on the calendar today is the Chicago PMI which is expected to rebound following last month’s surprise plunge. That index could use a lift as it’s currently in the midst of its largest y/y decline since 1980! From a market perspective, can today’s closing bell come soon enough?
For all the volatility we’ve seen this month, it was surprising to see that the nine 1% days in the S&P 500 (up or down) this month only ranks tied for 10th going back to 1952 when the five-day trading week in its current form started on the NYSE. In fact, even last year just as the S&P 500 was about to peak, the month of December had more 1% daily moves. The other years with more 1% days in December all stand out in market history as some of the most volatile years in market history, including 2008 when there were 15 (more than two-thirds of all trading days in the month) 1% daily moves.
There’s still one trading day left in the year, and if the S&P 500 has another 1% day today it will move 2022 into a tie for 5th place with 1974, 1998, 2000, and 2018 in terms of 1% daily moves in December.
Where December 2022 stands out more, however, is in the number of 1% down days. With six 1%+ declines this December, it already ranks as tied for the third most 1% declines during the last month of the year since 1952. The only years with more were 2008 and 2018 while 1973, 1974, 2000, and 2002 are tied with this year. The only thing positive we can say is that it’s almost over, and hopefully, the new year will be ‘happier’.
Our Morning Lineup keeps readers on top of earnings data, economic news, global headlines, and market internals. We’re biased (of course!), but we think it’s the best and most helpful pre-market report in existence!
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The Closer – Dash for Trash, Flow Show, Migration & Population, EIA, 7y Sale – 12/29/22
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Looking for deeper insight into markets? In tonight’s Closer sent to Bespoke Institutional clients, we begin tonight with a look at which stocks led in the gains today and check in on fund flows (page 1). We then review the latest changes in population in the United States (pages 2 and 3). We finish with recaps of the latest EIA data (page 4) and the 7 year note auction (page 5).
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The Bespoke 50 Growth Stocks — 12/29/22
The “Bespoke 50” is a basket of noteworthy growth stocks in the Russell 3,000. To make the list, a stock must have strong earnings growth prospects along with an attractive price chart based on Bespoke’s analysis. The Bespoke 50 is updated weekly on Thursday unless otherwise noted. There were no changes to the list this week.
The Bespoke 50 is available with a Bespoke Premium subscription or a Bespoke Institutional subscription. You can learn more about our subscription offerings at our Membership Options page, or simply start a two-week trial at our sign-up page.
The Bespoke 50 performance chart shown does not represent actual investment results. The Bespoke 50 is updated weekly on Thursday. Performance is based on equally weighting each of the 50 stocks (2% each) and is calculated using each stock’s opening price as of Friday morning each week. Entry prices and exit prices used for stocks that are added or removed from the Bespoke 50 are based on Friday’s opening price. Any potential commissions, brokerage fees, or dividends are not included in the Bespoke 50 performance calculation, but the performance shown is net of a hypothetical annual advisory fee of 0.85%. Performance tracking for the Bespoke 50 and the Russell 3,000 total return index begins on March 5th, 2012 when the Bespoke 50 was first published. Past performance is not a guarantee of future results. The Bespoke 50 is meant to be an idea generator for investors and not a recommendation to buy or sell any specific securities. It is not personalized advice because it in no way takes into account an investor’s individual needs. As always, investors should conduct their own research when buying or selling individual securities. Click here to read our full disclosure on hypothetical performance tracking. Bespoke representatives or wealth management clients may have positions in securities discussed or mentioned in its published content.