The Bespoke Report — 12/13/24 – ‘Tis the Season
As we continue to work on our 2025 Annual Outlook report due out next Friday, this week’s Bespoke Report provides an update on everything going on in markets and includes our popular investment stats in bullet-point format. To read this week’s Bespoke Report newsletter and access everything else Bespoke’s research platform offers, start a two-week trial to Bespoke Premium.
Bespoke’s Morning Lineup – 12/13/24 – Lucky Friday the 13th?
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.
“In general, things either work out or they don’t, and if they don’t, you figure out something else, a plan B.” – Dick Van Dyke
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
gain of 0.40% with positive returns just under 62% of the time!
Before you go out and buy everything this morning, though, there’s a big caveat to that average; one of the better market days on record occurred on March 13th, 2020 when the S&P 500 rallied 9.3%! If you take that out, the average S&P 500 performance on Friday the 13th falls by more than half to 0.15%. Still not terrible, though.
The chart below shows the S&P 500’s performance on each individual Friday the 13th since 1999. Big downside moves on Friday the 13th have been uncommon with just three days out of 42 where the S&P 500 fell more than 1% (December 2002, April 2012, and November 2015) while there have been seven days that rallied more than 1%. Who knows? Since Friday the 13th historically hasn’t been that unlucky for the market, maybe we’ll finally get a day of positive breadth!
The Closer – Bad Breadth, Flow of Funds Deep Dive – 12/12/24
Log-in here if you’re a member with access to the Closer.
Looking for deeper insight into markets? In tonight’s Closer sent to Bespoke Institutional clients, we kick off with an overview of how bad breadth has been (page 1) followed by a dive into the rate hike in Brazil (page 2). We then take a deep dive into the Fed’s massive Flow of Fund report which received an update today. We cover topics like household net worth, debt growth, delinquencies, bank income, and more (pages 3 – 9). We finish with an overview of the week long bond reopening (page 10).
See today’s full post-market Closer and everything else Bespoke publishes by starting a 14-day trial to Bespoke Institutional today!
Chart of the Day: Sticky Inflation
Bespoke’s Weekly Sector Snapshot — 12/12/24
General Electric (GE), Spin-Offs, and Dividends
Back in March, long-standing blue chip company General Electric (GE) spun-off and merged its energy businesses (formerly GE Power, GE Digital, and GE Renewable Energy) into GE Veranova (GEV). Since the spin-off on March 27, GEV is the second best performing stock in the S&P 500 with a 161.9% gain. That is second only to the near-200% gain in shares of Palantir (PLTR) in that same span and compares to a 15.76% gain for the S&P 500. Meanwhile, parent company General Electric (GE) has slightly outperformed the S&P 500 with a 16.5% gain while another one of its semi-recent spin-offs (occurring in January of last year), GE HealthCare Technologies (GEHC), is down double-digits.
The S&P U.S. Spin-Off Index measures the performance of companies that have a market cap of at least $1 billion and have been spun-off of a parent within the past four years. In the chart below, we show the return of this index versus the S&P 500 over the past decade. As shown, spin-offs have offered respectable returns albeit coming up short of that of the S&P 500. On a relative strength basis, spin-offs were actually outperforming the broader market throughout 2014 into 2017, but the trend has shifted out of favor in the past several years. With that being said, the recent strong run in GEV among others has meant that the relative strength line has made a considerable pivot higher in recent months.
Of course, in being one of the best performing S&P 500 stocks this year, GEV also leads in performance since the spring among other spin-offs. In the table below, we show the members of the spin-off index in addition to when they were spun-off, their performance since GEV’s spin-off, and their dividend yields. The only one of these companies holding a candle to GEV has been Victoria’s Secret (VSCO) which has also more than doubled since the spring. Conversely, there are ten that have fallen in that span.
In addition to its big rally, GEV is also worth mentioning because in a press release earlier this week the stock instated a dividend and announced a buyback. Among the aforementioned spin-off stocks, about half pay a dividend and GEV’s new dividend yield of just 0.3% is at the lower end of these names. The $0.25 payout goes ex-dividend on December 19 with it planned to be paid out in late January.
Switching over to the parent company, General Electric (GE) is an interesting story with a dividend history worth mentioning. Currently, GE has the 14th lowest dividend yield among dividend payers in the S&P 500 Industrials sector. While the sector itself doesn’t have a particularly large yield, almost half (45%) of its member stocks have a larger yield than the S&P 500. For GE, the company had an impressive 32 year run of raising its dividend annually from 1977 through 2009. However, hard times during the Financial Crisis resulted in that dividend to get slashed. The 2010s saw the company undergo significant restructurings which have clearly continued into today. Those culminated in another big cut in the dividend in 2017 and 2018. After the continued restructurings, in the current iteration, General Electric is focused primarily on the aerospace business. While the stock’s price has rebounded (currently it is around some of the highest levels since 2008), the dividend yield is a shell of its former self. With that being said, GE raised its dividend by 20 cents in the first quarter of the year, marking the first time GE raised its dividend since 2016.
Like this post? Join our complimentary Dividend Discovery email newsletter to receive a dividend-centric post in your inbox a couple of times per week. If you’re interested in dividend stocks and ETFs, this newsletter is for you! CLICK HERE to sign up with just your email or click on the image below.
Bespoke’s Morning Lineup – 12/12/24 – PPI Hot, Claims Cool
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 only live once, and the way I live, once is enough.” – Frank Sinatra
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
Heading into today’s PPI report, US equity futures took a breather after yesterday’s rally. While S&P 500 futures were just marginally lower, Nasdaq futures were down by a more sizable amount, indicating a decline of nearly 0.5%. Yields are up by a couple of basis points across the curve, crude oil is back above $70, and Bitcoin has held above $100K overnight for now at least.
The just-released November PPI came in hotter than expected at the headline level (0.4% vs 0.2%) and October’s reading was revised up from 0.2% to 0.3%. Ex food and energy, producer prices were inline with forecasts at 0.2%. While inflation data was on the hot side, jobless claims were weak. Initial claims spiked up to 242K versus forecasts for a reading of 220K while continuing claims also came in 9K higher than expected at 1.886 million. In response to the data, equity futures added modestly to their pre-market losses while yields erased most of their morning increases.
The Nasdaq broke out to a record high yesterday, and the S&P 500 finished within one-tenth of a percentage point shy of hitting its 58th record closing high this year, and the S&P 500 is up 27.5% for the year. With numbers like these, you can’t fault investors for being optimistic about the stock market. By just about every sentiment measure out there, investors have embraced the bull market, but many of the indicators we track seem somewhat restrained relative to the magnitude of the market’s gains.
Take the weekly sentiment survey from the American Association of Individual Investors (AAII). In the latest update this week, bullish sentiment declined from 48.3% to 43.3%. Bulls still outnumber bears by over ten percentage points, but current levels are hardly extreme, and the weekly reading has been higher on just over 20% of all other weekly readings since the start of 2009.
Taking a closer look at bullish sentiment during the current bull market, the peak sentiment reading was just under a year ago on 12/21/23 when bullish sentiment reached 52.9%. Back in July shortly before the August pullback, bullish sentiment got close to that December reading reaching a level of 52.7%. Since then, bullish sentiment has been gradually trending lower with multiple lower highs and lower lows.
One reason sentiment has remained contained lies in the fact that breadth has been incredibly weak in recent days. As noted yesterday, the S&P 500’s daily breadth reading has been negative for eight straight trading days. Just over the last five trading days, the S&P 500 is essentially unchanged (-0.03%), but nine out of eleven sectors are lower with five down over 2%! Not exactly what you would associate with a year-end rally.
The Closer – CPI, Wages, Strong 10s – 12/11/24
Log-in here if you’re a member with access to the Closer.
Looking for deeper insight into markets? In tonight’s Closer sent to Bespoke Institutional clients, we begin with a look into today’s CPI data (pages 1 and 2) in addition to wage growth and yields (page 3). We then review today’s very strong 10-year note reopening (page 4) and petroleum inventory data (page 5).
See today’s full post-market Closer and everything else Bespoke publishes by starting a 14-day trial to Bespoke Institutional today!
Daily Sector Snapshot — 12/11/24
Fixed Income Weekly — 12/11/24
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.
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!
Click here and start a 14-day free trial to Bespoke Institutional to see our newest Fixed Income Weekly now!