Bespoke’s Morning Lineup – 12/30/24 – Rolling Over into Year End
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“When people are intimidated about having their own opinions, oppression is at hand.” – Jimmy Carter
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
Former President Jimmy Carter didn’t leave office as the most popular President, but his years after serving in the Oval Office helped to improve his legacy as one of the most admired men in modern American history. Since 1946, Gallup has run an annual survey asking Americans “What man that you have heard or read about, living today in any part of the world, do you admire most? And who is your second choice?” In the survey’s history, Billy Graham tops the list with 61 of the top 10 finishes. Ronald Reagan ranks a distant second with 31 top-ten finishes, but right behind him, Jimmy Carter ranks third with 29, slightly ahead of Pope John Paul II (27) and Bill Clinton (26). Living to just over 100, the 39th President lived a full life.
US futures were trading just modestly lower until shortly before 8 AM Eastern but have weakened considerably since then on little news. Overnight in Asia, Japan and Korea both ended their trading years on a negative note with Japan’s Nikkei down 1% and the Kospi down a more modest 0.2%. In terms of economic data, Japan’s Manufacturing PMI came in below 50 for the sixth straight month. Trading in Europe had been much more subdued than in Asia, but these indices have also seen a pickup in the selling as US futures rolled over. Here in the US, both today and tomorrow will be full trading sessions, and markets will be closed on Wednesday for New Year’s Day.
Getting back to the US, this morning’s weakness will put the S&P 500’s 50-day moving average back into play after it held that level on Friday. As shown in the chart below, the technical picture isn’t looking particularly positive as we close out the year. The index has been gradually trending lower since its peak on 12/6. What a difference a few weeks make.
Brunch Reads – 12/29/24
Welcome to Bespoke Brunch Reads — a linkfest of some of our favorite articles 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.
Wounded Knee: On December 29th, 1890, one of the darkest chapters in US history unfolded at Wounded Knee Creek in South Dakota. What began as an effort by US troops to disarm a band of Lakota Sioux quickly escalated, leaving approximately 300 dead.
The Lakota, part of the Sioux Nation, had been participating in the Ghost Dance movement, a spiritual practice that sought to restore their lands and way of life. US authorities, who feared it might inspire rebellion, saw this movement as threatening. Tensions came to a head when US troops, led by the Seventh Cavalry, intercepted Chief Spotted Elk (Big Foot) and his band as they traveled to the Pine Ridge Reservation. The group was ordered to set up camp at Wounded Knee, where soldiers surrounded them. The next morning, as soldiers began disarming the Lakota, a gunshot, its source still debated, triggered chaos. Armed with Hotchkiss guns, the troops opened fire on the encampment.
Though some soldiers were awarded Medals of Honor for their actions, for the Lakota and other Native communities, it remains a searing reminder of the suffering endured during westward expansion.
Health & Wellness
The effects of ‘brain rot’: How junk content is damaging our minds (El País)
“Brain rot” being named Oxford’s Word of the Year says a lot about how people feel about endless scrolling and junk online content. Research shows that doomscrolling can mess with your brain, shrinking grey matter, shortening attention spans, and making it harder to focus. Experts say the key isn’t just cutting back on screen time but being intentional about what you’re watching and making room for real-world activities. [Link]
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The Bespoke Report — 2024 Recap
Our Bespoke Report – 2024 Recap is now available for Bespoke subscribers. This report is a must-read rundown of everything that went on across financial markets in 2024. Below is a look at some of the topics covered:
- The year in headlines
- Thematic performance
- Seasonality
- Sector performance
- Sector weightings
- Mega-caps
- Earnings triple plays
- International markets
- Earnings themes
- ETF performance matrix
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Daily Sector Snapshot — 12/27/24
Bespoke’s Morning Lineup – 12/27/24 – Down the Hatch
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.
“A bottle of wine contains more philosophy than all the books in the world.” – Louis Pasteur
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
Global equities are celebrating the last Friday of 2024 with broad-based gains after US stocks opened lower yesterday but finished around the unchanged level. In Asia, Japanese stocks rallied on reports that the BoJ was willing to be patient regarding its next rate hike. The only decliner in the region was South Korea which declined over 1% as political uncertainty continues. In Europe, stocks were closed for trading yesterday in observance of Boxing Day, and with just one day of trading before the weekend, activity is light. That hasn’t kept stocks in the region from rallying, though, and the STOXX 600 is trading nearly 0.5% higher.
The picture in the US isn’t as optimistic this morning as futures on the S&P 500, Nasdaq, and Dow are all down 0.30%. Treasury yields are higher again as the yield on the 10-year US Treasury tops 4.6%. The high for the year was just above 4.7% back in April, and if we reach that level in the days ahead, it could become problematic for stocks. Thankfully, oil prices have remained contained right near $70 per barrel while gold holds steady near $2,650 per ounce. Finally, Bitcoin has had a massive rally since the election, but for the last month now, it has moved sideways. At today’s level of around $96,700, Bitcoin is the same level now as it was on November 20th.
If a bottle of wine is full of philosophy, Americans have consumed increasingly less wisdom. Alcohol sales surged during Covid but pulled back as the economy reopened and people had to start working again. As if that wasn’t bad enough for sales, several other headwinds have lined up against the sector ranging from the growing popularity, legalization, and acceptance of cannabis, a renewed focus on health and wellness, declining popularity among younger generations, lack of affordability due to inflation, etc. Remember when it seemed like a different celebrity launched their own ‘artisanal’ tequila brand every week? You don’t hear those stories much anymore.
Given the issues facing the industry, it shouldn’t come as a surprise that companies selling booze have had a terrible year. Their weakness stands out even more relative to the overall market. As the S&P 500 closes out the year right near record highs with a YTD gain of over 25%, all six of the major public companies involved primarily in the sale of alcoholic beverages are down YTD, and three of them are right at or near 52-week lows.
Wine and other alcoholic beverages have been around for thousands of years. While recent quarters have seen sluggish sales, it’s unlikely that this will lead to the demise of the alcohol industry anytime soon. However, the factors contributing to these sales declines, don’t show any signs of ending soon. This raises the question: if Al Capone were alive today, would he even find the alcohol business as profitable as it was during Prohibition?
The Closer – Claims, CMBS and CRE, 7y Auction – 12/26/24
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Looking for deeper insight into markets? In tonight’s Closer sent to Bespoke Institutional clients, we lead off with a note on continuing claims relationship to the unemployment rate (page 1) followed by a dive into CMBS and office CRE (page 2). We then finish with a recap of Tuesday’s 5-year note auction and today’s 7-year note auction (page 3).
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Bespoke’s Weekly Sector Snapshot — 12/26/24
Are Continuing Claims a Concern?
With the holidays, today’s economic data slate was light with only jobless claims on the calendar. For initial claims, this week’s reading came in at 219K. That was down 1K from an unrevised reading of 220K the previous week and was a surprise decline versus the forecasted print of 223K. Seasonally adjusted weekly claims have been on the decline in the past few months, but that only returns to levels right in the middle of the past couple of years’ range.
Before seasonal adjustment, initial claims totaled 274.7K. That’s not much different from what has been observed in recent years for this time as it basically unchanged year over year, slightly above 2021 and 2022 levels, and slightly below pre-pandemic levels from 2018 and 2019. As shown in the second chart below, the end of the year has typically seen claims rise before peaking shortly into the new year. Given claims have largely followed standard seasonal patterns, there’s still a couple of weeks to go in which claims will likely continue to rise until what can be expected to be the seasonal and annual high.
With initial claims simply following seasonal patterns and not rising or falling in any notable or concerning way, continuing claims are a bit different. After seasonal adjustment, continuing claims jumped to 1.91 million. In the grand scheme of things, that is still relatively low and ranks in the bottom quintile of the historical range. That being said, the most recent reading narrowly surpassed the highs from November marking the first reading above 1.9 million since November 2021.
In the charts below, we again show the chart of seasonally adjusted continuing claims in addition to its six-month rate of change, but with a red dot for each time when the level of claims came in at a 3+ year high. As shown, claims are at an interesting crossroads. On the one hand, similar instances of a multi-year high in continuing claims have only been observed in or immediately surrounding recessions. On the other hand, the current level of claims is much lower than other recessionary periods and other three-year highs in recent decades. Additionally, the uptick in claims over the past six months is the smallest of any of these prior instances of a three-year high in claims.
Chart of the Day: Worst Performers
Bespoke’s Morning Lineup – 12/26/24 – Holiday Hangover
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.
“We’re developing a new citizenry. One that will be very selective about cereals and automobiles, but won’t be able to think.” – Rod Serling
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
The bulls may have enjoyed a little too much eggnog yesterday. US equity futures are firmly lower across the board indicating declines of 0.3%. Treasury yields, gold, and crude oil are all fractionally higher while Bitcoin is under the most selling pressure with a decline of 4% as its attempt to bounce back above $100 fails for now.
The only economic report on the calendar this morning was jobless claims. Initial claims came in modestly lower than expected, but continuing claims were higher than expected and bounced back above 1.9 million.
As we noted on Tuesday, the S&P 500’s 1.10% gain was the best Christmas Eve performance for the index since 1974. The Nasdaq’s 1.35% rally was the second-best gain on the last trading day before Christmas and the third time it rallied more than 1%. As shown in the table below, in 2000 the Nasdaq rallied over 7% on the last trading day before Christmas. However, that came well after the dot-com peak when the index was in a stupid phase of volatility that the drawn-out election results only exacerbated. The only other year the Nasdaq gained more than 1% on the last trading day before Christmas was in 1991. Overall, there have been nine years that the Nasdaq rallied more than 0.75% on the last trading day before Christmas. In those years, the median rest-of-year gain from Christmas through year-end was 1.6% with positive returns five out of eight times.
