Bespoke’s Morning Lineup – 11/5/24 – Let the Counting Begin
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.
“The ignorance of one voter in a democracy impairs the security of all.” – John F. Kennedy
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
It’s finally over. The votes are counted, and the results are in. In the words of one CEO involved, “While the past few months have been difficult for all of us, we are all part of the same team. We will only move forward by listening and working together.” Yes, the Boeing strike is over. Wait, you didn’t think we were talking about the election? For that, the votes are still coming in and need to be counted, and one thing we can be confident of is that once we do finally have a winner, there will be very little ‘listening’ and ‘working together’ with the other side. Not if past experience is any indication of future results!
Heading into today’s session, equity futures are modestly higher. Outside of Palantir (PLTR) which is up by double-digit percentages, much of the earnings news overnight was weak, and this morning’s only economic report is ISM Services which is forecast to come in at 53.8 from 54.9 in September. Europe and Asian markets were mostly higher overnight, while Treasury yields and crude oil have also joined in on the upside.
If the betting market odds are to be believed (big if) when the dust all settles, former President Trump will be the 47th President, Republicans will take over the Senate, and Democrats will retake control of the House. Wouldn’t that be an interesting mix?
Based on numbers from electionbettingodds.com, there have been some notable moves in the betting markets over the last few weeks. After trailing late in the summer and into early September, former President Trump saw his odds steadily improve from around 45% in mid-September to roughly 63% in late October. From there, VP Kamala Harris saw her odds rebound briefly into this past weekend, but as we headed into Election Day, her odds have pulled back again and now stand at 41.0% versus 58.5% for Trump. While a nearly 20-point gap in the betting markets looks wide, it’s a smaller lead than it seems and indicates only a modestly better than coin-flip chance in favor of the former President. Nothing is close to guaranteed at this point.
As Trump’s odds rallied from mid-September before peaking out in late October and subsequently pulling back into the weekend, there were also some notable moves in the equity market. The table and chart below compare sector performance from 9/18 to 10/29 (when Trump’s odds were improving) to performance from 10/29 to 11/4 (when Harris’ odds rallied).
When the market started to price in a Trump win sectors like Technology, Communication Services, Financials, Consumer Discretionary, and Industrials all rallied over 3% while Health Care, Consumer Staples, and Real Estate fell over 1%. When Harris’ odds started to improve, Energy was the only sector with gains (1.82%) while Technology was the worst-performing sector. As shown in the scatter chart, it’s not a perfect relationship but many of the best-performing sectors during the period when Trump’s odds were rising were some of the weaker performers when Harris’ odds improved and vice versa.
Before finishing, we wanted to leave off with one last snapshot of sector performance heading into the election results from our Trend Analyzer. It’s a mixed picture. Most sectors are down over the week, and while there were four overbought and two oversold sectors a week ago, today, Communication Services is the only overbought sector while Consumer Staples, Health Care, and Real Estate are all oversold. Relative to their 50-day moving averages, six sectors are above and five are below. You can’t get much more neutral than that! Don’t forget to vote.
The Closer – Battery Manufacturing, Home Buyers, 3-Year Auction – 11/4/24
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Looking for deeper insight into markets? In tonight’s Closer sent to Bespoke Institutional clients, we lead off with a look at the latest earnings in addition to US battery manufacturing (page 1). We also review Ford sales (page 2) and mortgage delinquency and first time homebuyer data (page 3). After a recap of today’s 3-year note auction (page 4), we close out with a rundown of positioning data (pages 5-8).
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Daily Sector Snapshot — 11/4/24
Chart of the Day – Good Times in the Bad Times
Bespoke’s Morning Lineup – 11/4/24 – Changing of the Guard
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.
“The person who is the star of previous era is often the last one to adapt to change, the last one to yield to logic of a strategic inflection point and tends to fall harder than most.” – Andrew Grove
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
Futures are little changed this morning but are trading with a positive bias as crude oil rallies and treasury yields move lower. There hasn’t been a lot of earnings or economic news, but with the election tomorrow, polls are a major focus, and news over the weekend, showed the race getting much closer. Just a few more hours left!
While not the most notable news of the weekend, Friday evening’s announcement that Intel (INTC) would be removed from the Dow Jones Industrial Average (DJIA) in favor of Nvidia (NVDA) represents another milestone in the transition of the old to new guard in the semiconductor sector. INTC entered the DJIA 25 years ago in November 1999, and the addition followed what had been a rally of over 900% in the prior five years. If you think that’s impressive, NVDA’s rally over the last five years has been over 2,500%!
INTC’s quarter century in the DJIA was fraught with dysfunction. While the stock initially rallied sharply in the months after it was added, the honeymoon ended quickly. INTC quickly reversed course and lost over 80% of its value. While the stock rallied from 2010 through 2020, it is lower now than it was when it was added. At this point, not many tears are being shed over the end of this union.
The election is just a day away, and with the polls so close between two completely different candidates, it’s understandable to see elevated levels of uncertainty in the market like the VIX’s reading of 22.45. The chart below shows the level of the VIX on the day before every Election Day, both Presidential and Non-Presidential, since 1990. For all years since 1990, the median level of the VIX on the day before Election Day was 18.4, and while you might think that volatility was elevated in Presidential Election years, it was only marginally higher (median: 18.6). This year, the current level of 22.45 ranks as the fourth highest of the nine Presidential Election years since 1990. So uncertainty has ratcheted higher for a year where the VIX has been mostly below average as Americans head to the polls.
Regarding equity market performance, the S&P 500 tends to see positive returns to close out the year after Election Day. For all years since 1990, the median gain has been 3.3% with positive returns 25 out of 34 times. For Presidential Election years, performance has tended to be modestly stronger with a median gain of 3.9% and gains six out of eight times.
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Brunch Reads – 11/3/24
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.
One World Trade Center: On November 3rd, 2014, One World Trade Center opened its doors in lower Manhattan. Rising 1,776 feet into the sky, the tower became the tallest building in the Western Hemisphere and an architectural centerpiece of the World Trade Center complex, rebuilt after the September 11 attacks. Its glass facade captures sunlight throughout the day, creating a prismatic effect. The building blends state-of-the-art office spaces, retail, and observation decks with panoramic views of New York Harbor and the Statue of Liberty. It’s also part of a larger complex that includes memorials and museums dedicated to the lives lost on 9/11. The opening of One World Trade Center was not just a milestone in architecture but a cultural and symbolic moment that united New Yorkers, Americans, and international visitors.
Sports & Entertainment
OPINION: A single weekend of Taylor Swift’s The Eras Tour exceeds NFL draft in economic impact (KentWired)
Taylor Swift’s Eras Tour is a powerhouse for local economies, generating an estimated $4.6 billion in the US alone. Her shows fill stadiums, drive record hotel bookings, and pack restaurants and transit, often surpassing even the NFL Draft’s economic impact. As fans flock to each city, Swift’s tour leaves a massive footprint everywhere it stops. [Link]
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Bespoke Report – 11/1/24 – What The…
To read our weekly Bespoke Report newsletter and access everything else Bespoke’s research platform offers, start a two-week trial to Bespoke Premium. In this week’s report, we review the bull market turning two, sector performance driving the rally, earnings season, the election, sentiment, and much more.
Daily Sector Snapshot — 11/1/24
The Triple Play Report — 11/1/24
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 28 new stocks. To sign up, choose either the monthly or annual checkout link below:
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Reddit (RDDT) is an example of a company that recently reported an earnings triple play, and the company now has three triple plays since its IPO back in March. The stock exploded higher by 42% in reaction to the triple play on 10/30. RDDT shareholders could not have asked for a much better start out of the gate as the stock now trades around $115-$120 in comparison to its IPO price of $34 per share.
Looking at the snapshot below from our Earnings Explorer, RDDT results have been near flawless relative to expectations so far despite there being only three quarters worth of data. It has been rare to see this from IPOs lately.
Reddit is a social media/news aggregation platform that allows users to share and discuss content. Some of the fastest ways to get information now is through platforms like X or Reddit. Reddit users have found their communities to be their go-to place for often unfiltered insights and recommendations. On Reddit’s recent conference call, they said AI has been a major factor for growth, allowing the company to drive significant non-English user engagement with translation. You can read more about RDDT and the 27 other triple plays we covered 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.
Amazon (AMZN), Bezos, and $200 Bucks
Amazon (AMZN) was up over 6% on Friday, rallying behind a solid earnings report Thursday night. However, shares are currently bumping up against resistance around the $200 level. In July, the stock reached these same levels but outside of a handful of intraday blips, repeatedly failed to push above $200.
The selling pressure around the $200 level in July coincided with some major insider activity. In March, it was reported that Amazon founder Jeff Bezos planned to sell up to 25 million shares of AMZN by the end of 2025. When AMZN kept unsuccessfully trying to break through $200 in July, we quickly found out why. Insider transaction filings showed that Bezos seemingly had a limit order to sell millions of shares above $200. As you can see below, from July 2nd through July 11th, Bezos sold millions of shares a day at an average price just above $200. On July 11th, the last day of reported selling from Bezos, the stock no longer had enough buyers to keep up with Bezos’ sell orders and eventually traded lower. Since then, there have been no more reported Bezos sales, and the stock price didn’t get near $200 again…until today.
As mentioned earlier, AMZN shares reacted positively to earnings after the close last night and traded up 6%+ in reaction to the news. That took shares up near $200 at the open this morning for the first time since July 11th — when Bezos last reported a sale.
Based on AMZN’s intraday action today, it looks like Bezos still has a live $200 limit sell order because the stock stalled out at $200 once again and couldn’t break through.
Back in July, Bezos managed to unload more than 8 million of the 25 million shares he reportedly plans on selling. The stock has traded over 80 million shares today, but only around 5 million shares have traded at $200 or higher, so we’ll see how many more shares he managed to unload when his next insider sales report gets filed.
For now, it looks like $200 is going to remain stiff resistance until the Bezos shares clear.
