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“…and then we’re going to Washington, D.C., to take back the White House! Yeah!” – Howard Dean, 1/19/2004

Morning stock market summary

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 week started with a shaky start on Tuesday and additional losses on Wednesday, but Thursday’s rally and additional strength in the futures this morning have the major averages on pace for a positive week ahead of what will be a busy week for earnings next week. The only reports on the economic calendar today are the Michigan Sentiment report at 10 AM where economists are forecasting a modest uptick in the headline reading and no change in one-year inflation expectations. Along with the report, Existing Home Sales are essentially expected to remain unchanged at 3.83 million.  In terms of Fed-speak, Chicago Fed President Goolsbee is about to go on CNBC (or may have already appeared depending on when you read this), and then after the close San Francisco Fed President Daly will speak at an event in her district. After that, the FOMC will go into its quiet mode ahead of its upcoming meeting. While the pace of Fed-speak will slow, along with earnings, the political pace will also pick up next week with the New Hampshire Primaries on Tuesday.

Just when you think this fall’s election matchup is a foregone conclusion, remember that politics is just as volatile as any market.  Think back twenty years to the Iowa Caucuses, and Howard Dean’s “I Have a Scream” speech. Dean was one of the leading candidates on the Democratic side, raising a record amount of funds early in the campaign. Not only that, but his support was broad with a large percentage of small donors.   Even though he finished third in Iowa, it was expected that when the campaign moved back closer to his home state of Vermont, he would see increased momentum. But then he screamed.

In what would generously be described as an energetic speech, Dean spoke ‘enthusiastically’ about the future of the campaign and the victories it would see right up to the White House in November. He then capped it off with a scream of “Yeah!” where his voice cracked like Peter Brady singing “Time to Change” in the Brady Bunch. The clip was played all over the nightly news, late-night shows, and the internet, and whether it was the main catalyst or not, from there, the wheels fell off the Dean bandwagon. In New Hampshire, Dean finished a distant second behind John Kerry. From there, Dean’s losses in the primaries continued, and after going ‘all in’ on the Wisconsin primary, Dean came in third and dropped out of the race the next morning on 2/18.

In less than a month, Howard Dean went from a leading candidate for the Democratic Party in the 2004 election to out of the race.  This November’s election could very well end up being a race between President Biden and former President Trump, but the election is still more than nine months away, and a lot can change between now and then.

Heading into the last trading day of the week, most sectors are down over the last five trading days and on a YTD basis, but the weakest of them all has been Utilities as rising rates have hurt the sector. It’s down more than 5% over the last five trading days, joining Energy as one of just two oversold sectors.  While most sectors are down over the last five trading days, Technology and Communication Services have managed to buck the trend with gains.  What else is new?

Up until this week, the Utilities sector had been in a somewhat steady uptrend from its October lows when rates peaked. As shown in the chart, though, the uptrend collapsed late last week just as the sector started to bump up against its longer-term downtrend.

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