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“The strong survive and the weak disappear. We do not intend to disappear.” – Jimmy Hoffa

Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.  

Equities are showing follow-through to yesterday’s rally with the S&P 500 on pace to open 0.3% higher while the Nasdaq trades up 1%. Contributing to the Nasdaq’s rally is an 11% gain in Amazon (AMZN), which is helping to partially offset a 7% decline in Apple (AAPL). Treasury yields are higher again, with the 10-year yield at 4.68%, while crude oil also gains nearly 2% ahead of the weekend.  Gold and Bitcoin are also both down over 1%.

In Asia, stocks capped off a wild week with some big gains. The Nikkei rallied 4%, but still finished the week down 0.4%; if you think that’s extreme, look at the moves in South Korea, where the Kospi rallied 17.9% for its largest one-day rally on record, but for the week it finished down 1.9%. In a word, that’s nuts.

In Japan, the BoJ left its benchmark overnight rate unchanged at 1.0%, but Tokyo CPI accelerated to 2.0% from 1.7% in June. In China, July Manufacturing PMI unexpectedly decelerated to 49.2 versus expectations for 50.1, while the Non-Manufacturing component fell from 50.2 down to 49.0. That weakness reinforced calls for increased government spending in the second half of the year.

In Europe this morning, equities are finishing off what was already a positive week with gains. The STOXX 600 is up 0.7%, taking its week-to-date gain to 1.5%. Italy and France are leading this morning’s gains, but every major benchmark is on pace for a gain of 1.5% or more for the week. This morning’s key economic data was Eurozone CPI, which increased from a year-over-year pace of 2.8% up to 2.9% while the core rate jumped from 2.4% to 2.5%.

In the US this morning, the week will close out with three reports. At 8:30, we’ll get the Employment Cost Index, followed by Chicago PMI at 9:45, and Michigan sentiment at 10 AM.

As we head into the last trading day of the week and month, we’ve seen some strange bedfellows among the leaders and laggards. Over the five trading days ended yesterday, the two top-performing sectors have been Consumer Discretionary and Consumer Staples with gains of 3.34% and 2.72%, respectively. While both sectors are exposed to the consumer, they usually don’t trade in tandem with each other, as the Discretionary sector is considered cyclical while Staples is more defensive.

At the other end of the performance spectrum, Utilities, one of the most defensive sectors in the market, is down 3.31%, and the only two other sectors down 1% or more are both cyclicals – Technology and Industrials. Unlikely pairs like these tend to occur during periods of high volatility, which the day-to-day moves of the last week would qualify as.

Four of the trillion-dollar market cap stocks reported earnings this week, and while the results were mixed (AAPL and META down, AMZN and MSFT up), the market made it through the deluge relatively unscathed. There’s still a lot of uncertainty out there, but if the last week’s performance of these trillion-dollar stocks has confirmed anything, it’s that they are their own individual stocks and far from a monolith.

Over the last five trading days through yesterday’s close, four of the eight stocks listed below were higher, and four were lower. Even more striking is that the five-day returns of the eight stocks were practically mirror images of each other. While MSFT is up over 10%, META was down over 10%. GOOGL is up over 5% in the last week while NVDA is down over 5%. AAPL was up over 3% while Tesla was down over 3%, etc. In terms of where they’re trading with respect to their trading ranges, though, just MSFT and AAPL were overbought while half of the stocks listed were oversold.

One of the two overbought stocks as of yesterday’s close was AAPL, but after last night’s earnings report, the stock is trading down more than 7% (red line in chart below), which will not only move it out of overbought territory but also below its 50-day moving average and below support from its breakout point earlier this month. AAPL had been a defensive hideout for most of July, but now more than ever, this is a what have you done for me lately kind of market.

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