In these emails, when we use the term blow out it is usually in reference to yields, spreads, or earnings, but today traders on Wall Street are focused on the blow out in Duke star Zion Williamson’s sneakers and specifically how it will impact the stock of Nike this morning.  Thankfully for Mr. Williamson, the injury doesn’t appear to be too serious, but Nike overnight has been in full-blown damage control.  Even former President Obama immediately noticed the cause of the fall as being due to the fact that “his shoe broke.”

In broader news this morning, US equity futures are lower after some mixed economic data.  Although Jobless Claims came in better than expected, the Philly Fed report missed by a mile and actually went negative for the first time since May 2016.  Read all about overnight events around the world and this morning’s news in today’s Morning Lineup.

Bespoke Morning Lineup – 2/21/19

In last night’s Closer, we discussed, among other things, the recent strength in the Russell 2000 and its 8 straight days of gains.  Along those lines, we wanted to highlight not only how strong small caps have been overall, but also relative to the S&P 500.  Just recently, the 30-day performance spread between the Russell 2000 and the S&P 500 topped 5 percentage points.  As shown in the chart below, although this was common in the early days of the bull market, ever since the FOMC started hiking rates, occurrences have been fewer and far between.  The last time the spread topped 5 percentage points was in late 2017 and before that late 2016.

The chart below shows the relative strength of the Russell 2000 versus the S&P 500 since the start of 2009, and the red dots indicate each time the performance spread above topped 5 percentage points.  What’s notable about this is that in each of the last two periods where the spread reached similar levels, small caps underperformed going forward.