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.

“They were building a Ferrari for every launch, when it was possible that a Honda Accord might do the trick.” – Elon Musk

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 kickoff to earnings season for the Mag 7 didn’t start well last night as Alphabet (GOOGL) and Tesla (TSLA) traded lower in reaction to earnings. GOOGL is currently down just over 4% while TSLA is down around 8%. In terms of ‘typical’ reactions to earnings, the 8% decline in TSLA is more ‘normal’ as the stock typically moves up or down around 8% in response to earnings while GOOGL’s average one-day move in reaction to earnings is a bit over 5%. The weakness in these two stocks has dragged futures lower with the Nasdaq leading the way with a decline of just over 1% while the S&P 500 looks to open down by about 0.70%. For now, small caps are holding up better with the Russell 2000 looking to open down by 0.40%.

Given the weakness in equities, treasury yields are lower with the biggest moves at the short end of the curve. Oil and gold, however, are higher, along with bitcoin which is back above $66K. On the economic calendar this morning, we’ll have Wholesale Inventories at 8:30 followed by flash PMI readings from S&P 15 minutes after the open, and New Home Sales at 10 AM Eastern.

Many of the equity market trends in place for months reversed in the last couple of weeks. Small caps took over the leadership from large caps, value outperformed growth, homebuilders outperformed semis, etc. Along these lines, since international stocks have underperformed the US for what seems like forever, we would have expected to see them get a lift during this turnaround period. That hasn’t been the case.

The chart below shows the relative strength of the S&P 500 versus Europe’s STOXX 600 (on a dollar-adjusted basis) over the last twelve months. In the chart, a rising line indicates outperformance on the part of US stocks and vice versa for a falling line. While US equities aren’t quite at their highest levels in a year relative to the STOXX 600, they are very close, and there hasn’t been any reversal of the trend of outperformance that has been a place. A pause? Maybe. But not a reversal.

The chart below shows the relative strength of the S&P 500 versus the STOXX 600 dating back to 2000. Again, there has been no reversal of US outperformance relative to European stocks.  In mid-June, the S&P 500 broke above the prior relative performance peak from September 2022, and as recently as last week, the S&P 500’s relative strength hit a new peak.

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.

“Success is not the key to happiness. Happiness is the key to success. If you love what you are doing, you will be successful.” – Bela Karolyi

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

In today’s world, “The Magnificent 7” often refers to the tech giants Microsoft, Apple, Nvidia, Alphabet (Google), Amazon, Meta Platforms (Facebook), and Tesla. However, the original “Mag 7” were a different kind of legend, made up of Borden, Chow, Dawes, Miller, Moceanu, Phelps, and Strug. These were the seven women of the 1996 US Women’s Gymnastics Team, led by coaches Martha and Bela Karolyi. The August 13, 1984 cover of Sports Illustrated had a picture of Mary Lou Retton with the caption, “Only You, Mary Lou”, but the 1996 Women’s Olympics gymnastics team was stacked with a deep roster of talent and high hopes of winning the gold- something never done before in US women’s gymnastics history.

Battling it out with Russia and Romania, on July 23, 1996, it all came down to the vault, and the US needed a solid score to clinch the gold. First up for the US, Dominque Moceanu slipped on each of her vault attempts leaving it to Kerri Strug.  On her first attempt, Strug also slipped and ‘heard something snap’ as she fell to the mat wincing in pain.  Despite the burning in her ankle, Strug swallowed the sting and gathered herself at the start of the mat. Strug sprinted down the 75-foot runway, launching into a round-off back handspring onto the vault before soaring into a one-and-a-half twist. Coming back down from orbit, she stuck the landing (on one foot) and turned towards the judges to finish the routine.  Not a second later, she collapsed to the mat and crawled off the mat in agony.

Strug scored a 9.712 which was enough for gold. The picture of Bela Karolyi carrying Strug to the medal stand because she couldn’t walk has become one of the most memorable pictures in Summer Olympics history. Nearly as iconic is the picture of each of the original Mag 7 standing on the gold medal platform in their warmup suits…except for Strug in the second from the right position who couldn’t get the pants over her brace.

Alphabet (GOOGL) and Tesla (TSLA) will kick off earnings season for the tech-heavy stock market Magnificent 7 after the close today. Heading into the reporting period, the last several days haven’t seen a gold market performance from any of them, as they’ve all stumbled to varying degrees in the last week.  Apple (AAPL) and Amazon.com (AMZN) have both seen declines of at least 4%, while Nvidia (NVDA) isn’t far behind with a decline of 3.8%.  The only one of the seven not down more than 1% during this span is TSLA, but it’s also up the least YTD with a gain of 1.22%. Outside of TSLA, the other Mag 7 stocks remain up at least 15% YTD while GOOGL and Meta Platforms (META) hold on to gains of over 30% and Nvidia (NVDA) leaves the rest of them in the dust with a YTD gain of nearly 150%.

Relative to their trading ranges, AMZN and META have broken below their 50-DMAs which would be viewed negatively in the short term from a technical perspective.  Meanwhile, AAPL and TSLA have remained at overbought levels bucking the trend of the rest of the group and the broader market. The fact that these stocks have experienced weakness leading up to their earnings reports isn’t necessarily such a bad thing as rallies into earnings would only have the potential to set the bar unrealistically high. It doesn’t take a gymnast to know that the lower the bar, the easier it is to get over it.

Looking at the charts of each Mag 7 stock, even after their recent pullbacks, they mostly all remain in uptrends of varying degrees of steepness. While TSLA may not be in an uptrend, it’s still more than 25% above its 50-day moving average even as it deals with resistance from its late 2023 peak.

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.

“There are two hundred million idiots, manipulated by a million intelligent men.” – Pablo Escobar

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

Last week’s Bespoke Report asked if you would remember “where you were” last Tuesday when the Russell 2000 registered the most overbought short-term overbought reading for a US index ever recorded. Over the weekend, the major news events kept coming when President Joe Biden released a statement saying he would no longer seek re-election. Will I ever forget the BBQ chicken sandwich with melted cheddar cheese that I was having for lunch when my daughter read the statement from TikTok?

As the news filtered out, President Biden’s decision was quickly compared to President Johnson’s decision in 1968 not to seek re-election.  Besides the fact that they were both sitting presidents with low approval readings when they decided to drop out, the two scenarios are very different.

Johnson dropped out very early in the primary season in March 1968 as his chances for the nomination looked very uncertain if not unlikely. Biden’s decision came well after the primaries he overwhelmingly won were completed and his nomination was locked up. Additionally, whereas Johnson announced his decision to the American people in a televised address, Biden’s decision came via a statement that said he would “speak to the nation later this week in more detail about my decision.” When looking back to history for comparisons, it’s hard to find a scenario where a political party’s candidate for President who had high approval ratings within their party at one point was forced to withdraw from the election less than a month later.

Despite the major events of the weekend, the equity market seems undeterred. Futures are firmly higher heading into the new week after rocky returns last week. One factor investors need to be prepared for as we head into the end of July and early August, though, is the calendar. As shown on the Seasonality Tool of our website, while historical returns over the next week are middling relative to the rest of the year, the S&P 500’s median one-month performance from the close on 7/22 over the last ten years has been in the bottom third relative to history. The median three-month performance over the last ten years doesn’t get much worse. As shown at the bottom of the image, the S&P 500’s median three-month performance from the close on 7/22 over the last ten years has been a decline of 1.38% and ranks in just the second percentile relative to all other three-month periods during the year.

Breaking out the S&P 500’s three-month performance over the last ten years shows that while overall returns are negative, there has been a lot of dispersion.  In the six years over the last ten when the S&P 500 was lower, it declined at least 1.2%. Conversely, in three of the four years when the S&P 500 was higher, it gained at least 4%. Whatever you do, buckle up.

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.

“An emperor’s an entertainer, an empire a super-show.”– Nero

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

If you’re reading this, you are one of the lucky ones as computer systems around the world have been crippled. The culprit is a botched security update issued by CrowdStrike (CRWD) through Microsoft (MSFT) systems which has caused thousands (or even millions) of people to be greeted by the dreaded ‘blue screen of death’. Flights and mass transit systems worldwide have been ground to a halt leaving people temporarily stranded as CRWD looks to roll back the update.

After a lousy couple of days for US stocks, Asian and European stocks are closing out the week on a down note. Major Asian equity benchmarks were down between 0.2% for Japan to 2.0% for Hong Kong’s Hang Seng. The Japanese government lowered its 2024 growth forecast from 1.3% to 0.9% even as inflation has pushed rates higher. In Europe, the STOXX 600 declined 0.5% in early trading and is on pace to finish the week down more than 2%. The only major economic report of note in the region was UK Retail Sales, which came in much weaker than expected, falling by 1.2% versus forecasts for a decline of just 0.6%.

There are no economic reports to speak of in the US this morning, and futures are little changed after trading moderately lower overnight, so the main issue of discussion heading into the weekend will revolve around whether or not President Biden stays in the race, and if not, who will replace him.

In what has been a bifurcated year for the market, the five days ending Thursday have continued to be a two-tier system, except now in the other direction. Through yesterday’s close, the S&P 500 tracking ETF (SPY) was down 0.69% over the last week, but mid-caps were up over 1% while small and micro-cap stocks surged over 3%.

There used to be a segment on Sesame Street called, “One of These Things” where they would show four items with one not looking like the others.  The one-year charts of the major indices based on market cap would be a perfect version of that game where micro-caps, small-caps, and mid-caps have all surged and broken out of sideways trading ranges in the last few days. Meanwhile, large-caps have pulled back after reaching record highs.

Even as US large-cap stocks have faltered over the last week, they’ve outperformed every other part of the world. As shown in the snapshot of regional ETFs below, European and Asian markets were down slightly more than the S&P 500 while emerging markets fared even worse with declines of over 2%.  It may not have been the best week for US stocks in what was an overdue pullback, but other parts of the world fared even worse as US small caps were the only global bright spot.