Chart of the Day: US Approaches 50% of World Market Cap
Bespoke’s Morning Lineup – 6/24/24 – Bitcoin Tries to Hold the Sixties
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“A champion is someone who gets up when he can’t.” – Jack Dempsey
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
US futures are pointing to a flat to slightly negative open this morning on what is going to be a quiet day of economic data. The only report on the calendar is the Dallas Fed Manufacturing report at 10 AM which is expected to come in slightly less worse than last month’s reading of -19.4. European markets started the week on a strong note with no specific news to act as a catalyst, but that doesn’t diminish the fact that the STOXX 600 is up a respectable 0.5%.
Like many stocks, Bitcoin has also found itself treading water for the last several months trying to hang on to the gains from the late 2023/early 2024 rally. This morning, prices are down another 4% near the $60,000 level. After peaking above $70,000 in March, prices have been drifting lower in a sideways range, and if the April lows in the $57,000 range don’t hold, it could be a long summer.
From a longer-term perspective, $65,000 seems to be a level that Bitcoin just can’t shake. In early 2021, it briefly flirted with that level and then quickly erased more than half of its value. Later that year, it got there again and managed to stay there for a few days before crashing over 75%. It took two years and a few months to get back there again, and this time Bitcoin managed to hang around $65,000 again and even take out $70,000, but that level has failed to hold again.
While the recent pullback in Bitcoin looks steep on an absolute basis, relative to its history, 17% is nothing. The chart below shows historical drawdowns in Bitcoin from a record high, and the average since 2011 has been 48%, meaning that on a little less than half of all days since 2011, Bitcoin has been down 50% or more from a prior all-time high.
To continue reading the rest of today’s morning note, where you’ll find much more analysis of global equities and economic readings released this morning, read today’s full Morning Lineup with a two-week Bespoke Premium trial.
Brunch Reads – 6/23/24
Welcome to Bespoke Brunch Reads — a linkfest of the favorite things we read 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.
“Su Su” (“Keep Fighting”): On June 23rd, 2018, a Thai soccer team, the Wild Boars, made up of boys aged 11 to 16, became stuck in the Tham Luang cave complex with their 25-year-old coach. The team was exploring a cave the coach had previously visited when monsoon rains flooded the tunnels, blocking their exit. For 18 days, an international team attempted to rescue the team. With no food, the team survived on the water that dripped from the cave walls for nine days until divers could get food and water to them. The rescuers also installed an air pipe after oxygen levels dropped to dangerously low levels. Fortunately, the entire team survived after capturing global attention.
AI & Technology
Amazon-Powered AI Cameras Used to Detect Emotions of Unwitting UK Train Passengers (WIRED)
New documents reveal that Amazon’s facial recognition software was used in UK train stations to scan passengers’ faces, predicting their age, gender, and emotions, potentially for future advertising purposes. Over the past two years, eight stations, including major ones like London Euston and Waterloo, tested AI surveillance for safety and crime reduction. This included detecting trespassers, overcrowding, and antisocial behavior. Civil liberties group Big Brother Watch expressed concerns over the lack of transparency and public consultation. [Link]
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The Bespoke Report – 6/21/24 – The Holiday Card Market
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This Week’s Can’t-Miss Analysis — 6/21/24
We publish a lot of market-related content each week, and we want to make sure you don’t miss the most important topics. Below are some charts and tables we view as “can’t miss” from the last week.
Breadth continued to be a major topic of discussion this week. In Tuesday’s Morning Lineup, we highlighted that seven of the last twenty trading days saw the S&P 500 close higher on the day even though there were more stocks in the index down on those days than up. A stretch like this hasn’t occurred since August 2020, when the mega-caps were rallying because of a theory that they would be the main beneficiaries of COVID lockdowns.
While the S&P 500 keeps making new highs, in Thursday’s Morning Lineup, we noted that Technology is the only major sector making new highs along with the index. Most sectors haven’t made new 52-week highs in a month or longer, highlighting the thinness of the recent rally.
To continue reading the rest of this week’s “Can’t-Miss” analysis, which includes another dozen or so important market-related topics, start a two-week trial to Bespoke Premium today! With a two-week trial, you’ll also receive our daily research in your inbox as it gets posted. Go ahead and give it a try by signing up at this link.
Before you go…
Check out Bespoke co-founder Paul Hickey’s appearance on CNBC if you missed it earlier this week. Click here or on the image below to view. Also, don’t miss our latest Conference Call Recaps and Triple Plays Report available with a trial!
Have a great weekend!
Bespoke’s Morning Lineup – 6/21/24 – June Swoon?
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.
“Saying that you don’t care about privacy because you have nothing to hide is no different from saying you don’t care about freedom of speech because you have nothing to say.” – Edward Snowden
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
From where markets stand now, equities would finish the week with gains, after breadth in the S&P 500 came in positive yesterday for the third day in a row. That may not sound like much, but the last time the S&P 500’s A/D line was positive for three or more days was in the first week of May. To stay positive on the week, though, we’ll have to get through flash PMIs for the Manufacturing and Services sectors 15 minutes after the opening bell and then Leading Indicators and Existing Home Sales at 10 AM. In Europe this morning, flash PMI readings generally were weaker than expected while UK Retail Sales rose more than expected. Equities on that side of the Atlantic are down between 0.5% and 1%, but the losses still aren’t enough to fully erase the week’s gains.
You’ve probably heard a lot lately about how the end of June can be a tough time for the equity market, and below we show how the numbers have played out since 1980. Usually, the S&P 500 declines from the close on 6/20 through month-end. The S&P 500’s median change during the period has been a decline of 0.09% with positive returns just 44% of the time. Even in years when the S&P 500 was up sharply YTD heading into the last days of June, performance was still on the weak side as the S&P 500’s median change from the close on 6/20 through month end was a decline of 0.23% with gains just 43% of the time.
The silver lining? Over the last four years, the S&P 500 has been up during this period each time, and in the last three years, it has rallied 3.1%, 3.0%, and 1.4%, respectively. As strong as certain seasonal tendencies can be over time, there are always exceptions.
To continue reading the rest of today’s morning note, where you’ll find much more analysis of global equities and economic readings released this morning, read today’s full Morning Lineup with a two-week Bespoke Premium trial.
Bespoke Baskets Update — June 2024
Nearing 10x Sales for Large-Cap Tech
In today’s Chart of the Day we took a look at valuations across the Tech sector and how things stand relative to historical extremes. (It’s an eye-opening read, so make sure to check it out if you haven’t seen it yet.)
Below is a quick look at trailing 12-month price to sales ratios (P/S) over the last five years for the large-cap S&P 500 and small-cap Russell 2,000 along with each index’s respective Technology sector. As shown, the Russell 2,000’s price to sales ratio is just 1.25x, which is slightly below its average P/S ratio over the last five years. The Russell 2,000 Technology sector’s price to sales ratio is higher at 2.8x, but that’s still below the 2.9x P/S ratio for the S&P 500 as a whole. Incredibly, the S&P 500 Tech sector’s price to sales ratio has pushed all the way up to 9.8x, which is well above its high at the peak in late 2021. A 9.8x multiple is attractive if you’re looking at price to earnings (P/E), but for Tech stocks to be trading at 9.8x annual sales, that’s just a remarkably high number. (As mentioned, we’ve got further coverage of this topic in today’s Chart of the Day if you’d like to read more of our thoughts.)
Below is a look at the stocks in the large-cap Russell 1,000 that have seen the biggest increase in their price to sales (P/S) ratios since the current bull market began on 10/12/22. As shown, NVIDIA (NVDA) has seen its share price rise more than 1,000% during this bull market, but its P/S ratio has made 32 turns higher from 9.7x up to 41.9x! That’s by far the biggest jump of any stock in the index. Of the 30 stocks shown, the average P/S ratio has risen 9.6 points from 8.6x up to 18.2x, and most stocks on the list are Tech stocks.
Chart of the Day – Record Tech Valuations
The Triple Play Report — 6/20/24
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 11 new stocks. To sign up, choose either the monthly or annual checkout link below:
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Brady (BRC), an industrials name that supplies identification and workplace safety products, is an example of a company that recently reported an earnings triple play. Shares of BRC are up more than 40% since the beginning of 2023, which includes a jump-start 11.4% up-day after its earnings triple play report on 5/22 that followed a slower start to the year for the stock.
Looking at the snapshot below from our Earnings Explorer, BRC is not a company that often reports triple plays with just two over the last seven years, both in the last two years though. Two earnings reactions north of 10% in the last year are some of its best earnings days since 2016. So in some regards, BRC may be trending in the right direction. The company’s EPS have also been trending upwards over the the last several years, usually above estimates. This quarter, that figure hit a record high due in part to stabilizing input costs and the increasing adoption of automation technologies.
BRC introduced several products this quarter, including barcode scanners, an industrial jet color label printer, and an improved floor marking tape designed for manufacturing sites. The Bluetooth-enabled barcode scanner, for example, uses proprietary technology that allows the scanner to read very small barcodes from any angle, and then parse and arrange data that connects to cloud and ERP systems. From more of a macro standpoint, management called out short-term hesitancy in investment due to elevated interest rates and other general concerns, so the overall recovery for industrials has been slower than expected. Over the long-term, though, that sentiment shifts to an overwhelmingly positive outlook thanks to AI potential. You can read more about BRC and the 10 other triple plays 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.