Bespoke’s Morning Lineup – 3/5/24 – Higher Highs
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.
“Nothing in life is as important as you think it is when you are thinking about it.” – Daniel Kahneman
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
Markets are in a bit of a hangover this morning as futures are lower across the board. S&P 500 futures suggest a 33 bps decline at the open while the Nasdaq is down over 50 bps. There’s not much in the way of a catalyst for the move lower besides the fact that the market has come so far so fast, and investors appear to be looking over their shoulders for Fed Chair Powell’s congressional testimony tomorrow and Thursday. Since the Fed started hiking rates in 2022, Powell has been known to take a crowbar to the knees of any rally, so some apprehension is understandable.
The key economic data this morning will be the ISM Services report at 10 AM, and the headline index is expected to decline modestly, falling from 53.4 down to 53.0. That would follow last Friday’s weaker-than-expected report for the Manufacturing sector which remains stuck in contraction territory. While not an economic report, Target (TGT) is trading higher this morning after reporting better-than-expected EPS. In response, the stock is trading up over 8%.
Several of the top-performing stocks this year are also the largest in the S&P 500 (think Nvidia, Meta, and Eli Lilly), but over 60% of stocks in the index are up YTD and 45% are up over 5%, so underlying breadth has also been positive. Looking through our Daily Sector Snapshot report, you can see the positive breadth in the cumulative A/D line which has been regularly hitting record highs, along with the percentage of S&P 500 stocks trading above their 50 and 200-day moving averages (DMA) which has also been well over 50%.
Another signal of strong breadth is in the percentage of stocks hitting 52-week highs. Just yesterday, 19.5% of stocks in the S&P 500 hit 52-week highs which is the highest single-day reading in at least a year after it took out the prior high of 19.3% from early January.
When looking at the individual sectors driving the expansion of new highs, there are some modestly surprising trends. Leading the charge in new highs was the Industrials sector where 42% of the sector’s components traded at their highest levels in at least a year yesterday.
The Materials sector has also seen a steady widening in the number of new highs as its reading has steadily increased from less than 10% in late January to more than 30% yesterday.
The Consumer Discretionary sector didn’t see a new high in new highs yesterday, but at nearly 23%, only a couple of days in mid-December had a higher percentage of new highs.
Whenever we’re talking about market strength, you expect to hear Technology as part of the conversation. While nearly 30% of the Technology sector hit 52-week highs yesterday, that reading was lower than Friday’s level of 34%. As shown in the chart below, there have been several days in the last few months where a higher percentage of Technology sector stocks hit 52-week highs. Is Tech finally starting to pass the baton?
For more analysis of global equities and economic readings released this morning, read today’s full Morning Lineup with a two-week Bespoke Premium trial.
B.I.G. Tips – Earnings Triple Plays Recap: Q4 2023
Today we published our newest Earnings Triple Plays report. During the just-completed Q4 2023 earnings reporting period, there were a total of 78 earnings triple plays out of just under 2,000 individual quarterly earnings reports from US-listed stocks. That’s 44 less than the 122 triple plays we saw during the prior earnings reporting period.
What is a triple play? When a stock reports quarterly earnings, it registers a “triple play” when it beats analyst EPS estimates, beats analyst revenue estimates, and raises forward guidance. We coined the term back in the mid-2000s, and you can read more about it at Investopedia.com. We consider triple plays to be the cream of the crop of earnings season, and we’re constantly finding new long-term opportunities from this basket of names each quarter. You can track the newest earnings triple plays on a daily basis at our Triple Plays page if you’re a Bespoke Premium or Bespoke Institutional member. To read our newest report and see some of the triple plays with intriguing charts at the moment, start a two-week trial to Bespoke Premium!
Bitcoin Elevates
As we discussed in the Morning Lineup today, equities’ sleepy start to the week serves as a sharp contrast to surging Bitcoin prices. As of this writing, Bitcoin is up 6% on the day bringing it right above $67,000 for the first time since the record high from 11/8/21.
As Bitcoin nears a new record, we would note that the current streak of 847 calendar days without a record close is the second longest streak next to the recovery from the late 2017 peak.
As shown in the first chart below, the rapid rise in Bitcoin prices this year has resulted in prices flying above the 50-DMA. Currently, Bitcoin trades 2.6 standard deviations above its 50-DMA. That is extremely overbought, albeit the spread eclipsed 3 standard deviations as recently as February 28th. As shown, these have been some of the most overbought readings in the crypto space of the past five years, but historically that isn’t necessarily a bad thing. Whereas the standard theory is that an asset trading well above its moving average would suggest that it is due for some downside mean reversion, the opposite has historically played out for Bitcoin. As shown in the table below, the best average forward returns for Bitcoin have typically occurred when it has been the most overbought rather than oversold.
Chart of the Day: AI Search Hype
Chart of the Day: US vs. Japan
Bespoke’s Morning Lineup – 3/4/24 – No Fear Here
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.
“The only thing we have to fear is fear itself.” – Franklin D. Roosevelt
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
91 years ago today, with the country in the grips of the Great Depression, Franklin D Roosevelt was inaugurated as President and attempted to strike a tone of optimism for a country badly in need of a boost. The current picture is far different. Although Americans may not exactly be optimistic, the economy is doing relatively well, and just last Friday, the S&P 500 and Nasdaq both closed at record highs. Even the Russell 2000 hit a 52-week high! Maybe now, the only thing to fear is the lack of fear itself.
The picture this morning is a bit more subdued as futures are modestly lower ahead of a quiet day of economic data, but things will pick up later in the week with ISM Services and the February Employment report. It will also be a very busy week for Fedspeak as we head into the pre-meeting blackout on Friday. Chair Powell will even be testifying to Congress on Wednesday and Thursday.
Stocks may be quiet to start the week, but Bitcoin prices are going crazy again this morning with a move above $65,000. Since the ETPs started trading in early January, Bitcoin has rallied more than 40%, and from the post-ETP launch low on 1/26, prices are up 69%.
Just as a year ago no one was thinking the S&P 500 would be trading at all-time highs within a year, two months ago not many people were thinking that Bitcoin would be trading to new highs any time soon. With prices back above $65,000, though, bitcoin is now within 4% of its all-time high of just under $68,000.
While digital gold has gone parabolic of late, physical gold hasn’t been as strong, although prices are also within 4% of an all-time high. This morning, gold is trading just shy of $2,100 per ounce which is a level it has had a lot of trouble taking out over the last two years. Back in March 2022 and May 2023, gold prices rallied towards $2,100 and quickly pulled back. Late last year, though, gold made another run at $2,100, and while it failed to break through again, it didn’t experience a pullback anything like the prior two. Third time the charm?
For 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’s Brunch Reads – 3/3/24
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.
While you’re here, join Bespoke Premium with a 30-day trial!
On This Day in History:
Around the World: On March 3rd, 2005, Steve Fossett made history by completing the first solo, nonstop, unrefueled flight around the world in the Virgin Atlantic GlobalFlyer. The flight, beginning in Kansas, took about 67 hours and covered 22,766 miles. Fossett, before embarking on adventures like this one full-time, had a successful career in the financial services industry, founding Lakota Trading in 1980. The GlobalFlyer was specially constructed to be lightweight yet capable of carrying a significant fuel load and was the first to complete such a trip marking significant advancements in aircraft design and fuel efficiency. There have since been several other high-profile attempts to embark on air and space journeys like Fossett’s. Amazon founder Jeff Bezos went to space with his company Blue Origin, and Richard Branson also made a trip of his own. What’s Elon waiting for? Spark up the SpaceX rocket!
Economic Trends
A Warren Buffett Protégée Is on the Hunt for Small Companies. She Now Has Millions More to Spend. (WSJ)
Tracy Britt Cool, a former Warren Buffett protégé, co-founded Kanbrick, aiming to invest in midsize businesses with a competitive edge. Focusing on consumer businesses, the company rules out financial services, healthcare, real estate, and other industries in what boils down to a couple of companies a year. It’s a highly selective process trying to find businesses with a “moat,” as Buffett likes to say. While inspired by Berkshire Hathaway’s principles, Kanbrick aims to forge its own path. [Link]
Are We in a Stock Market Bubble? (Ray Dalio)
On LinkedIn, Ray Dalio, founder of Bridgewater, suggests that while some segments like the “Magnificent 7” appear frothy due to high valuations and expectations around generative AI, the broader US stock market does not exhibit classic bubble characteristics. Dalio cited criteria such as price levels relative to traditional measures, sustainability of conditions, the influx of new and naïve buyers, overall market sentiment, the degree of leveraged purchases, and the extent of speculative forward purchases. According to Dalio, while certain areas show elevated metrics, overall, the market does not match the extreme conditions seen in past bubbles. [Link]
Wendy’s Bold Move: Dynamic Pricing Strategy Set to Transform Fast-Food Industry (BNN)
Wendy’s, the fast-food chain, is looking to revolutionize its pricing strategy by introducing dynamic pricing across its outlets. Inspired by practices in the airline and rideshare industries, Wendy’s said it would adjust prices in real-time based on the time of day. The goal was to attract more customers during quieter periods while managing demand during peak times. However, this innovative approach also poses a challenge: 52% of consumers perceive such fluctuations as price gouging. [Link]
Consumers Pushing Back Against Price Increases — And Winning (Voice of America)
Consumer behavior in response to inflation has shifted significantly. Frustrated by persistently high prices, Americans are opting for store-brand items, exploring discount stores, and buying fewer luxury goods. The food sector has seen the most pushback against price increases, prompting large food companies to slow their hikes. Despite overall inflation declining from its 2022 peak, it remains a central concern, with President Joe Biden criticizing excessive corporate price hikes and highlighting “shrinkflation,” where companies reduce product sizes instead of raising prices. [Link]
AI & Technology
There are growing calls for Google CEO Sundar Pichai to step down (Business Insider)
After recent issues with Gemini, analysts and industry insiders are questioning if CEO Sundar Pichai, who has led Google and Alphabet since 2015 and 2019 respectively, is the right person to navigate Google through this critical period of intense competition in AI. Despite Pichai’s success in growing Google’s market cap significantly, there’s concern that the company’s internal bureaucracy, idealogy, and caution are hindering its ability to innovate. [Link]
Apple Cancels Work on Electric Car, Shifts Team to Generative AI (Bloomberg)
Apple has canceled its ambitious decade-long project to build an electric car, according to insiders. The decision surprised the nearly 2,000 employees working on the project. COO Jeff Williams and Kevin Lynch, in charge of the effort, shared the news internally. The car team, known as the Special Projects Group (SPG), will shift to the artificial intelligence division, focusing on generative AI projects. Layoffs are expected, but the exact number remains unclear. [Link]
Klarna says its AI assistant does the work of 700 people after it laid off 700 people (Fast Company)
The AI chatbot now handles two-thirds of all customer service interactions at Klarna, a buy-now, pay-later company. That amounts to 2.3 million conversations, and it has achieved customer satisfaction levels comparable to human agents. Despite layoffs in 2022, Klarna insists the AI’s productivity equivalent to 700 full-time agents is aimed at showcasing the long-term benefits of AI technology rather than replacing human jobs. [Link]
Google Left in ‘Terrible Bind’ by Pulling AI Feature After Right-Wing Backlash (BNN Bloomberg)
Google’s AI chatbot, Gemini, faced controversy for not producing accurate image generations, even in historical contexts where the chatbot seemed to refrain from showing white people in multiple examples where they should be. Google paused Gemini’s image generation feature and is addressing the issue, emphasizing that no AI is perfect. Critics argue that Google’s approach to AI image generation, which aims to counteract bias, lacks clarity and may not fully address underlying data biases. [Link]
Throwback for Philadelphia tech: What were you doing in 2009? (Technical.ly)
In 2009, Chris Wink, Sean Blanda, and Brian James Kirk founded Technical.ly Philly to cover Philadelphia’s rising tech scene. Over 15 years, Technical.ly expanded to Baltimore, DC, Delaware, and Pittsburgh, documenting local tech communities and companies. Reflecting on the changes, industry figures highlight a stronger, more vibrant tech ecosystem in Philadelphia, marked by increased startup activity, collaborative projects, and advancements in digital equity. Looking ahead, there’s optimism for Philadelphia to emerge as a leader in AI ethics. [Link]
Environment
South Fork Wind just became the US’s first complete utility-scale offshore wind farm (Electrek)
New York’s South Fork Wind, developed by Ørsted and Eversource, has completed installation of its final turbine, becoming the first utility-scale offshore wind farm in US federal waters. The 132-MW project will power 70,000 homes in Long Island and reduce carbon emissions significantly, contributing to cleaner energy and environmental benefits. [Link]
Startup is shipping 100,000-year-old Arctic ice from Greenland to chill cocktails in Dubai (New York Post)
Arctic Ice, a Greenland startup, is facing criticism for shipping ancient glacier ice to Dubai for use in high-end cocktails. The company claims it only uses ice from already detached icebergs, aiming to prevent their meltwater from raising sea levels. However, critics argue the operation exploits natural resources and contributes to carbon emissions. [Link]
Geothermal startup Fervo Energy is tapping fresh $221M round, filing reveals (TechCrunch)
Fervo Energy, a geothermal startup from Houston, has raised $221 million to enhance its geothermal power generation methods. Utilizing advanced drilling techniques and technology, the company aims to harness Earth’s deep thermal energy more efficiently. The startup has already achieved a faster and cheaper drilling process, a Department of Energy grant, and the successful launch of a geothermal power plant in Nevada supplying power to Google’s data centers. This new round of funding is expected to further Fervo’s efforts in expanding geothermal energy’s role in providing sustainable power. [Link]
Sports
‘I just saw the best player on the field’: Wyatt Langford is turning heads with every thunderous swing of his bat (ESPN)
At the Texas Rangers spring training, an unexpected star emerged according to pitching coach Mike Maddux: Wyatt Langford, a power-hitting outfielder. Despite the team’s focus on bolstering their pitching, Langford’s prowess at bat has caught the eye of coaches, hinting at an even stronger offensive lineup for the Rangers. Drafted fourth in 2023, Langford quickly ascended through the minor leagues with standout performances, positioning himself as a viable contender for the major league. His rapid progress and remarkable stats suggest Langford could be a significant addition to the Rangers, offering a fresh offensive dynamic to the World Series champions. [Link]
‘Seventy is the new 50’: Why NBA offenses are as prolific as ever (ESPN)
The NBA is witnessing its highest scoring averages since the 1969-70 season, fueled by rule changes in the mid-2000s designed to enhance game pace and scoring. This offensive explosion, highlighted by several players scoring over 60 points in a single game, has led to discussions within the league about the current balance between offense and defense. The league is contemplating if and how to adjust the rules to bring more defense, or less scoring, into the game. With players shooting better than ever from beyond the arch, maybe it’s time to move the three-point line back? [Link]
Health & Wellness
Ultraprocessed foods linked to heart disease, diabetes, mental disorders and early death, study finds (Yahoo Life)
In the age of weight loss drugs and trends towards healthier lifestyles, a comprehensive review of 45 meta-analyses involving nearly 10 million people has found that consuming ultra-processed foods significantly increases the risk of developing or dying from various health conditions. If we’re looking at the numbers, the study suggests a 50% higher risk of cardiovascular disease-related death and common mental disorders. Ultra-processed foods, high in calories, added sugar, sodium, and low in fiber, are linked to obesity, type 2 diabetes, depression, and potentially cancer. [Link]
Obesity now greater risk to global health than hunger (The Telegraph)
Obesity has surpassed hunger as the leading global health threat, with over one billion people worldwide now clinically obese. This marks the first time the number of obese individuals has exceeded those considered underweight. The increase in obesity, particularly among the younger population, raises concerns about the long-term health implications, including type 2 diabetes, cancer, and mental health issues. The study calls for action from both the health sector and broader society to address this growing issue, including changes in food industry practices and government strategies to promote healthier lifestyles. [Link]
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Have a great weekend!
The Bespoke Report – 3/1/24 – A Few Points Short of the Full Deck
To read our weekly Bespoke Report newsletter and access everything else Bespoke’s research platform has to offer, start a two-week trial to Bespoke Premium. In this week’s report, we dive into the sustainability of the current AI hype cycle, look at Jamie Dimon’s recent JPM stock sales, highlight new all-time highs across the globe, and provide a full rundown of the just-completed earnings season.
The Triple Play Report — 3/1/24
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 28 new stocks. To sign up, choose either the monthly or annual checkout link below:
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Hims and Hers Health (HIMS) is an example of a company that reported an earnings triple play recently.
HIMS has solid earnings history, as shown in the snapshot below from our Earnings Explorer. The telehealth company had its IPO in January of 2021 and has never missed a top-line estimate in 12 earnings reports. In Q4, HIMS’s revenue grew an impressive 65% YoY as it increased its subscriber count 48%. Having recently launched customized weight loss offerings, which are of course very popular, HIMS is benefitting from “customized solutions designed around addressing the underlying causes of weight gain.” Subscribers in that category are essentially all opting for a personalized treatment. “Hers” dermatology has been another key driver of the company’s success. You can read more about HIMS and the 25 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.
Bespoke Market Calendar — March 2024
Please click the image below to view our March 2024 market calendar. This calendar includes the S&P 500’s historical average percentage change and average intraday chart pattern for each trading day during the upcoming month. It also includes market holidays and options expiration dates plus the dates of key economic indicator releases. Click here to view Bespoke’s premium membership options.
