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.

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Science and Technology

Could we stop Yellowstone from erupting with a giant geothermal power plant? (Construction Physis)
Yellowstone National Park sits on a massive super volcano that, if it erupted, would be catastrophic for the entire world causing a cloud of ash that would likely lead to the extinction of most species. Some scientists have theorized that a geothermal energy plant could mitigate the risks of an eruption and create a major source of power for the United States. [link]

Measuring the Productivity Impact of Generative AI (NBER)
A study found that customer support agents using AI reported a nearly 14% increase in productivity, with 35% improvements for the lowest skilled and least experienced agents. [link]

Apple’s Headset Has Metaverse Believers Hoping It Can Save Their Industry (WSJ)
Apple is set to unveil its virtual reality headset next week at its World Wide Developer Conference (WWDC), and developers across the industry are counting on its success to help revive the entire space which, to this point, just hasn’t caught on with consumers or enterprises. [link]

Deep-brain stimulation during sleep shown to strengthen memory (Medical Press)
New research from UCLA Health and Tel Aviv University shows how deep-brain stimulation during sleep could help patients with memory disorders. It’s theorized that memory is consolidated by the brain during sleep and this research provides ground-breaking evidence. [link]

Tennessee man eats only McDonald’s food for 100 days straight: Here’s what happened (Fox News)
In an attempt to lose weight, yes, lose weight, a fifty-seven-year-old man in Nashville ate only McDonald’s for 100 consecutive days. After those 100 days, he’s lost 58.5 pounds from his start at 238 pounds. [link]

The big question of how small chips can get (Financial Times)
Experts warn that semiconductor chips won’t be able to get much smaller, even as computing progress has depended on it in the past. [link]

Economy

Macy’s and Costco sound a warning about the economy (CNN)
Big chain stores suggest their consumers are spending less at their stores and shifting their priorities to more essential purchases. In the past, these types of shifts have been common in recessions. [link]

As retailers leave some cities, one grocery chain is trying to stay (Washington Post)
A significant increase in theft and violent crime over the last five years together with decreased urban foot traffic and inflation-related issues are trends that are forcing companies to think hard about closing stores in urban areas. Giant Food is standing firm on its position to not close stores and is attempting to combat these issues with actions. [link]

A Visual Breakdown of America’s Stagnating Number of Births (WSJ)
A multitude of factors are impacting the recent decline in the nation’s birth rate. Included are some economic factors such as housing affordability. In the next ten years, this decline in conjunction with lower levels of immigration and more baby boomer retirements will contribute to effects on the labor force supply. [link]

Here Are The 15 Richest Women Celebrities In America (Forbes)
Forbes presents the fifteen richest women celebrities in America, how they did it, and what they’re up to. Second on the list of musicians is Taylor Swift, as every additional concert ticket you buy, pushes her net worth higher. [link]

Apple Customers Say It’s Hard to Get Money Out of Goldman Sachs Savings Accounts (WSJ)
The Apple savings account has attracted many customers given its attractive interest rate of 4.15% compared to the average of 0.25%.  Some customers, however, have experienced delays and other inconveniences regarding transfers out of their accounts despite Goldman’s contradictory claims on the matter. [link]

Travel

TSA records busiest day of pandemic amid smooth holiday for air travel (Washington Post)
Memorial Day Weekend, like many holiday weekends, means increased air travel across the United States. This year saw a major rebound as TSA screened 300,000 more flyers this Memorial Day weekend than they did pre-pandemic in 2019 during the same holiday weekend. [link]

Why You’re Losing More to Casinos on the Las Vegas Strip (WSJ)
With odds already stacked against gamblers, Vegas is subtly making changes to further game odds in their favor. This means lower payouts, riskier bets, and higher minimums to play. Players are already losing billions of dollars annually to the casinos, so find out why they haven’t been so easily deterred from their growing disadvantages. [link]

Airlines Are Weighing Passengers to See if They Got Heavier (Time)
Air New Zealand is the latest airline to jump on the trend of asking its passengers to step on the scales, and it has to do with safety. The airline claims that this survey, running through June, will help it calculate the “weight and balance of the loaded aircraft.” Some airlines are conducting surveys of this kind in part to analyze how “recent factors such as the shift to remote working, war in Ukraine and potential long-term effects of Covid-19 have impacted people’s weight.” [link]

International

App Store developers generated $1.1 trillion in total billings and sales in the App Store ecosystem in 2022 (Apple)
The App Store store has grown over 27% for three straight years and 90% of billing and sales accrued solely to developers, with no commission to Apple, the tech giant announced. The marketplace supports close to 5 million jobs in the United States and Europe. Read about some of the key drivers of its growth. [link]

Everywhere You Look in China Are Signs of More Market Misery (Yahoo Finance)
Chinese stocks entered a bear market after a drop of over 20% from their peak. Weak data, geopolitical risks, and other signals point to a continued downturn in China. [link]

Friends With (Metal) Benefits (Phenomenal World)
The United States is looking to Australia for critical minerals to aid the energy transition. Approval of an earlier signed compact allows American taxpayers to support Australian mineral projects, and the US can benefit against China (Australia’s largest export customer) in obtaining scarce minerals like lithium, nickel, and cobalt. [link]

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Have a great weekend!

It’s been a miserable couple of weeks for shares of Target (TGT) as the stock is on pace for its tenth straight day of losses today.  Whether or not the stock closes up or down today, the nine-day losing streak heading into Thursday was the longest in more than 23 years, and there have only been three other streaks that were as long or longer than the current one.

While shares of Target (TGT) have been down sharply over the last two weeks (-20.2%), its main competitor Walmart (WMT) hasn’t had nearly as rough of a time as its shares are down just 1.5%.  At the current level of -18.7 percentage points, the two-week performance spread between TGT and WMT is at an extreme, and there are only a handful of other periods since 1980 where the spread was wider in WMT’s favor. What’s ironic, however, is that exactly a year ago today, TGT’s two-week underperformance versus WMT was even wider at -22.8 percentage points. Back then it was a disastrous earnings report that caused the stock to crater.

The recent weakness in TGT has been mostly attributed to a negative backlash from the merchandise associated with the company’s Pride campaign, and while that may have accelerated the decline, it’s important to note that the stock has been steadily underperforming WMT for well over a year now.  The chart below shows the relative strength of TGT versus WMT over the last five years.  While TGT was a big beneficiary relative to WMT during the year after COVID when consumers were flush with cash, once the checks stopped, so too did the outperformance.  As of today, the stock’s relative strength versus WMT is at the lowest level since the first half of 2020.

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Please click the image below to view our June 2023 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.

May 2023 is now behind us, and below is a look at how various asset classes performed during the month using US-listed exchange-traded products as proxies.  We also include YTD and YoY total returns.

May was a month of divergence where Tech/AI soared, and the rest of the market fell.  Notably, the Nasdaq 100 ETF (QQQ) gained 7.88% in May while the Dow Jones Dividend ETF (DVY) fell 7.7%.  That’s a 15 percentage-point spread!

At the sector level, it was a similar story.  While the Tech sector (XLK) rose 8.9%, sectors like Energy (XLE), Consumer Staples (XLP), Materials (XLB), and Utilities (XLU) fell more than 5%.  In total, 8 of 11 sectors were in the red for the month.

Outside the US, we saw pullbacks in most areas of the world other than Brazil, India, and Japan.  China, Hong Kong, France, Canada, Italy, Spain, and the UK all fell more than 5%.

All of the commodity-related ETFs/ETNs were in the red for May, with oil (USO) and natural gas (UNG) falling the most at more than 10% each.

Finally, fixed-income ETFs also fell in May as interest rates bounced back.  The aggregate bond market ETF (AGG) was down 1.14% in May, leaving it up just 2.6% YTD and down 2.2% year-over-year.

Have you tried Bespoke All Access yet?

Bespoke’s All Access research package is quick-hitting, actionable, and easily digestible. Bespoke’s unique data points and analysis help investors better visualize underlying market trends to ultimately make more informed investment decisions.

Our daily research consists of a pre-market note, a post-market note, and our Chart of the Day. These three daily reports are supplemented with additional research pieces covering ETFs and asset allocation trends, global macro analysis, earnings and conference call analysis, market breadth and internals, economic indicator databases, growth and dividend income stock baskets, and unique interactive trading tools.

Click here to sign up for a one-month trial to Bespoke All Access, or you can read even more about Bespoke All Access here.