Chart of the Day – The Spectacular Solar Surge
Claims Fine In Spite of Superlatives
Today’s data slate was light with the only release of note being initial jobless claims. The release is perhaps more in focus than normal given it comes on the back of weaker-than-expected labor data last week in the form of the nonfarm payrolls and JOLTS reports. Just like last week’s data, the weekly jobless claims number was a disappointment with seasonally adjusted initial claims totaling 231K. That was handily above the estimate of 212K and last week’s reading of 209K. As frequently quoted today, that results in the highest reading since last summer. Additionally, the 22K week-over-week jump marks one of the larger sequential increases of the past few years.
Despite those superlatives, one week does not make a trend. The chart below shows the four-week moving average of claims, which helps smooth out week-to-week fluctuations. By this reading, not much has happened. The moving average remains relatively flat with current levels consistent with those from the few years before the pandemic as well as those levels since the start of 2022 when pandemic era programs expired.
On a non-seasonally adjusted basis, claims totaled 290K. As shown below, for the comparable week of the year that is somewhat higher than the past several years (outside of the elevated 2020 and 2021 readings), but that is far from any alarmingly high level. The current week of the year did see claims rise week-over-week which is a bit unusual, though not without precedent having happened 39% of the time historically and is likely the reason for the big jump in the adjusted number.
As for seasonally adjusted continuing claims, it is a similar story. Claims matched expectations rising to 1.785 million versus 1.768 million the previous week. Once again, those levels are well within the range of readings of the past year and are little cause for concern.
Bespoke’s Morning Lineup – 5/9/24 – Higher Jobless Claims
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“You don’t get rich writing science fiction. If you want to get rich, you start a religion.” – L. Ron Hubbard
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
After a quiet week of economic data, there’s finally a meaningful report this morning with jobless claims at 8:30. Initial claims came in higher than expected (231K vs 212K) and ticked up to the highest level since last August. Continuing claims at 1.785 million were more in line with forecasts and the recent trend. Earnings have still been coming in fast, but the companies reporting aren’t as large from a market cap perspective. That doesn’t mean they’re any less important if you own them, and we continue to see large one-day moves from several companies reporting. Unfortunately, it feels as if most of those big moves have been to the downside.
Moves in the Japanese yen have made headlines recently as the cross broke above resistance taking the yen to multidecade lows versus the dollar. In terms of lead market stories, the yen has started to move off the front pages as investors look for the next shiny object, but recent moves have still been significant. As shown in the chart below, after April’s massive break, the BoJ intervention caused a brief rally which pulled the cross back to levels that had served as major resistance. In a textbook move, the former resistance for USDJPY served as support, and the last few days have seen a return to the upward trend.
The daily moves in the yen have become more subdued this week, but that follows what had been a period of extreme volatility. In the five days ending 5/2, USDJPY’s average intraday range was 2.5% which was tied with a period in November 2022 for the most volatile five stretch since the Covid crash. Since 1989, there have only been a handful of other periods where the cross had a more volatile five-day stretch.
All this volatility in the yen hasn’t been helpful for Japanese stocks. From its high in early March (right before the USDJPY cross broke above resistance at 152) to late April, the Nikkei 225 corrected by more than 10%, and while it bounced with global markets in the last two weeks, the rally has stalled out right at levels that had been acting as support.
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The Closer – Student Loans, Utilities’ New High, 10Y Auction – 5/8/24
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Looking for deeper insight into markets? In tonight’s Closer sent to Bespoke Institutional clients, we begin with a checkup on student loan balances (page 1) followed by a rundown of tonight’s earnings reports (page 2). We then pivot into a look at the snapped streak without Utilities hitting a 52-week high (page 3). Next, we recap today’s weak 10 year note auction (page 4) before closing out with a review of the latest petroleum inventory data (page 5).
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Chart of the Day – Where’s All The Triple Plays?
Bespoke’s Consumer Pulse Report — May 2024
Bespoke’s Consumer Pulse Report is an analysis of a huge consumer survey that we run each month. Our goal with this survey is to track trends across the economic and financial landscape in the US. Using the results from our proprietary monthly survey, we dissect and analyze all of the data and publish the Consumer Pulse Report, which we sell access to on a subscription basis. Sign up for a 30-day free trial to our Bespoke Consumer Pulse subscription service. With a trial, you’ll get coverage of consumer electronics, social media, streaming media, retail, autos, and much more. The report also has numerous proprietary US economic data points that are extremely timely and useful for investors.
We’ve just released our most recent monthly report to Pulse subscribers, and it’s definitely worth the read if you’re curious about the health of the consumer in the current market environment. Start a 30-day free trial for a full breakdown of all of our proprietary Pulse economic indicators.
Bespoke’s Morning Lineup – 5/8/24 – Leadership Shift?
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“Leaders get out in front and stay there by raising the standards by which they judge themselves—and by which they are willing to be judged.” – Fred Smith
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
Futures have been drifting lower all morning. First, it was weaker-than-expected earnings reports in the tech/growth area (Shopify, Uber, etc). Then, Intel lowered Q2 sales guidance for the second time in less than two weeks. Now, Tesla (TSLA) is trading lower on reports of a criminal probe into claims it may have made concerning its full self-driving mode. All of these ingredients create a perfect recipe for an excuse for investors to take a step back after the recent bounce and reassess things. Outside of earnings, there’s little in the way of economic news today with Wholesale Inventories (10 AM) being the only report on the calendar.
We’ve become so used to US stocks leading the rest of the world in recent years, but this morning, there’s been a slight shift in the balance of power. Europe’s benchmark STOXX 600 is up 0.25% this morning for its fourth straight day of gains. In the process, the index has taken out its prior record high from late March, erasing all of the declines from April.
Meanwhile, the S&P 500 also closed out yesterday with its fourth straight day of gains but remains 1.5% below its record high from the end of March.
So, what explains the disparity in performance? The chart below shows the performance of STOXX 600 groups since the end of March when it last made a record high. Leading the way, Basic Resources, Banks, Energy, Utilities, and Drug Stores have all rallied over 3%. Most of these groups have larger weightings in the STOXX 600 than in the S&P 500 and therefore, they have provided a bigger ‘kick’ to the index’s performance. Meanwhile, Technology which isn’t nearly as heavily weighted in Europe as it is in the US is down 1.26%.
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Chart of the Day – Nasdaq Back-to-Back-to-Back 1%+ Gains
Bespoke’s Morning Lineup – 5/7/24 – It at First You Don’t Succeed, Try Again
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“Extremes to the right and to the left of any political dispute are always wrong.” – Dwight Eisenhower
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
S&P 500 futures were just unchanged on the day in what has been a relatively quiet morning. Crude oil is modestly lower and treasury yields are slightly lower. In terms of earnings, Disney is sharply lower after reporting weaker-than-expected sales and dragging the Nasdaq lower, shares of Palantir (PLTR) are down over 8% despite reporting better-than-expected EPS and sales. Dragging the stock lower? A disappointing forecast relative to lofty expectations.
Heading into yesterday’s session to start the week, the setup looked much like the prior Monday. Then, we started the week following a Friday when the S&P 500 rallied but came up just shy of its 50-DMA. While we rallied to start last week, the market couldn’t maintain enough momentum to get back above its 50-DMA. We then followed that failed attempt with a disheartening three straight days of lower intraday highs and lower intraday lows. Last Friday, we rallied again and broke that streak of lower highs and lows and rallied but finished the week just shy of the 50-DMA.
One positive about weakness in the middle of last week around the Fed meeting was that from the lows in mid-April, the S&P 500 maintained a run of higher lows. Fortunately for bulls, Monday wasn’t a Groundhog Day type event, and the S&P 500 not only opened the week above its 50-DMA, but it stayed there the entire session in a run of three straight days of gains of at least 0.91%.
The picture for the Nasdaq looks a lot like the S&P 500. Unlike the S&P 500, though, the Nasdaq finished off last week above its 50-DMA and stayed there to kick off this week. Like the S&P 500, however, it took the Nasdaq two tries to get back above that short-term moving average. As the old saying goes, “If at first you don’t succeed, try again.”
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The Closer – Back Across The 50-Day, SLOOS, CoT, Auction Previews – 5/6/24
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Looking for deeper insight into markets? In tonight’s Closer sent to Bespoke Institutional clients, we start with a look at the outlook for the S&P 500 following its 1% surge back above its 50-DMA today. We then discuss Federal Reserve headlines from today before breaking down earnings. The Senior Loan Officer Outlook Survey (SLOOS) was released today with lots of implications for the economy (pages 2 & 3). We then look ahead to new issue 3y, 10y, and 30y Treasury coupons this week in a busy auction slate (page 4). Finally, we review positioning by futures speculators across asset classes (pages 5 – 8).
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