$2.9 Trillion in Market Cap Added
After seeing the total market cap for the Russell 1,000 fall by $10.9 trillion in 2022, we’ve seen a rebound of $2.9 trillion in market cap so far in 2023. Below is a look at the total change in market cap by sector across the Russell 1,000 so far in 2023 and for all of 2022. The Tech sector saw its market cap fall $4.35 trillion last year, and it has seen its market cap rise by $1.176 trillion to start 2023. Consumer Discretionary’s market cap has risen by $701 billion, followed by Communication Services at $516.9 billion and Financials at $373 billion.
Four sectors have actually seen their market caps fall this year. Health Care’s market cap has fallen the most at -$141 billion, while Energy has fallen $57 billion, Consumer Staples has declined $32.2 billion, and Utilities has fallen $29.9 billion.
Below is a look at the biggest gainers in market cap so far this year at the individual stock level. Seven stocks have already gained more than $100 billion in market cap this year. Apple (AAPL) has jumped the most at $333.7 billion, followed by Tesla (TSLA) at +$227 billion, Amazon (AMZN) at +$190 billion, Alphabet (GOOGL) at +$176 billion, and Meta (META) at +$166.8 billion.
While the seven biggest gainers to start 2023 have added a combined $1.377 trillion in market cap, they lost a combined $4.86 trillion in market cap in 2022. Click here to start a two-week trial to Bespoke Premium.
Bespoke’s Morning Lineup – 2/7/23 – The “Chat AI” Invasion
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“As long as we enjoy it, we’ll do it. ‘Cause we enjoyed it before we made any money.” – George Harrison, 2/7/1964
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Much like Chat GPT has rocked the way people gather and consume information, 59 years ago today, the music scene in the United States was changed forever as John, Paul, George, and Ringo touched down at Kennedy airport for the first time. The rest is history. When the Beatles appeared on the Ed Sullivan Show less than two weeks later, around 40% of the US population watched. Everywhere the band went they were swarmed by screaming (nearly all female teens) fans. For the imprint the Beatles made on both the music industry and pop culture, it’s hard to believe that within six years of first setting foot on US soil the band was no more. The Beatles’ candle may not have burned for long, but the movement they sparked still shines today.
A single event watched simultaneously on TV by 40% of the US population will never be duplicated again, but the stampede of Chat GPT into the mainstream is an event unrivaled by any other product in history. According to a study by UBS, Chat GPT reached 100 million monthly active users in the span of two months putting it years ahead of Google Translate (78 months), Uber (70 months), Spotify (55 months), and Instagram (30 months). Even TikTok took nine months to reach that milestone! Chat GPT is to consumer tech what the Beatles were to music. It will leave a permanent impact on society in terms of how people gather, produce, and consume information and who knows what else. The only question is whether it will be the AI tool we’re still talking about years from now, or will it burn out and allow others to fill the void? Just yesterday, Google launched its own AI technology called Bard to public testing, and according to Bloomberg, Baidu (BIDU) will launch its own service similar to Chat GPT by March.
These Chat tools may be the next big thing, but the stocks of the three companies launching them haven’t been particularly impressive. Shares of BIDU may be trading right near six-month highs, but the stock is still down over the last year and is trading for less than half of what it traded for at its peak in early 2021. Last week, it closed above its 200-day moving average for the first time in more than 200 trading days ending its second-longest streak of trading below that level in its history as a public company. Its time above the 200-DMA didn’t last long, though, as it closed back below that level the following day and is down over 15% in the last six months. Finally, Microsoft (MSFT) has the most direct exposure to OpenAI’s Chat GPT tool, but it too has been sucking wind. Like GOOGL, it only just recently traded above its 200-DMA and is still down more than 10% in the last six months.
Chat AI tools may be changing the world and there will be big winners, but the ones with the most immediate and direct exposure haven’t seen a big change in their fortunes. Maybe the fact that ‘everyone’ seems to be launching their own versions of these tools suggests that they don’t have a lot of scarcity value after all.
Our Morning Lineup keeps readers on top of earnings data, economic news, global headlines, and market internals. We’re biased (of course!), but we think it’s the best and most helpful pre-market report in existence!
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FANG Index Has Best One-Month Rally on Record
“Big Tech” stocks like Apple (AAPL), Amazon (AMZN), and Alphabet (GOOGL) have taken a breather over the past few days after reporting earnings last week. It’s important to note, however, just how much these stocks had rallied leading up to their near-term highs last week. Through last Thursday, the NYSE FANG+ had rallied 34.44% over the prior month. That was actually its biggest month-over-month rally in the index’s history dating back to 2014! As shown below, the index managed to make a “higher low” in early January just before it took off, and it just barely took out its highs from last August when it peaked last week before pulling back slightly.
While last week’s earnings results provided some negative fundamental catalysts (some of which we highlight in our most recent Conference Call Recaps), there is also the technical aspect that this group of stocks had gotten historically overbought. At last week’s highs, the 14-day RSI reached 77.4. Normally, any reading above 70 would be considered overbought. At 77.4, the RSI reading for the NYSE FANG+ index was the most elevated since June 2021 and ranked in the 97th percentile of all days since 2014. After further declines to start out this week, the RSI is still elevated, but back below 70. Click here to learn more about Bespoke’s premium stock market research service.
Chart of the Day – 1% Moves Become the Norm
Bespoke’s Morning Lineup – 2/6/23 – Dispersion
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“The greatest leader is not necessarily the one who does the greatest things. He is the one that gets the people to do the greatest things.” – Ronald Reagan
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There’s very little data to speak of this morning, or for that matter, the entire week, so investors will have to focus primarily on earnings and Fed Chair Powell’s speech at noon tomorrow. Last week was the peak for earnings season in terms of the market cap of companies reporting, but in terms of quantity, it will be just as busy this week. Markets are starting off on a negative footing as US Treasury yields continue their climb following last Friday’s jobs report. After touching its 200-day moving average on Thursday at 3.29%, the 10-year yield is more than 30 bps higher this morning at 3.60%. Even after the volatility of the last year, that’s quite a big move in a short period of time. Crude oil and natural gas, meanwhile, are both trading up over 1%.
Last week’s market word of the week was dispersion. As shown in the snapshot from our Trend Analyzer, performance was all over the map with Communication Services leading the way higher with a gain of over 5% while Energy trailed falling nearly 6%. As a result of the moves, we finished off the week with two sectors at ‘extreme’ overbought levels (Communication Services and Technology) while Utilities, with its 1.4% decline, finished the week at ‘extreme’ oversold levels.
Energy and Utilities were the only two sectors down over 1% last week, and both of their price charts have been showing signs of deterioration. After stalling out at a lower high earlier this year, Energy stocks have been under pretty significant pressure as both crude oil and especially natural gas have been weak. If the declines continue this week, chart watchers will be focusing on support at the lows from late 2022 which also corresponds to highs from late in the Summer. The picture for Utilities has been even weaker. That sector is now in a well-defined downtrend and last week’s decline resulted in a potential breakdown below support.
It seems strange to say after a year like 2022 but a number of sectors have also been breaking out to six-month highs. Last week, Financials, Industrials, and Materials all managed to trade above multi-month resistance levels and trade to six-month highs.
Our Morning Lineup keeps readers on top of earnings data, economic news, global headlines, and market internals. We’re biased (of course!), but we think it’s the best and most helpful pre-market report in existence!
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Bespoke Brunch Reads: 2/5/23
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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Going Green
CTR reports on improved lithium extraction from brine (The Desert Review)
A new process for extracting lithium from the water inside geothermal power plant loops is starting to scale up in California’s Salton Sea. [Link]
Cities Would Literally Be Much Cooler With More Trees by Lara Williams (Bloomberg)
Sometimes big problems have remarkably simple solutions. For cities, high temperatures, pollution, and health crises could all be improved by planting a lot more trees. [Link; soft paywall]
Dysportsia
Get Used to Face Recognition in Stadiums by Khari Johnson (Wired)
The dystopian use of facial recognition systems at Madison Square Garden is only the tip of the iceberg as sports venues work to contain fans who get out of hand…and some they just don’t like. [Link]
Sports Illustrated Publisher Taps AI to Generate Articles, Story Ideas by Alexandra Bruell (WSJ)
Arena Group, which publishes a range of finance, sports, and general interest sites, is integrating AI to produce content using AI, sometimes by using inventories of content from the group’s previous articles. [Link; paywall]
ChatGPT
OpenAI launches ChatGPT Plus, a paid version of the popular AI chat by Christianna Silva (Mashable)
For $20 per month, paid users get more reliable uptime and faster access to the popular AI chatbot protocol which has spread widely across the internet in the last few months. [Link]
Are You Smarter Than ChatGPT? OpenAI Tool Aims to Detect AI-Generated Text by Michael Kan (PC Mag)
Amidst concerns that AI-generated text is being misused (especially by students), ChatGPT’s creators at OpenAI have created a tool that claims to be able to detect whether a piece of text was AI-generated or human in origin. [Link]
Chow
Wings and Guacamole Are Cheaper, Just in Time for Your Super Bowl Party by Kevin Simauchi (Yahoo!/Bloomberg)
After a huge surge alongside other commodities over the past couple of years, prices for chicken and avocados are collapsing just in time for the Super Bowl. [Link]
Wave of ‘sushi terrorism’ grips Japan’s restaurant world by Justin McCurry (The Guardian)
Conveyor belt sushi restaurants have become the focus of an unfortunate social media trend which has sent their stocks plunging as a breakdown in basic social decorum threatens to remake the industry in Japan. [Link]
Raising Chickens for Cheaper Eggs Gets Expensive Fast by Rachel Wolfe (WSJ)
If you’re trying to skip the high egg prices at the grocery store by raising your own chickens, watch out: you might be signing up for more than you bargained for. [Link; paywall]
Pandemic
Merck Covid Drug Linked to New Virus Mutations, Study Says by John Lauerman (Bloomberg)
A study has found that a Merck treatment for COVID-19 creates more mutations of the virus, which works by altering the virus’s genome to reduce replication. [Link; soft paywall]
US Offices Reach 50% Occupancy for First Time Since Pandemic Hit by Matthew Boyle (BNN Bloomberg)
For the first time since the pandemic hit, building occupancies across 10 major metro areas moved above 50%, marking a major milestone in the return to normal that has been slowly and steadily emerging. [Link]
Adani
The Adani affair: the fallout for Modi’s India by John Reed and Benjamin Parkin (FT)
A look at the macroeconomic and political milieu that surrounds Gautam Adani and his company in the wake of a catastrophic decline in shares following short seller allegations of stock manipulation and accounting fraud. [Link; paywall]
Balloon
US Downs Alleged Chinese Spy Balloon That Lingered for Days by Christian Hall and Riley Griffin (Bloomberg)
After a Chinese weather balloon (or, depending on who you’re listening too, spy platform) spent a week above the US, an American fighter jet shot it down over the South Carolina coast on Saturday. [Link; soft paywall]
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Have a great weekend!
The Bespoke Report – 2/3/23
This week’s Bespoke Report newsletter is now available for members. (Log in here if you’re already a subscriber.)
In a blockbuster week for labor market data, the FOMC slowed the pace of rate hikes further but kept trying to talk tough about the outlook for rates. Equity, foreign exchange, and credit markets had different ideas both in the US and around the world. We dive deep into quarterly data on wages and productivity, monthly jobs numbers from the blockbuster Employment Situation Report today, PMI data from around the world economy, and other tidbits from the data this week. Earnings are also underway, and we provide qualitative and quantitative highlights from earnings results on both sides of the Atlantic this week.
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The Bespoke Triple Play Report — 2/3/23
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 above-expectations 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 our newest Conference Call recaps. To sign up, choose either the monthly or annual checkout link below:
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New Chapter in the Meme Stock Mania
We may be just a little more than a month into the new year, but there have already been a handful of Russell 1,000 stocks that have posted absolutely massive moves. There are currently seven Russell 1,000 stocks that have doubled year to date, some of which are more embattled high-growth stocks like Carvana (CVNA) and Peloton (PTON). Breaking down the index into deciles based on which stocks have the highest levels of short interest clearly shows that the top performers have also been those which have been most heavily bet against by investors. Whereas the decile of stocks with the lowest levels of short interest has risen a mere 4.4%, the decile of most heavily shorted names is up a substantial 36.3%.
Expanding to the Russell 3,000, in the chart below we show an equal weight index of the 100 most highly shorted stocks. Over the past month, the group has rallied almost 30%. That is a comparable rally to this past summer and outside of that, the only larger rallies of the past five years were coming out of the COVID Crash and the early 2021 short squeezes. This is not the first rodeo for highly shorted stocks flying higher. Click here to learn more about Bespoke’s premium stock market research service.
Dollar Down, Internationally Exposed Stocks Up
In last night’s Closer, we provided a decile breakdown of Russell 1,000 stocks’ year to date moves. One area in which there has been a clear distinction between winners and losers has been how exposed the companies are internationally. Given the dollar’s decline this year, stocks which generate a higher share of revenues abroad would face less headwinds from the dollar to make them more attractive and vice versa for stocks that are more domestically focused. That has largely appeared to have played out. As shown below, the decile of stocks that have the least international revenue exposure have only risen an average of 4.5% this year whereas most other deciles have seen average gains in the mid-teens. Then there is the 10th decile of stocks that generate the highest share of revenues abroad. That group is up an average of 22.4% this year.
Again, the dollar’s changes are a key reason for the strength in these stocks with heavy international revenue exposure. As shown below, Bloomberg’s trade-weighted dollar index peaked back in the fall and has been on a one-way trip lower, erasing much of the past year’s gains in the process. Over the past few days, the dollar has rebounded, but the steep downtrend is still alive and internationally focused companies may continue to have some fuel. Click here to learn more about Bespoke’s premium stock market research service.
