Bespoke’s Brunch Reads – 4/21/24
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.
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On This Day in History:
The Surgeon’s Photograph: On April 21st, 1934, 90 years ago today, the Daily Mail published the “Surgeon’s Photograph” depicting the Loch Ness Monster. Captured by Dr. Robert Kenneth Wilson, a London gynecologist, the photograph showed what looked like the head and neck of a serpent-like creature emerging from the waters of Loch Ness in Scotland. For decades, the picture captivated the public and fueled speculation about the existence of a mysterious aquatic creature. Depending on your perspective, fortunately, or unfortunately, a hoax. The photograph is really a toy submarine attached to wood putty in the shape of a sea serpent’s head, but tough to tell in a low-quality photo from the thirties! We’ve come a long way with media and image quality, especially with smartphones and the introduction of AI. So, how tough would it be to pull something like this off today?
AI & Technology
Microsoft’s AI Copilot Is Starting to Automate the Coding Industry (Bloomberg)
Microsoft’s AI Copilot, developed by GitHub using OpenAI’s GPT-4 technology, is revolutionizing the coding industry by automating routine tasks and allowing software engineers to focus on more complex problems. The ability to complete and translate code across programming languages is saving engineers hundreds of hours each month. This tool has garnered over 1.3 million users, including businesses like Goldman Sachs and Ford, helping GitHub stay competitive against rivals like Amazon and Google. Despite its benefits, Copilot still has limitations, such as occasionally generating outdated or buggy code, and requires careful usage by developers. [Link]
Crucial connection for ‘quantum internet’ made for the first time (Phys.org)
Researchers have successfully produced, stored, and retrieved quantum information for the first time. Quantum information is a bit like the data stored in your computer but operates under the rules of quantum mechanics, which allows it to behave in ways that regular computer data can’t. This breakthrough overcomes a big hurdle. Usually, quantum information gets lost or degrades when sent over long distances, just like a phone call might drop out in a tunnel. By using devices compatible with each other, information can be sent through existing telecom fibers, showing that it’s possible to build networks that can effectively handle this special type of information. [Link]
If you’ve got an EV, Google Maps is about to become much more valuable (Washington Post)
Google has announced updates to its Maps app to improve support for EV drivers, including a new tool to locate nearby charging stations with real-time availability and charging speeds. If you drive an EV, you know that “range anxiety” can be a real thing. Well, the updates also feature route planning for long trips with integrated charging stops and detailed navigational aids for locating chargers in complex places like parking garages and hotels. [Link]
Google who? Gen Z is searching on TikTok, YouTube instead (Axios)
Gen Z is turning its back on Google Search and instead using social media platforms like TikTok and Reddit for searches. This shift highlights their preference for quick, relatable content and their skepticism towards Google’s algorithm, which often prioritizes sponsored content. While Google still leads in overall search usage, the trend among younger users (18-24 years old) suggests a significant change in how information is accessed online. Have you tried some of the AI features out there in place of Google like ChatGPT, Snapchat’s AI, or even Meta’s brand-new Llama 3? [Link]
Meta adds its AI chatbot, powered by Llama 3, to the search bar across its apps (TechCrunch)
Speaking of Meta’s brand-new Llama 3, the social media giant has integrated its latest language model into the search functionalities of its primary apps including Facebook, Messenger, Instagram, and WhatsApp. Alongside this, Meta has introduced a new website, meta.ai, for easier access to its AI chatbot, and added features like faster image generation and the ability to transform images into GIFs. However, the widespread use of AI across its platforms raises concerns about content moderation, given the potential for AI to generate misleading responses. [Link]
Jamie Dimon Has a New Vision for Money in an AI World (BNN Bloomberg)
JPMorgan’s CEO, Jamie Dimon, envisions a future where AI enhances every aspect of the banking industry from trading, research, equity hedging and customer service, often as a “co-pilot.” Comparing AI’s impact to historical innovations like the printing press and electricity, JPMorgan is integrating AI to boost productivity and improve the quality of life for workers, but some jobs will be lost according to Dimon. Despite the push for a financial “super app” similar to those in China, Dimon foresees a trend towards multiple specialized apps in the US. When it comes to picking stocks though, Dimon doesn’t see AI being able to replace humans and pick flawlessly. [Link]
Wait, When Did the Schlubs of Silicon Valley Learn to Dress? (WSJ)
The tech industry has been known for its “disruptive” persona embodied by the style choices of executives like Mark Zuckerberg and Jeff Bezos. Meta’s CEO, Zuckerberg, has long opted for a look that is about as dressed down as it gets, but recently, he’s been appearing in much more conventional and refined attire for those of his status. Perhaps the change in appearance has to do with increased competition and regulatory issues in the tech industry. TikTok’s Shou Zi Chew and Nvidia’s Jensen Huang are going for more mature and respectable styles as well, as a more polished appearance could help project stability and professionalism. [Link]
Environmental
Dubai’s Extraordinary Flooding: Here’s What to Know (New York Times)
Recent heavy rains in the United Arab Emirates and Oman have caused unprecedented flooding, leading to at least 21 deaths, submerged vehicles, clogged highways, and severe disruptions at Dubai’s airport. Despite the Arabian Peninsula’s low annual rainfall, it often comes in severe bursts, and global warming could make such extreme downpours more frequent and intense. The UAW also employs cloud seeding, a process that attaches tiny particles to clouds to enhance rainfall, but its impact on these specific storms remains unclear. The flooding of cities in arid regions like Sharjah shows how they are often ill-prepared for so much rainfall, lacking adequate drainage systems. [Link]
Record breaker! Milky Way’s most monstrous stellar-mass black hole is sleeping giant lurking close to Earth (Video) (Space.com)
The Milky Way has revealed a new stellar-mass black hole, discovered close to Earth and named Gaia-BH3. Found using the European space telescope Gaia, this black hole is 33 times the mass of our sun and is just 2,000 light-years away, making it the second-closest black hole to Earth ever discovered. Unlike the supermassive black holes, Gaia-BH3 formed from the collapse of a massive star, offering unique insights into the population of dormant stellar black holes in our galaxy. [Link]
Economic Trends
Million-Dollar Analyst Jobs at Risk in China Research Pullback (Yahoo Finance)
Due to a prolonged market downturn and stricter regulations in China, firms are cutting costs by reducing staff, slashing bonuses, and imposing stricter performance metrics. For example, Guotai Junan Securities saw several senior analysts resign rather than accept pay cuts, and another brokerage in Shenzhen laid off 40% of its analysts. That’s a sharp U-turn from previous years when brokerages were expanding and offering high salaries to attract top talent. Additionally, policy changes that reduce trading fees and restrict paid research have further pressured the industry. These challenges are compounded by a general wariness among investors toward Chinese stocks, leading to a decreased demand for equity research. [Link]
Investments
The Headache at the End of the Costco Gold Rush (WSJ)
We’ve discussed the Costco gold bars here before, but selling them proves to be much more challenging than buying them. One buyer bought a gold bar for $2,000 and struggled to sell it close to market value, eventually settling for $1,960. Despite high consumer interest in gold as a hedge against inflation, the reality is that gold is not very liquid, and sellers often face immediate losses due to transaction fees and market discounts, nor does Costco offer buybacks or returns on its gold bars! [Link]
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Have a great weekend!
The Bespoke Report – 4/19/24 – No More Peppers Please! & Global Macro Update
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Bespoke’s Morning Lineup — 4/19/24
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 best kept secret in the investing world: Almost nothing turns out as expected.” – Harry Browne
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
The S&P 500 has formed a downtrend that is clear as day over the last three weeks, as shown in the 15-day intraday chart of the index below:
As we noted in last night’s Closer, the S&P 500 ETF (SPY) has opened higher and then closed down from that opening level for four straight trading days. This is a reversal from the intraday strength that we generally saw during the slow-and-steady rally seen from last October through March.
This morning, at least, it looks like SPY is set to open lower, and bulls will be looking for that gap down to be bought.
We discussed the Israel/Iran conflict in more detail in this morning’s Commentary, but notably, oil prices have pulled back significantly after an initial spike on news that Israel was indeed retaliating against Iran last night. Oil popped 4% on the news last night, but it’s down 5% from those levels and now trading lower on the day. You can see this action in the candlestick chart of oil below. For now, oil’s 50-day moving average has still not been breached.
For 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’s Morning Lineup – 4/18/24
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.
“Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves.” – Peter Lynch
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 are trading slightly higher this morning, but that’s nothing new as we’ve seen a number of days in the last week or two start higher only to roll over and sell-off into the close. We cover the recent intraday selling on page four of this morning’s report.
At the end of March, most US equity index ETFs were trading in overbought territory, but now it’s the opposite as shown in the snapshot from our Trend Analyzer below. Small-caps and the Dow are at the most extreme oversold levels.
The percentage of stocks in the S&P 500 that are overbought versus oversold has completely flipped as well, with 46% of the index now oversold compared to just 6% that remain overbought.
For 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 — April 2024
Chart of the Day – Bonds Left Bleeding
Bespoke’s Morning Lineup – 4/17/24 – Quiet But Positive
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.
“Houston, we’ve had a problem here.” – Jack Swigert, Apollo 13 Astronaut
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
There’s not a lot of news to speak of this morning, but that isn’t stopping futures from drifting higher. Treasury yields, crude oil, and gold are all little changed with a negative bias. Mortgage applications increased in the latest week even after yields surged, but other than that, the economic calendar is empty for the rest of the day.
54 years ago today, Americans were glued to their TVs anxiously watching as Apollo 13 splashed down in the Pacific Ocean after a troubled six-day mission in space. While the world breathed a sigh of relief as Apollo 13 returned safely from orbit and down to Earth, investors today are nervously watching the market as it comes back down to earth. After trading at overbought levels for months, major indices around the world are pulling back and falling from overbought levels and back below their 50-day moving averages. Yesterday, it was the STOXX 600’s turn as the index closed below its 50-DMM for the first time since November 14th.
Yesterday’s decline ended the longest streak of closes above the 50-DMA since June 2017 and just the 11th streak that lasted more than 100 days. The longest of those streaks ended in April 1997 at 160 trading days and also occurred within a year of the second longest streak on record (142 trading days ending on 6/7/1996).
So, when these streaks come to an end, is it a sign of a market calamity on the way? Not necessarily. For more details check out today’s Morning Lineup!
Read today’s entire Morning Lineup.
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.
Chart of the Day – Housing Starts
Bespoke’s Morning Lineup – 4/16/24 – Hope is a Four Letter Word
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.
“Don’t hope. Hope is for people who aren’t prepared.” – Kareem Abdul-Jabbar
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 are higher this morning as positive earnings results lift the mood of investors even as interest rates are higher. Housing Starts and Building permits were just released, and both reports came in lower than expected. Housing Starts were a big miss coming in at 1.321 million compared to forecasts for 1.485. Building Permits were also weaker at 1.458 million versus consensus forecasts for 1.510 million. These reports should have been friendly to rates, but so far there has been very little movement in the 10-year yield. Besides these two reports, the only other items on the calendar are Industrial Production and Capacity Utilization at 9:15. We’ll also be hearing from Fed Chair Powel at 1:15 Eastern.
After the last two trading days, and all of April for that matter, there are probably a lot of overexposed traders and investors hoping for an up day or two. We don’t know where the market will go from here in the short term, but at this point, the S&P 500 is only down 3.66% from its closing all-time high at the end of March. That’s not even close to what most people would call a correction, let alone a pullback. While the current decline is the first of that magnitude since late last year, since 1953 there have been 455 declines of 3% or more on a closing basis without a 3% rally in between. That works out to one about every two months. In other words, the fact that we hadn’t had a pullback of 3% in over five months was more unusual than the fact that the S&P 500 is now down over 3% from its high. In fact, since 1953, there have only been ten other periods where the S&P 500 went longer than the just-ended streak without falling 3% from a local closing high.
Looking at the four major US indices across the market cap spectrum, the Russell 2000 is the only one not up YTD, although it was in the black just a week ago. What’s also notable is that a week ago all four indices were above their 50-day moving averages (DMA) and two (MDY and SPY) were overbought. As of yesterday’s close, all four indices are not below their 50-DMA, and two (QQQ and IWM) are oversold. Change tends to happen fast in the markets.
The fact that all four of the indices shown above closed below their 50-DMA yesterday was notable because it was the first time since November 2nd that all four of them closed below their 50-DMAs. Since 1990, that streak was on the extreme side, but it wasn’t unheard of as eleven streaks were longer and another six lasted longer than 100 trading days. The most recent ended in August of last year (106 trading days), and the longest was 262 trading days ending in January 1996.
Read today’s entire Morning Lineup.
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.
The Triple Play Report — 4/15/24
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 14 new stocks. To sign up, choose either the monthly or annual checkout link below:
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Cintas (CTAS), a workplace health and safety company, is an example of a company that reported an earnings triple play recently.
CTAS has been trending up for quite some time now and has traded above its 50 and 200-DMA consistently since last October.
Looking at the snapshot below from our Earnings Explorer, in its last 20 earnings reports, or five years of earnings, CTAS has beaten both EPS and revenue estimates 100% of the time. Its triple play on March 27th is just the company’s fourth over this stretch, however, which resulted in a one-day gain of 8.25%. Tallying five straight years of earnings beats is no easy task, especially when those five years include a global pandemic. Ultimately, CTAS was able to succeed through the pandemic as revenue for First Aid and Safety Services surged despite declines in Uniform Rental and Facility Services as many businesses suffered.
Fast forward to today, CTAS’s health and safety products remain in high demand in a post-pandemic world. Uniform Rental and Facility Services remains the core of CTAS’s business with steady growth while First Aid and Safety Services grew double-digits versus the prior year due to strong demand and higher margin products, like AED rentals, in that category. This quarter also highlighted the SmartTruck technology to aid efforts in optimizing its delivery and service routes to minimize costs and improve speed. Six Sigma was also mentioned as a benefit for improving manufacturing processes by eliminating defects and guaranteeing quality. You can read more about CTAS and the 13 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.