The Bespoke Report – Disinflationary Boom
This week’s Bespoke Report looks at the combination of data and central bank decisions this week that validate the equity bull market. But despite good news on the economic front and solid earnings, let alone any other risk vectors, it’s hard to not get the sinking feeling that optimism is running a bit too high for the time being. Even if we do see an equity market pullback, growth is solid, consumers are feeling increasingly optimistic, inflation is slowing, and supply chains have healed.
To read this report and access everything else Bespoke’s research platform has to offer, start a two-week trial to Bespoke Premium.
Bespoke’s Morning Lineup – 7/28/23 – Looking to End on a Positive Note
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.
What? Over? Did you say ‘over?’ Nothing is over until we decide it is! Was it over when the Germans bombed Pearl Harbor? Hell no!” – John Blutarsky
Below is a snippet of content from today’s Morning Lineup for Bespoke Premium members. Start a two-week trial to Bespoke Premium now to access the full report.
In case you missed it yesterday, below is a link to yesterday’s segment on CNBC.
Consumers Aren’t Going to Keep Paying High Prices
While Bluto may argue otherwise, the Dow’s streak of daily gains ended at 13 days tying it with the 13-trading day period ending in January 1987 for the longest winning streak in the last 125 years. This morning, the bulls are determined not to make yesterday’s decline the start of a new losing streak, and so far, they’ve been successful as futures on all three major averages trade in the green.
Overnight and this morning, major equity indices are seeing mixed returns. In Asia, the Hang Seng and Shanghai Composite both traded up over 1% to cap off weekly gains of more than 3% while India traded marginally lower and traded down less than 1% for the week. In Europe, German GDP was the big report of the morning. While economists were expecting growth of 0.1% following Q1’s contraction of 0.3%, the actual reading showed zero growth (0.0%). The German economy may no longer be in a recession, but it isn’t growing either.
Earnings data for the week is now behind us, but there’s still a decent chunk of economic data to contend with including ECI (weaker than expected), Personal Income (weaker than expected), Personal Spending (stronger than expected), PCE Deflator (mostly inline with forecasts although Y/Y Core was less than expected at 4.1% versus 4.2% forecast), and Michigan Sentiment.
After hitting new bull market highs early in the session yesterday, stocks sold off and finished near the lows of the day. Technicians call days like yesterday ‘reversal days’, and they are considered negative market signals. As with several technical indicators, though, they sound good in theory, but they don’t always work out in practice. Since the inception of the S&P 500 tracking ETF (SPY) back in 1993, there have now been 83 days where SPY traded to a 52-week high intraday and then reversed lower throughout the trading session to the point where its intraday low was lower than the prior day’s low and the close was below the open.
The chart below of SPY shows every one of those prior reversal days over time. While there were a few times when the market did have a reversal day near a peak, most of them occurred nowhere near market peaks.
Start a two-week trial to Bespoke Premium to read today’s full Morning Lineup.
The Closer – Broken Streaks, ECB Recap, GDP Breakdown, Rents Collapse – 7/27/23
Log-in here if you’re a member with access to the Closer.
Looking for deeper insight into markets? In tonight’s Closer sent to Bespoke Institutional clients, we start with a look at the latest earnings (page 1) followed by a look at the Dow coming up just short of a new record winning streak (pages 2 and 3). We then check in on European central bank rates and stocks (page 4) before pivoting to today’s GDP data (page 5). We also look at apartment vacancies (page 6) before closing out with a review of the 7 year note auction (page 7).
See today’s full post-market Closer and everything else Bespoke publishes by starting a 14-day trial to Bespoke Institutional today!
Sentiment Staying Bullish
The S&P 500 has continued its rally but sentiment has not exactly reflected that. The latest reading on investor sentiment from the AAII survey showed bullish sentiment dropped back below 50% this week. 44.5% of respondents reported as bullish in the past week which is right in line with the average reading of the past two months.
The 6.5-point decline in bulls was only partially picked up by bearish sentiment which rose from 21.5% (the lowest level in over two years) to 24.1%. Albeit higher sequentially, that remains a muted reading.
Neutral sentiment took home a larger share of the drop to bulls with the reading rising to 31% from 27.1%. That is only the most elevated reading in two weeks as neutral sentiment is the closest of any response to its respective historical average.
While the AAII survey showed some moderation in optimism this week, that was not the case for other surveys. In last Thursday’s Closer, we discussed how alongside the AAII survey, multiple other sentiment readings have tipped in favor of bulls recently. One such indicator that has continued to become more bullish is the NAAIM Exposure index which tracks the average equity exposure of active investment managers. Readings range from -200 to +200. -200/+200 would imply on average money managers are leveraged short/long, readings of -100/+100 would be fully short/long, and a reading of zero would be market neutral. This week the index tipped above 100 for the first time since late November 2021. In other words, active money managers are now fully long for the first time in over a year and a half. That streak of readings below 100 also ends as the fourth longest in the survey’s history at 86 weeks in a row.
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.
The Bespoke 50 Growth Stocks — 7/27/23
The “Bespoke 50” is a basket of noteworthy growth stocks in the Russell 3,000. To make the list, a stock must have strong earnings growth prospects along with an attractive price chart based on Bespoke’s analysis. The Bespoke 50 is updated weekly on Thursday unless otherwise noted. There were eleven changes to the list this week.
The Bespoke 50 is available with a Bespoke Premium subscription or a Bespoke Institutional subscription. With Bespoke Premium, you’ll receive a number of daily market updates from us along with our weekly newsletter and a portion of our investor tools. With Bespoke Institutional, you’ll receive everything that’s included with Premium plus additional daily macro analysis and more stock-specific research.
To see all 50 stocks that currently make up the Bespoke 50, simply start a two-week trial to Bespoke Premium or Bespoke Institutional.
The Bespoke 50 performance chart shown does not represent actual investment results. The Bespoke 50 is updated weekly on Thursday. Performance is based on equally weighting each of the 50 stocks (2% each) and is calculated using each stock’s opening price as of Friday morning each week. Entry prices and exit prices used for stocks that are added or removed from the Bespoke 50 are based on Friday’s opening price. Any potential commissions, brokerage fees, or dividends are not included in the Bespoke 50 performance calculation, but the performance shown is net of a hypothetical annual advisory fee of 0.85%. Performance tracking for the Bespoke 50 and the Russell 3,000 total return index begins on March 5th, 2012 when the Bespoke 50 was first published. Past performance is not a guarantee of future results. The Bespoke 50 is meant to be an idea generator for investors and not a recommendation to buy or sell any specific securities. It is not personalized advice because it in no way takes into account an investor’s individual needs. As always, investors should conduct their own research when buying or selling individual securities. Click here to read our full disclosure on hypothetical performance tracking. Bespoke representatives or wealth management clients may have positions in securities discussed or mentioned in its published content.
Jobless Claims Back to Improving
It was a solid morning for economic data with a number of indicators coming in better than expected. Weekly jobless claims were one of those with seasonally adjusted initial claims unexpectedly falling to 221K from 228K last week and the lowest level since the second half of February.
Before seasonal adjustment, claims fell significantly week over week as could be expected for this point of the year. The 44.5K drop this week was in line with the average historical drop for the current week of the year as claims have fallen 80% of the time. Going forward, there will continue to be seasonal tailwinds through the end of summer before the typical fourth quarter turn higher.
As for continuing claims, the seasonally adjusted reading likewise hit a new short-term low coming in at just 1.69 million. That is the lowest reading and first sub-1.7 million since the end of January. Combined with the initial claims reading, this recent data points to a return to strength in the labor market data following deterioration late last year through the early spring.
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.
Chart of the Day – GDP Prices Show Disinflation
Where the Jobs Were
In last night’s Closer, we discussed the latest job postings data from job listings website Indeed. Compared to the official reading on labor market demand — the Job Openings and Labor Turnover Survey (JOLTS) — which is released monthly at a two-month lag, this Indeed data is a daily look with much lower latency. The latest release as of Tuesday covers postings through July 21st. As shown below, postings remain in a downtrend in spite of a modest rebound in the latest month. Having tracked well with the official data, modeling JOLTS on the Indeed data would predict JOLTS to continue to fall to around 9.57 million for the June data scheduled to be released next week.
The Indeed data also provides a good deal of demographic granularity based upon geographic areas. As shown below, the first two years of the pandemic had been a boon for smaller metro areas as they generally saw healthier readings on postings than the largest cities. While that dynamic moderated through the back half of 2021 through early 2022, the past year has seen the trend return. As shown in the charts below, postings have fallen regardless of MSA size, but larger metros have experienced a much more substantial drop. The smallest metros, on the other hand, have seen a much more modest decline, especially over the past several months. Check out the big drop in the second chart below showing the spread between the largest and smallest metros:
The data also provides a breakdown based on job industry. In the table below, we show the change in each industries’ postings since the pre-pandemic baseline of early February 2020. Currently, there are six groups with a lower reading on postings versus pre-pandemic: IT Operations & Helpdesk, Media & Communications, Marketing, Information Documentation and Design, Software Development, and Mathematics. Meanwhile, several health care and engineering related roles continue to sit atop the list with the greatest post-pandemic growth in job postings. Finally, we would also note that some industries like Human Resources and logistics-related industries that saw postings boom on account of strong hiring and stressed supply chains have moderated. Today, those same indices now have postings that are middle of the pack at best.
Read this month’s full Global Macro Dashboard report with a trial to Bespoke All Access.
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.
Bespoke’s Morning Lineup – 7/27/23 – Data Dump
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 take life too seriously. You’ll never get out alive!” – Elbert Hubbard
Below is a snippet of content from today’s Morning Lineup for Bespoke Premium members. Start a two-week trial to Bespoke Premium now to access the full report.
After one of the most subdued reactions to a Fed decision in memory, today is not only one of, if not, the busiest days of earnings season, but there’s also a ton of economic data hitting the tape as we send this out. Given the volume of reports, you would think that there would be something to worry about in the data, but jobless claims were lower than expected, GDP was better than expected, Durable Goods were better than expected, and the inflation data (GDP Price Index and Core PCE) were all weaker than expected. Not a bad showing!
One thing they have already started to worry a little more about this week is the fact that most of them are bullish. After individual investor sentiment, as measured by AAII topped 50% for the first time in over two years last week, it headed south again this week falling down to 44.9%. That’s despite the Dow rising every single day since the last survey was taken!
We’ve talked a decent amount in the last few weeks about the extraordinarily narrow trading range that Bitcoin has traded in recently. This week, it has started to drift out of that range to the downside, and while it hasn’t been a dramatic move, the 50-day moving average is back into play. After testing that level in each of the last three trading days, Bitcoin has successfully tested that level, and today it has managed to stay above that level for now. There’s still a decent amount of time left in the day, so we’ll see if it holds, but for now, Bitcoin’s uptrend remains intact. If the 50-DMA fails to hold, though, the pace of selling could accelerate.
Bitcoin’s ‘little brother’, Ethereum, has been extremely quiet lately. Outside of a brief downdraft and recovery in June, its price has essentially done nothing. Extreme volatility is a way of life for speculators in crypto, but lately, the sector has had as much excitement as a movie on the Hallmark channel.
Start a two-week trial to Bespoke Premium to read today’s full Morning Lineup.