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.

“Work takes on new meaning when you feel you are pointed in the right direction. Otherwise, it’s just a job, and life is too short for that.” – Tim Cook

Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.  

An apple a day keeps the doctor away, and an Apple (AAPL) earnings report could be just what the market needs to get out of this week with a gain.  At current levels, the gains aren’t quite enough to push the market into the black for the week, but if there’s any positive momentum during the trading day (a bigger ask lately), we could get over the hump. Overnight, Asian markets were mixed as the yen rallied from its multi-decade lows earlier in the week.  Europe is firmly in positive territory with gains of around 0.50% as banks lead the rally even as Novo Nordisk falls around 5%. Ahead of the 8:30 jobs report, treasury yields are little changed, oil is slightly higher but still below $80, and gold is down fractionally.

Before the April employment report, we wanted to briefly summarize trends surrounding recent reports.  The table below summarizes the last two years’ worth of reports including how each came in relative to expectations along with equity market performance on the day of the report.  One thing that immediately stands out is that just three of the last 24 reports have come in weaker than expected, and the average margin of “beat” in these 24 reports was 76K. Before Covid, a beat of 76K was very strong.  Post-Covid, it’s a normal occurrence.

In terms of the market’s reaction to these reports, the last eight reports have been extremely positive with positive one-day reactions seven times.  Before that, things weren’t quite as strong. From May 2022 through April 2023, for example, the S&P 500 declined on the day of the report nine out of twelve times.  In terms of recent sector performance, two standouts have been Energy and Financials. Both sectors have reacted positively to 12 of the last 13 reports with average gains of 0.98% and 0.78%, respectively.  Consumer Discretionary and Industrials haven’t been slouches either as they notched gains on eleven of the last thirteen non-farm payrolls days.

Getting back to the pace of stronger-than-expected reports, it’s hard to believe but 21 of the last 24 reports have been better than expected.  As shown in the chart below, dating back to 2000, we’ve never seen this torrid pace of stronger-than-expected reports.  Can the Fed really be talking about rate cuts when the pace of stronger-than-expected reports is this strong?

While better than expected Non-Farm Payrolls reports have been occurring at a pace never seen before, another notable trend lately has been the pace at which reports have been revised lower.  When we compare the originally reported change in Non-Farm Payrolls to the current readings after revisions, just nine reports have been revised higher meaning that 15 have been revised lower. Looking back over time, this isn’t necessarily extreme, but it is above the historical average of 12.  In other words, Non-Farm Payrolls reports over the last few years have been blistering hot relative to expectations at their initial release, but unlike a fine wine, they haven’t been getting better with age.

Read today’s entire Morning Lineup.

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.

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.

“How you finish, is what they will remember.” – Unknown

Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.  

Markets are in rebound mode this morning as they look to recoup the losses from the last hour of trading. Crude oil is higher but still below $80, and the 10-year yield is unchanged.  This morning’s economic data has been mixed with jobless claims coming in lower than expected, but Unit Labor Costs rising more than expected (4.7% vs 4.0%) although last quarter’s reading was revised lower. As labor costs increased, Non-Farm Productivity was weaker than expected rising just 0.3% compared to forecasts for an increase of 0.5%.

When people look back on Super Bowl LI, most will only remember that the Patriots won their fifth championship in an unbelievable comeback against the Falcons.  The Falcons, who were up by 25 in the second half, won’t be remembered for being so close, but instead for one of the biggest choke jobs in Super Bowl history. At one point in the second half, they had a 99% probability of winning. It was guaranteed.

Similarly for the market, people will not look back on yesterday as being a day when the S&P 500 was up over 1% with less than an hour left in the session. Most people will just remember it as a day when the S&P 500 finished moderately lower (-0.34%), and for those more involved in the day-to-day moves, they’ll remember that the S&P 500 collapsed into the close falling over 1% in the final hour and more than 0.50% in the last ten minutes of trading! As we noted in the Closer last night, at one point yesterday, the S&P 500 had a 99% probability of finishing the day with a gain. Choke job indeed.

What’s even crazier about yesterday’s tank into the close, is that it was the second day in a row where it happened.  Below we show the S&P 500’s intraday charts for Tuesday (4/30) and Wednesday (5/1).  While the patterns heading into the last ten minutes of both days were almost the opposite, the last ten minutes were nearly identical; The S&P 500 dropped 0.59% in the final ten minutes on Tuesday and 0.60% on Wednesday.  These late-day declines are uncommon enough on their own, but to occur on back-to-back days is extremely rare.

The chart below shows streaks where the S&P 500 declined 0.50% or more in the final ten minutes of trading going back to 1985, and there have only been nine other periods where there were back-to-back occurrences (with two extending to an unheard-of third day).  The most recent occurrence was in February 2018 during the Volmageddon meltdown. The next before that was in August 2015 when China devalued the yuan and before that August 2011 when the US lost its AAA credit rating from S&P. There were also a few occurrences during the Financial Crisis and also in October 1987 during the market crash.  You probably get the point; these types of back-to-back declines normally occur during periods of intense market stress.

For an analysis of how the market performed following these periods, read today’s entire Morning Lineup.

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.

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.

“You don’t need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beats the guy with 130 IQ.” – Warren Buffett

Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.  

Many global markets are closed in observance of May Day today, and here in the US, most investors are close to crying “Mayday” after futures are firmly lower following yesterday’s sharp declines.  It’s another busy day of earnings and economic data, and the big report overnight was from Amazon.com (AMZN) which is trading modestly higher.  Several other smaller but notable companies like Super Micro Computer (SMCI), Starbucks (SBUX), and Skyworks (SWKS) are all trading lower, though.  And that’s just the companies that begin with ‘S’!  On the economic calendar, the ADP Payrolls report came in modestly higher than expected, but we still have JOLTS, ISM, and Construction Spending on deck. Also, don’t forget the Fed at 2 PM and Powell’s presser at 2:30.

April has historically been a positive month for stocks but not this year.  The S&P 500’s 4.2% decline was only the weakest April since 2022 (-8.8%), but it was one of only seven Aprils since WWII where the S&P 500 declined more than 4%.  Not only was the S&P 500 down in April, but it also broke a five-month streak of gains.

Five-month streaks of gains for the S&P 500 haven’t been uncommon. Since WWII, there have been 31 prior periods where the S&P 500 posted positive returns for five or more straight months. What made the recent streak unique is that every positive month was a gain of at least 1%, and there have only been nine of those since WWII.

In the charts below, we summarize the performance of the S&P 500 in the one, three, six, and twelve months following the first down month that ended prior streaks.  While futures are lower this morning, and the S&P 500 is entering what has historically been a weak period in terms of returns, bulls can take some solace in the fact that median returns following the end of the prior 31 five-month winning streaks along with the median performance following five-month streaks of 1%+ gains have been better than the average for all one, three, six, and twelve month periods since WWII.

Speaking of a weak period for the market, like the recently ended streak, there have only been three other periods where the S&P 500 was up for at least five straight months and then declined in April. It’s a small sample size, but on a positive note, the S&P 500 was higher one, three, and six months later.  One year later, though, performance was mixed with declines once, a paltry gain of just 2.4% another time, and a massive gain of over 22% following the streak that ended in April 1986.

Read today’s entire Morning Lineup.

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.