Bespoke’s Morning Lineup – 9/4/24 – It’s September
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.
”Obsolescence is the very hallmark of progress.” – Henry Ford II
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
What started as a weak start to September in the US spread to Asia overnight, followed through to Europe this morning, and is now back in the US this morning. That’s September for you! The big reports overnight and this morning were PMI readings for the services sector, and they mostly came in weaker than expected but still showed growth. Today’s major economic reports in the US are JOLTS for July and Factory Orders at 10 AM.
Yesterday’s 2.12% decline for the S&P 500 was the worst opening day for a month since May 2020, and the worst start to September since 2015. September is no stranger to big down days to start the month. Since 1953, the first full year of the five-day trading week in its current form, the S&P 500 has declined 1%+ on the first trading day of the month 14 times now, which works out to just under 20% of the time. The next closest months are October and January with eleven each.
In the table below, we summarize the performance of the S&P 500 following 1%+ declines to start the month grouped by month. Over the following day, week, and month, the S&P 500 tends to see steady gains overall, although returns when the decline occurs in September have been below average. One day and one week later, the S&P 500 was positive but up by just an average of 0.13% and 0.14%, respectively. Four weeks later, though, 1%+ declines to start the month of September have been followed by an average decline of 1.36% which is the worst four-week performance of any month except June.
The chart below shows the four-week performance following 1%+ declines by month. Here you can really see the weakness that follows these types of declines during the summer months, but outside of the June to September period, 1%+ declines to start the month have been followed by an average four-week performance of 1% or more.
While the four-week performance of the S&P 500 following a 1%+ decline to start September has been weak, performance following recent 1%+ declines have been positive. The chart below shows the performance of the S&P 500 in the four weeks following the last 20 1%+ declines to start the month, and after each of the last eight occurrences, the S&P 500 has been up four-weeks later every time for a median gain of 4.6%.
Continue reading today’s full Morning Lineup by starting a two-week trial to Bespoke Premium.
The Closer – Semis Slammed, AI Falls Apart, Crude Collapses – 9/3/24
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 kick off with a look into the pattern forming in the semis and what performance for the group and Tech more broadly looks like following severe drops like we saw today (page 1). We also note the big drop in AI names (page 2) and crude oil’s collapse (page 3). We then check in on the latest PMIs (page 4) and LMI (page 5) before closing out with weekly positioning data (pages 6 – 9).
See today’s full post-market Closer and everything else Bespoke publishes by starting a 14-day trial to Bespoke Institutional today!
Daily Sector Snapshot — 9/3/24
Bespoke Stock Scores — 9/3/24
SPY Price Change vs. Total Return
While plenty of large-cap companies have dividend yields above 3%, the US market as a whole has a relatively low dividend yield of just 1.29%. Below is a chart showing SPY’s dividend yield at the end of each quarter since it began trading in 1993. As you can see, SPY’s average yield over this entire time frame has been 1.82%, and its current yield is at the very low end of its 30-year range.
A dividend yield of less than 2% may not seem like much, but those payouts really add up and compound over time. In fact, nearly half of the US stock market’s (SPY) total return since 1993 has come from collecting its quarterly dividend and re-investing that cash right back into SPY.
Below is a snapshot of a page from our “Get Invested!” slide-deck that we published last year for clients. It includes a chart of SPY’s simple share-price change since inception versus its total return (dividends re-invested) since inception. Through late March of this year when we last updated this slide-deck, SPY’s price change since inception was 1,063%, while its total return was nearly double that at 1,959%. The 896-percentage point difference between SPY’s simple share-price change and its total return is all a result of re-investing those quarterly dividends paid out by SPY.
Interested in reading more about dividends? Join our new complimentary “Dividend Discovery” email newsletter that goes out a couple of times per week.
Separately, if you’d like to receive Bespoke’s stock market/macro research on a daily basis, click here or on the image below to start a two-week trial today!
Bespoke Market Calendar — September 2024
Please click the image below to view our September 2024 market calendar. This calendar includes the S&P 500’s historical average percentage change and average intraday chart pattern for each trading day during the upcoming month. It also includes market holidays and options expiration dates plus the dates of key economic indicator releases. Click here to view Bespoke’s premium membership options.
Chart of the Day – Picking Up Where it Left Off Eleven Months Ago (& Breadth Update)
Bespoke’s Morning Lineup – 9/3/24 – Right on Cue
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.
“Practice isn’t the thing you do once you’re good. It’s the thing you do that makes you good.” – Malcolm Gladwell
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
Right on cue, the first trading day of September has been accompanied by weakness in the futures. One caveat worth pointing out is that much of the weakness is only erasing the late-day surge in the final minutes of trading last Friday. Overnight in Asia, most major benchmarks were also lower, but the magnitude of the losses was mostly modest. Similarly in Europe, the STOXX 600 is down less than 0.5%.
Looking ahead to the rest of the trading day, we’ll get a first look at manufacturing activity and sentiment for August with Manufacturing PMIs from S&P at 9:45 and ISM at 10. Also at 10, we’ll get the latest update on Construction Manufacturing, but that’s a July number.
The negative level of equity futures to kick off September should surprise no one as stocks have gotten a lot of practice being weak in September. Just over the last 20 years, the S&P 500’s median performance the day after Labor Day has been a decline of 0.14% with gains just 40% of the time. More recently, the first real workday of September has been even weaker with declines in seven straight years for a median loss of 0.42%.
With a weak start, Labor Day week has also tended to be weak. Over the last 20 years, the median decline has been 0.20% with gains just half of the time. Over the last four years, Labor Day week has seen declines of at least 1.3% three times. The one exception was in 2022 when the S&P 500 rallied 3.65%.
During the rest of September after Labor Day, performance has been extremely bifurcated. While the S&P 500 has been positive slightly more often than it has been negative, and the median return has been slightly positive (0.26%), the last four years have been weak. As shown in the chart below, performance from the Friday before Labor Day through month end has been negative by at least 1.87% in of the last four years.
Continue reading today’s full Morning Lineup by starting a two-week trial to Bespoke Premium.
A Left-for-Dead Blue Chip Bounces Back: 3M (MMM)
When you have some time, be sure to listen to the latest episode of The Compound where Bespoke’s Paul Hickey joined Josh Brown, Michael Batnick, and Gunjan Banerji for an in-depth conversation about markets. You can find it at this link or wherever you typically listen to podcasts.
With four months left in 2024, below is a look at the year-to-date performance of the 30 stocks in the Dow Jones Industrial Average. Would you believe that previously left-for-dead blue chip 3M (MMM) is currently the Dow’s best performing stock on the year? With a gain of more than 50% YTD, MMM is just ahead of Walmart’s (WMT) 48.4% gain.
Three stocks in the Financials sector round out the top five: American Express (AXP), Goldman Sachs (GS), and JP Morgan (JPM).
On the flip side, current left-for-dead blue chips have been the year’s worst performers in the Dow: NIKE (NKE), Boeing (BA), and Intel (INTC). All three of these stocks are down more than 20% on the year.
Below is a look at the growth of a hypothetical $10k investment in 3M (MMM) shares at the start of 1990 with dividends re-invested. MMM shares peaked more than six years ago in early 2018, where that $10k had turned into nearly $300k at the highs. From its high point in early 2018 through late 2023, MMM experienced a drawdown of more than 60%, leaving the $10k in 1990 down to just $115k at its recent lows.
With a year-to-date gain of more than 50% in shares, though, the current value of $10k in 1990 is back up to $226k.
If it weren’t for 3M’s dividend, long-term returns would be much more muted. An easy way to show this is to look at MMM’s share price change versus its total return since 1990. Whereas MMM shares are up just 741% in price since 1990, its total return has been 2,165%. This means that well over 50% of MMM’s returns over this period have been from re-investing the dividends paid out by the company.
Interested in dividends? We’re launching a new email newsletter called “Dividend Discovery” where we’ll focus specifically on dividend stocks, ETFs, and strategies. It’s free to join, just enter your email here if you’re interested.
Like this post? We think you’ll love our premium research where we provide actionable analysis on a daily basis to investors of all types. Check out the two membership options below and then click here to start a two-week trial to either of them.
Brunch Reads – 9/1/24
Welcome to Bespoke Brunch Reads — a linkfest of some of our favorite articles 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.
Bespoke’s Paul Hickey appeared on The Compound podcast with our friends Josh Brown and Michael Batnick of Ritholtz Wealth earlier this week, and the episode is now available. You can find it at this link, by clicking on the image below, or wherever you typically listen to podcasts. Give it a listen and let us know what you think.
The Germans Invade Poland: On September 1st, 1939, Germany invaded Poland, marking the beginning of World War II. The invasion followed months of escalating tensions in Europe, driven by Hitler’s expansionist ambitions. Germany’s Blitzkrieg involved rapid, coordinated attacks using aircraft, tanks, and infantry, overwhelming Polish forces. Hitler justified the attack by a fabricated attack on a German radio station, known as the Gleiwitz incident, staged by the Nazis to claim that Poland had attacked first. The invasion was brutal and swift, and the Polish army was ill-prepared and outmatched in numbers and modern military equipment.
An anecdote often recounted from the early days of the invasion is the desperate but courageous charge of the Polish cavalry at Krojanty on September 1st. The cavalry, armed with sabers and lances, bravely charged the German infantry, unaware that they were supported by armored vehicles. Though ultimately a tragic loss, this event symbolized Poland’s fierce but doomed defense.
Creating the NFL Schedule (NFL Football Operations)
No matter what colors you bleed on NFL Sundays, creating the NFL schedule is no easy task. It involves balancing the needs of the fans and broadcast partners, and considering the logistical challenges. The NFL has a team of experts to navigate around pre-existing events at stadiums, adhering to a strict rotational formula for matchups, and managing the demands of the league’s six major broadcast partners. The process involves generating thousands of potential schedules using cloud-based computing, ultimately narrowing it down to the one that best fits all these factors. The 2024 schedule also includes international games in Brazil, the UK, and Germany. As the top teams and storylines emerge, the league will also utilize flex scheduling to ensure that prime-time games feature top-tier matchups. [Link]
Continue reading our weekly Brunch Reads linkfest by logging in if you’re already a member or signing up for a trial to one of our two membership levels shown below! You can cancel at any time.