The Bespoke Report – 8/30/24 – Holding Pattern
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On Thursday, Paul Hickey and the Wall Street Journal’s Gunjan Banerji sat down with Josh Brown and Micheal Batnick for an episode of The Compound. It was a great conversation about markets. politics, and many other things. Gunjan, Josh, Micheal, and the rest of the Compound crew are an awesome group, so take some time over the long weekend to give it a listen, and let us know what you think.
Daily Sector Snapshot — 8/30/24
Bespoke’s Morning Lineup – 8/30/24 – Eight Down, Four to Go
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 we learn from history is that people don’t learn from history.” – 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.
The unofficial end of earnings season was over two weeks ago, but earnings-related news has dominated recent headlines. Yesterday, Nvidia’s (NVDA) report sparked a 6% decline in the stock even as the rest of the market rallied. This morning, futures are trading higher in response to some positively received reports from Dell (DELL), Autodesk (ADSK), and Lululemon (LULU).
While the tone is positive now, today is the last trading day of August, and next week starts what has been the worst month of the year for equities. If you take a look at the bottom of page one of today’s Morning Lineup you can see just how bad the next one-month period has been relative to all other one-month periods throughout the calendar.
From an economic perspective, the month will end on a busy note with Personal Income, Personal Spending, and PCE at 8:30. These reports will be followed by Chicago PMI at 9:45 and Michigan Sentiment at 10 AM. After that, expect things to quickly quiet down as traders head out for the long weekend. As far as the 8:30 data is concerned, it was mostly in line with expectations except for the reading on Personal Income which was better than expected.
They say you can’t teach an old dog new tricks, and in the case of Warren Buffett who turns 94 years young today, all he still does is win. One long-held selling point of Berkshire Hathaway (BRK/a) has been that while the stock can tend to underperform the market during strong bull markets, it’s when things start to hit the fan that the stock proves its worth. That’s what makes its performance over the last 12 months so impressive. Even as the S&P 500 has rallied 26.2% on a total return basis over the last twelve months, BRK/a has done even better outperforming the index by three percentage points.
Over the last five years, Berkshire has separated itself from the S&P 500 by even more. As shown below, BRK/a’s gain of 130.2% has exceeded the gain of the S&P 500 by more than 20 percentage points.
Over the last ten years, the margin of outperformance hasn’t been quite as strong with BRK/a outperforming the S&P 500 by less than six percentage points.
Lastly, over a 20-year time frame, BRK/a’s performance of nearly 713% outperforms the S&P 500 by 65 percentage points. When a stock outperforms the broader market with such consistency over so many different timeframes you can chalk it up to more than just luck. It may have taken until just before Buffett’s 94th birthday for his company to reach the trillion-dollar club but he proved long ago that he is the greatest investor in at least a generation.
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The Closer – Dollar Stores, Bulls Above 50%, Energy – 8/29/24
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Looking for deeper insight into markets? In tonight’s Closer sent to Bespoke Institutional clients, we kick off with a rundown on dollar store stocks (page 1) followed by an update of investor sentiment (page 2). We then review the latest revisions to GDP (page 3) in addition to monthly estimates for US energy production (page 4). We then recap today’s 7-year note auction (page 5) and close out with an update on the latest demographic data for jobless claims (pages 6 and 7).
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Bespoke’s Weekly Sector Snapshot — 8/29/24
The Bespoke 50 Growth Stocks — 8/29/24
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. There were 9 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 monthly on Thursdays unless otherwise noted. 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 after publication. 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.
Chart of the Day – Kodiak Gas Services (KGS)
New York, New York
Updated home-price trends across the country from S&P CoreLogic’s Case Shiller indices came out earlier this week and showed home prices up 5.4% YoY and up about 0.5% MoM nationally through June 2024.
Below is a snapshot of the 20 individual cities tracked by Case Shiller. Notably, New York home prices were up the most of any city on a year-over-year basis at +8.99%. Three West Coast cities followed New York with gains of more than 8% as well: San Diego, Las Vegas, and Los Angeles.
Home prices were up the least over the last year in Portland at just 0.77%, followed by Denver (1.90%) and Minneapolis (2.01%).
Thirteen of the twenty cities tracked made new all-time highs in June. San Francisco is the farthest below all-time highs at -7.06%.
Miami and Tampa — two Florida cities — are still up the most since COVID hit in February 2020 with gains of more than 70%. San Francisco, DC, Portland, and Minneapolis have seen home prices rise the least since COVID, although they’re still all up more than 35%.
Since the brief pullback we saw in 2022 and early 2023, home prices nationally are up just over 11%, and cities like New York, San Diego, LA, Chicago, and Detroit have seen the biggest bounces off their 2023 lows with gains of roughly 15% or more.
Below is a chart showing the year-over-year percentage change in Case Shiller home price indices from June 2023 to June 2024:
Below are price charts for each city and the three composite indices since the start of Case Shiller’s data. Cities highlighted in green are currently at all-time highs. The red line in each chart marks the onset of the COVID pandemic, so you can see how much prices started to jump at that point.
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Bespoke’s Morning Lineup – 8/29/24 – Now What?
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.
“I want my name back” – Richard Jewell
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
If you missed yesterday’s CNBC segments previewing and then discussing Nvidia’s (NVDA) earnings results, you can catch them by clicking on the image below.
The main event has come and gone, and there are now just two trading days to Labor Day weekend. Even though shares of NVDA are trading lower in response to its earnings report last night, futures are trading higher this morning with even the Nasdaq trading marginally in the green. Besides the weakness in NVDA, a positive report from salesforce.com (CRM) and others has helped to offset some of the weakness.
Besides the busy slate of earnings last night and this morning, the economic calendar was busy at 8:30 with revised GDP, Core PCE, Wholesales Inventories, and Jobless Claims. From an equity market perspective, the results couldn’t have been better as GDP and Personal Consumption came in better than expected, inflation data was weaker than expected, and jobless claims were slightly lower. The only other report on the calendar for the day is Pending Home Sales at 10 AM.
Throughout August, US Treasury yields have declined across the curve, but the short end has seen the steepest declines. After starting the month at 4.26%, the 2-year US Treasury yield has declined 40 basis points to 3.86%, while the 10-yield has dropped just 20 basis points, falling from 4.03% to 3.83%.
Given the steeper declines at the short end of the curve, the spread between the two yields has narrowed considerably and is close to flipping positive from inversion (negative spread). It got close earlier this month during the heightened volatility when the yen carry trade was being unwound, but this would be the closest it has gotten to a positively sloped curve in a ‘normal’ market environment since mid-2022.
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