December 2017 Headlines
S&P 500 Stock Seasonality – 1/8/18
While we don’t ever suggest that investors should base their trading solely on the calendar, there is evidence that the market and many stocks do indeed follow seasonal patterns. This makes our S&P 500 Stock Seasonality report a useful addition to every investor’s toolbox. Using the last ten years worth of price data, our Stock Seasonality report looks at the average returns for the S&P 500, its eleven sectors, and its 500 individual stocks. In the report, we highlight the five stocks in each sector that have historically been the best and worst performers over the next two weeks. For each stock, we also include information such as average returns, the percent of time each stock or sector is positive/outperforms the S&P 500, and its historical performance over the next two weeks for each of the last ten years. The Stock Seasonality report is published on a weekly basis on Mondays, and it is available to all Bespoke Premium and Bespoke Institutional subscribers.
One sector that we wanted to highlight this week is Technology. While the sector’s median return during the upcoming two-week period has been a relatively muted 0.25%, one notable aspect of its performance has been the consistency of gains in recent years. As shown in the chart below, after three years where the sector was down sharply with declines of over 5% in a two-week period (2008, 2009, and 2010), everything has been coming up green for Technology for seven straight years!
For active traders, our Stock Seasonality report is an excellent tool to help keep track of the best and worst times of year for the overall market, sectors, and individual stocks. To see the report, sign up for a monthly Bespoke Premium membership now!
Dumpster Diving
The table below is from last Friday’s Bespoke Report (sign up for a free trial) newsletter that gets emailed to Bespoke clients on a weekly basis. In it, we list the S&P 500’s 20 best-performing stocks to start off the year, and we think it does a good job of summing up investor sentiment in the early days of 2018. Essentially, investors are buying anything that hasn’t already rallied in hopes of catching a move higher. Of the 20 stocks listed, their median return in 2017 was a decline of 11.8% and only six of them were up. Keep in mind that 2017 was a year where the S&P 500 was up close to 20% and three-quarters of the stocks in the index were up on the year.
Bespoke Brunch Reads: 1/7/18
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.
Asia
HNA Units Missed Payments to More Chinese Banks (Bloomberg)
A Chinese conglomerate that has racked up a record acquisition spree funded by enormous bank borrowing has reportedly missed payments. [Link]
A Browser You’ve Never Heard of Is Dethroning Google in Asia by Newley Purnell (WSJ)
Mobile users in India, Indonesia, and China are flocking to a browser created by a unit of Alibaba, at the expense of Chrome and Safari. [Link; paywall]
Fads
Want a Better Workout? Just Breathe by Tatiana Boncompagni (NYT)
Long considered by elite athletes in certain sports, breathing is getting more attention from the general population as a wellness – if not exactly fitness – strategy. [Link]
Silicon Valley elites are spending $60 for less than 3 gallons of dangerous, unfiltered water — and it’s flying off the shelves by Kate Taylor (Business Insider)
Where to begin? In addition to trespassing in order to gather water from springs, Silicon Valley devotees also risk all manner of diseases for the sake of…well, we’re not exactly sure what the appeal is. [Link]
Crypto
When Will Yale Buy Bitcoin? by Ted Seides (Institutional Investor)
So-called “thought leader” institutional allocators like Yale or CalPERS have not yet taken the plunge on crypto. [Link]
Millennium Fly by Ryan (MarketPOV)
Some background on one of the most ridiculous – and lucrative – trades in Eurodollar pit history, complete with Y2K paranoia and a timely pitch from an analyst. [Link]
Food
Rotisserie Chickens: The ’90s Gift to Supermarkets That Keeps on Giving by Annia Gasparro (WSJ)
An ode to the delicious and fantastically profitable spit-roasted bird that features prominently in grocery stores across the country. [Link; paywall]
Economic Research
A tiger by the tail: estimating the UK mortgage market vulnerabilities from loan-level data by Chiranjit Chakraborty, Mariana Gimpelewicz and Arzu Uluc (BoE Working Papers)
A fascinating new paper that uses novel computer science techniques to create a model of the UK mortgage loan stock which is far more useful for analysis of macroprudential risk than traditional data sets. [Link; 38 page PDF]
Weather
The “Bomb Cyclone” Caused A Spike In Shopping, And The Weather Forecasters Saw It Coming by Leticia Miranda (BuzzFeed)
Some background on the cottage industry of weather prediction for the sake of retail sales forecasting, as well as understanding how weather may impact other consumer behavior. [Link]
Biology
Intentional Fire-Spreading by “Firehawk” Raptors in Northern Australia by Mark Bonta, Robert Gosford, Dick Eussen, Nathan Ferguson, Erana Loveless, and Maxwell Witwer (Journal of Ethnobiology)
If you thought humans were the only species to use fire as a tool, you’d be wrong. This paper documents five species of raptor in Australia which transport fire across distances to scare prey out of hiding. [Link]
Have a great Sunday!
Plumbers Rejoice!
We all know it’s frigid across much of the US, but the chart below really says it all. As shown by the latest data on Google Trends, searches for the term “Frozen Pipes” are at the highest level on record. That statement doesn’t even do the current spike in search results justice, though. Based on the latest results, searches for “Frozen Pipes” are on pace to be nearly four times greater than they were at the previous record highs in early 2004 and early 2014. Incredible. It’s going to be a busy few weeks for plumbers and insurance adjusters!
The Bespoke Report – New Year, Same Gear
The Closer: End of Week Charts — 1/5/18
Looking for deeper insight on global markets and economics? In tonight’s Closer sent to Bespoke clients, we recap weekly price action in major asset classes, update economic surprise index data for major economies, chart the weekly Commitment of Traders report from the CFTC, and provide our normal nightly update on ETF performance, volume and price movers, and the Bespoke Market Timing Model. This week, we’ve added a section that helps break down momentum in developed market foreign exchange crosses.
The Closer is one of our most popular reports, and you can sign up for a free trial below to see it!
See tonight’s Closer by starting a two-week free trial to Bespoke Institutional now!
B.I.G. Tips – Death by Amazon – 1/5/18
International Markets Lead US to Start 2018
Below is a look at our asset class performance matrix highlighting the total return of various ETFs over three near-term time frames — over the last six months, over the last month, and year-to-date so far in 2018.
Notably, the oil ETF (USO) is now up more than any asset class in our matrix over the last six months with a gain of 32.76%. Behind oil is Brazil (EWZ), the BRIC ETF (EEB), Russia (RSX), and the S&P 500 Technology sector (XLK). Natural gas (UNG), Mexico (EWW), and the Telecom sector (IYZ) are down the most over the last six months.
In terms of performance to kick off 2018, US equities have done very well out of the gate with the S&P 500 gaining 2.24% this week. The Nasdaq 100 (QQQ) has done even better with a gain of 3.83%, while the Dow 30 (DIA) has lagged at +1.83%. Large-caps have outperformed small-caps thus far, and growth has outperformed value.
While US equities have yet to see a down day in 2018, international markets have posted even bigger gains to start the year. Russia (RSX), Brazil (EWZ), Italy (EWI), Spain (EWP), and Germany (EWG) are all up more than 4% on the year already, and the emerging markets ETF (EEM) is up 4.07%.
One asset class that has dipped to start 2018 is fixed income, where both short and long-term Treasury ETFs are down.
