Brunch Reads – 7/14/24
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.
I’m Your Huckleberry: On July 14th, 1882, John Ringo was found dead in Turkey Creek Canyon outside of Tombstone, Arizona. For those unfamiliar with the story, Johnny Ringo was notoriously dangerous with a pistol, or rifle, in the wild west. He was involved in multiple murders in Texas before relocating to Arizona, where he stirred up more trouble with other outlaws known as the Cochise County Cowboys, infamous for their cattle rustling, stagecoach robberies, and violent encounters with the law. Fast forward some and Ringo found his name attached to the gunfight at the O.K. Corral in 1881. He had run ins with the Earp brothers, adversaries of the Cowboys in the shootout, before. Wyatt Earp was portrayed by Kurt Russell in the 1993 film Tombstone about the O.K. Corral. Val Kilmer stole the show in that movie, though, for his role as Doc Holliday, a gambler and gunslinger closely tied to the Earp brothers.
After the gunfight at the O.K. Corral, Ringo challenged Holliday to a duel, wanting to settle the score. Holliday declined. Although, in the movie, Holliday gladly accepted with famous line, “I’m your huckleberry,” before Ringo’s drunken call for blood was diffused. Some time later, Ringo was found dead with a gunshot wound to the head. It was declared a suicide, although the details remain a mystery. Wyatt Earp later claimed responsibility for his murder, further complicating the truth of what really happened to Ringo. Tombstone gives another fantastic alternative theory.
Economic Trends
Women are set to inherit trillions of dollars in the great ‘horizontal wealth transfer’ (CNBC)
The “horizontal wealth transfer” will see around $9 trillion passed between spouses and partners in the coming years, as baby boomers and older generations transfer $84 trillion to younger generations over the next few decades. Since women tend to outlive men, they are likely to inherit a substantial portion of this wealth before it moves on to the next generation. This money move is anticipated to reshape wealth management, investing, and luxury spending landscapes, as women increasingly control a larger share of high net-worth assets. Women’s growing influence is also impacting philanthropy as donations to women’s and girls’ causes increase. [Link]
Continue reading our weekly Brunch Reads linkfest by logging in if you’re already a member or signing up for a complimentary 30-day trial to Bespoke Premium today! Cancel at any time.
The Bespoke Report — Equity Market Pros and Cons — Q3 2024
This week’s Bespoke Report is an updated version of our “Pros and Cons” edition for Q3 2024.
With this report, you’re able to get a complete picture of the bull and bear case for US stocks right now. It’s heavy on graphics and light on text, but we let the charts and tables do the talking!
On page three of the report, you’ll see a full list of the pros and cons that we lay out. Slides for each topic are then provided on page four and beyond.
To read this report and access everything else Bespoke’s research platform has to offer, sign up for Bespoke’s 50/20 special today. Our 50/20 special gets you a full year of Premium for half off, then 20% off per month after the first year. SIGN UP HERE.
PLEASE READ ON BELOW…
BESPOKE’S STOCK MARKET SUMMER CAMP
If you or any of your friends or colleagues have children, grandchildren, nieces, or nephews, please take note!
Here at Bespoke we’ve been following the stock market 24/7 for more than two decades, so based on the “10,000 hour” rule, we can confidently say that we are market “pros”.
At the same time, traditional education across grades K-12 doesn’t focus on the stock market, investing, and how it all works.
For years, we’ve thought about addressing the “stock market literacy gap” for students across the country. Now, we’ve come up with a plan!
Starting this summer, we are now offering “Stock Market Camp” for students in grades 5-8 and 9-12!
Bespoke’s Stock Market Camp will run for five days from Monday-Friday with each live Zoom class lasting roughly 75 minutes. Camp will be fun, engaging, and interactive, and by the end of the week, students will have a basic understanding of how the stock market and investing works! If a live class is missed, a recording will be available.
We don’t have to tell you how valuable knowing this information at a young age can be! Instead of kids playing video games, scrolling through TikTok, or messing around on Snapchat, we think our five-day Stock Market Camp will pay major dividends down the road!
For now we are making our Stock Market Camp available to students that are referenced by Bespoke readers. We are running one week of camp for high school students (grades 9-12) from July 22nd-26th, and one week of camp for middle school students (grades 5-8) from August 12th-16th. Each weekly camp will be capped at 40 students max, so please sign up ASAP to reserve your student’s spot. You can purchase as many spots as you’d like or forward this email to colleagues and have them sign up.
SIGN UP YOUR STUDENT OR STUDENTS TODAY AS THE CAMPS ARE LIMITED TO JUST 40 ATTENDEES!
We will touch base after sign-up to gather the pertinent information. If you sign up and the student cannot attend during the dates listed above, we can either provide access to a full recording of the camp or a credit for a future camp. Refunds will be provided upon request if we are notified at least one week before the camp’s start date.
Please reach out if you have any questions about Bespoke’s Stock Market Camp. The camp is for informational and educational purposes only, and there will be no investment advice or recommendations provided. All discussions will be impersonal and historical in nature. There will be no forward-looking analysis or discussion.
Daily Sector Snapshot — 7/12/24
Post-July Fourth Flip Flop
Back at the start of the quarter, we provided a decile analysis in a Chart of the Day looking at Q2 performance of Russell 1,000 members. In that report, we highlighted a theme that has been no secret this year: stocks with larger market caps have outperformed. Fast forward to this week and a cooler-than-expected CPI report, the themes of performance have flip-flopped. Since last Friday’s close, the average Russell 1,000 member has risen by 3.73%. However, the stocks with the largest market caps only rose 1.6%. Meanwhile, the deciles of the smallest stocks (by price and market cap) have outperformed, rallying closer to 5.5%. Similarly, the deciles of stocks with the cheapest valuations, highest dividend yields, highest short interest, most positive analyst sentiment, and worst performers YTD have seen gains in the 5% range.
Bespoke’s Morning Lineup – 7/12/24 – Welcome to Earnings Season
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.
“Vice president – it has such a nice ring to it!” – Geraldine Ferraro
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
Welcome to earning season! With the major banks and brokers reporting earnings this morning, Q2 earnings season has begun. Of the four major banks reporting today, they all exceeded EPS and revenue forecasts, and except for Wells Fargo (WFC), they’re also trading higher on the day. WFC’s decline is tied to weaker net interest income and an increase in non-performing loans. The response in the market has been mixed as futures are little changed with the S&P 500 indicated modestly higher while the Nasdaq is modestly lower heading into the June PPI report and then the Michigan Confidence report at 10 AM.
June’s PPI came in higher than expected and May’s results were also revised higher, which has put some downward pressure on equity futures and pushed yields higher, so that should (in theory at least) reverse some of the moves we saw in yesterday’s volatile session
You’ve been living through history over the last few days, and we’re not even talking about political history. We’ve been highlighting the near-record levels of outperformance of mega-caps relative to the rest of the market this year, and earlier in the week we noted that the rubber band can only stretch so much before it snaps back. Yesterday gave a perfect example.
In last night’s Closer and on X yesterday, we noted some of the major one-day extremes we saw in the relative outperformance of small caps versus large caps.
Another major shift was the performance of semiconductors relative to homebuilders. Over the last five years, homebuilders and semiconductors have traded practically step for step with each other. During that time, the correlation between the Philadelphia Semiconductor Index (SOX) and the S&P 500 Homebuilder Sub Industry has been +0.93. Admittedly, the last three months have seen a deviation from that positive correlation, but the two indices have seen similar returns and followed very similar paths.
Yesterday saw the two sectors deviate in a big way. While the SOX fell 3.5%, the homebuilders industry surged 6.7% for the best day since November 2022. As shown in the chart below, the 10+ percentage point outperformance of homebuilders versus semis was the widest since the depth of Covid in March 2020, and there have only been 24 days since 1994 when the one-day performance gap between the two was wider than yesterday.
What makes yesterday so unique is the market environment it occurred. Prior days where homebuilders outperformed semis by such a wide margin took place in extremely volatile environments. While the VIX closed yesterday below 13, on the 24 other days when the performance spread was ten percentage points or wider (in favor of homebuilders), the closing level of VIX ranged from 19.6 up to 70, and the median closing level was 26.5! Similarly, under the reverse scenario when semis outperformed homebuilders by 10 percentage points or more, the VIX closed in a range of 21.5 up to 61.6 with a median reading of 29.4. we’re not exactly sure what to make of the lack of volatility given the moves underneath the surface, but it’s somewhat unprecedented.
Daily Sector Snapshot — 7/11/24
Chart of the Day – Stocks & CPI
Bespoke’s Consumer Pulse Report — July 2024
Bespoke’s Consumer Pulse Report is an analysis of a huge consumer survey that we run each month. Our goal with this survey is to track trends across the economic and financial landscape in the US. Using the results from our proprietary monthly survey, we dissect and analyze all of the data and publish the Consumer Pulse Report, which we sell access to on a subscription basis. Sign up for a 30-day free trial to our Bespoke Consumer Pulse subscription service. With a trial, you’ll get coverage of consumer electronics, social media, streaming media, retail, autos, and much more. The report also has numerous proprietary US economic data points that are extremely timely and useful for investors.
We’ve just released our most recent monthly report to Pulse subscribers, and it’s definitely worth the read if you’re curious about the health of the consumer in the current market environment. Start a 30-day free trial for a full breakdown of all of our proprietary Pulse economic indicators.
Bespoke’s Morning Lineup – 7/11/24 – Deflation!
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.
“People generally see what they look for and hear what they listen for.” – Harper Lee, To Kill a Mockingbird
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 didn’t see yesterday’s segment on CNBC, you can view it here.
Bulls are taking a breather this morning as futures traded modestly lower ahead of the June CPI. We’re starting to get the first batch of earnings results for the season with reports from Pepsi (PEP), Delta (DAL), and Conagra (CAG), and the first impressions aren’t particularly positive. All three stocks are down at least 2% with DAL leading the losses with a decline of 8%.
The big report of the morning, though, was CPI which came in lower than expected at a level of negative 0.1% m/m. That’s the lowest level since May 2020. On a core basis, CPI increased 0.1% which was the lowest level since February 2021. Jobless claims were also lower than expected. While the earnings data left a lot to be desired for bulls, you couldn’t have asked for results in the economic data. In response, futures have erased their earlier losses and are now positive while the 10-year yield plummets to 4.20%. Thinking back to the surge into yesterday’s close, did somebody know something?
In a typical year, a net daily breadth reading of +311 for the S&P 500 wouldn’t raise much in the way of attention, but in 2024 which has been a year when leadership has been extremely narrow, a reading that positive stands out as one of the most positive breadth readings of the year. As shown in the chart below, there have only been six other trading days this year where the net daily advance/decline reading for the S&P 500 was higher. If it wasn’t for yesterday’s surge in the final 15 minutes of yesterday’s session, the breadth reading would have been much weaker at a level closer to +250.
Yesterday was also the sixth straight day that the S&P 500 closed at a record high which now ranks as the longest streak since an eight-day streak that ended in November 2021. Since late 1953, when the five-day trading week in its current form started, the current streak is the 23rd streak of six or more days with the longest being an eleven-day streak that ended on 7/10/1964.
With six record closing highs in a row, the total for 2024 is starting to pile up. With just one record closing high in 2022 (the first trading day of the year) and none in 2023, so far in 2024, there have already been 37 record closing highs. That already ranks as tied for the 14th most since 1954, but if the current pace keeps up between now and year-end (a big if), there would be 70 record closes which would be tied with 2021 for the second most trailing only the 77 records from 1995.
The Closer – RSI, 10y Reopening, Crude Production – 7/10/24
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 start out with a look into S&P 500 technicals (page 1) followed by a recap of the 10-year note reopening (page 2). We then note the return to record highs in crude production (page 3).
See today’s full post-market Closer and everything else Bespoke publishes by starting a 14-day trial to Bespoke Institutional today!