Consumer Confidence for the month of October surged to the highest level since December 2000.  While economists were expecting the headline index to show a slight increase to 121.0 from last month’s level of 120.6, the actual reading rose to 125.9, taking out the 124.9 high from March.  This month’s print was also the best reading relative to expectations since March.

Consumers aren’t as optimistic about the future as they are about the present, however.  When it comes to the present, consumers haven’t been this optimistic since July 2001.  When it comes to the future, though, confidence levels still have yet to take out the recent highs from last March.  As shown in the chart below, the divergence between sentiment towards the present and future tends to get wider the later you get into the economic cycle, so this kind of trend is closer to late-cycle than early cycle behavior.

When settling into our desks this morning and checking out how international markets performed overnight, we had to do a double-take when the color next to Japan’s Nikkei 225 was actually red.  Sure it was a drop of just 0.0003%, but it was a decline nonetheless.  And that’s something we haven’t been accustomed to seeing for Japanese stocks this month.  In fact, for the entire month of October, the Nikkei traded down on the day just two times out of 21 trading days!  That works out to up days on just over 90% of all trading days and is a level of consistency that has never been seen before.

Since 1970, there have only been three months where the Nikkei traded higher on 85% or more of a month’s trading days, and the other two months were in May 2015 (88.9%) and March 1986 (85%).  Each of those three months are highlighted in the chart below, and the performance of the Nikkei following the two prior months is summarized in the table below.  The Nikkei’s performance following each of those prior two experiences couldn’t be more different.  Back in 1986, the Nikkei was in the middle of an epic bull run that lasted another three years, while the occurrence in May 2015 was followed by a relatively steep decline and then a period of consolidation that continued right up until this month when the Nikkei finally made another multi-year high in mid-October.

A popular chart making the rounds today is the one below from Gallup, which shows the daily tracking of President Trump’s approval and disapproval ratings.  As shown, just ahead of grand jury indictments concerning former members of his campaign staff, the President’s approval rating is sinking like JC Penney, while his disapproval rating looks closer to Apple as it just broke out to new highs.

While these charts always make for some good conversation, their utility stops right about there, especially when it comes to the market.  The chart below compares the performance of the S&P 500 to Trump’s approval rating throughout his Presidency.  Even as Trump’s popularity plumbs new lows, the S&P 500 has been going in the exact opposite direction.  Sure, the President may be unpopular, and based on his approval ratings there’s only a one in three chance that anyone reading this approves of the job he is doing.  Like him or not, though, never let politics impact your investment decisions.  Just as a lot of investors missed out on the bulk of this bull market because they didn’t care for President Obama and his policies, another group of different investors has now likely missed out on another good year for the equity market just because they don’t care for President Trump.

Roughly 1,000 companies have reported Q3 2017 earnings numbers over the last three weeks.  Below is a list of the stocks that have posted the biggest one-day gains on their earnings reaction days so far this season.

As shown, Skechers (SKX) ranks first with a huge gain of 41.45% that it saw on 10/20.  Syntel (SYNT) ranks 2nd with a gain of 27.23%, followed by Atlassian (TEAM), FARO Techs (FARO), and First Solar (FSLR).  No other companies besides these have see one-day gains of more than 20%.

There are quite a few well-known names on the list of earnings season winners.  These include Buffalo Wild Wings (BWLD), Twitter (TWTR), Amazon (AMZN), Seagate Tech (STX), and IMAX,

While there have been 45 stocks that have gained more than 10% on their earnings reaction days this season, there have been nearly as many (39) that have fallen 10% or more.  Electronics for Imaging (EFII) has been the biggest loser with a one-day drop of 29.39% last Friday.  EFII posted what we call a reverse triple play — it missed EPS estimates, missed revenue estimates, and lowered guidance.  Acadia Healthcare (ACHC) also reported a reverse triple play, and it fell 25.93% on its earnings reaction day, ranking it second worst this season behind EFII.  Six other stocks have experienced one-day drops of 20%+ on earnings this season — TRVG, VOXX, ESND, NOK, UCTT, and HAWK.  Other notables on the list of biggest earnings season losers include GNC Holdings (GNC), Celgene (CELG), Expedia (EXPE), Advanced Micro (AMD), United (UAL), Whirlpool (WHR), Nutrisystem (NTRI), and Chipotle (CMG).

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