the Bespoke 50 — 9/28/17
Every Thursday, Bespoke publishes its “Bespoke 50” list of top growth stocks in the Russell 3,000. Our “Bespoke 50” portfolio is made up of the 50 stocks that fit a proprietary growth screen that we created a number of years ago. Since inception in early 2012, the “Bespoke 50” has beaten the S&P 500 by 57.6 percentage points. Through today, the “Bespoke 50” is up 137.9% since inception versus the S&P 500’s gain of 80.4%. Always remember, though, that past performance is no guarantee of future returns.
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Bullish Sentiment Pulls Back
After two weeks of peeking above 40%, bullish sentiment pulled back sharply this week. According to the weekly survey from AAII, bullish sentiment pulled in from 40.14% last week to 33.33%. That’s the largest one-week decline since mid-May. At the risk of sounding like a broken record, bullish sentiment has now been below 50% for a record 143 straight weeks.
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While bullish sentiment pulled back, bearish sentiment barely increased as it rose from 27.2% up to just 28.7%. Thie big increase this week came in neutral sentiment where the undecideds rose from 32.7% up to 37.9%, which is the highest level since late July.
Jobless Claims Defy Nature
Jobless claims for the latest week came in slightly ahead of forecasts, rising from 260K up to 272K. According to the DoL release, “Hurricanes Harvey and Irma [and Maria] impacted this week’s claims.” While it will be a few more weeks before claims are fully back to their normal trend, when you consider the impact that Katrina and Sandy had back in 2005 and 2012, the fact that claims never got above 300K this time around is really something else. This year we’ve seen three major hurricanes impact US states or territories. With the streak remaining intact, jobless claims have now been under 300K for 134 straight weeks.
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While weekly claims are pulling in from their recent highs, the impacts of the hurricanes on the four-week moving average are still being felt. In this week’s report, the four-week moving average increased to 277.75K, which is the highest reading for that indicator since January 2016. But even this should start pulling in again next week.
Non-seasonally adjusted claims have also been strong despite the hurricanes. This week’s print increased to 215K from 213K and is 77K below the average for the current week of the year going back 2000. In fact, going back to 1967, claims have only been lower in the current week of the year six other times and only once since 1973. We can only imagine how low claims might have been without the major hurricanes over the last six weeks.
The Closer — Poloz Punishes, Dancing Durables, Foreign Gasoline — 9/27/17
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Looking for deeper insight on global markets and economics? In tonight’s Closer sent to Bespoke Institutional clients, we discuss the outlook for USDCAD ahead of monthly GDP Friday and in the wake of Governor Poloz’s speech today. We also review durable goods activity reported by the Census today and recap petroleum market data from the EIA.
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ETF Trends: International – 9/27/17
Chart of the Day: Investors Down on the Consumer
Fixed Income Weekly – 9/27/17
Searching for ways to better understand the fixed income space or looking for actionable ideals in this asset class? Bespoke’s Fixed Income Weekly provides an update on rates and credit every Wednesday. We start off with a fresh piece of analysis driven by what’s in the headlines or driving the market in a given week. We then provide charts of how US Treasury futures and rates are trading, before moving on to a summary of recent fixed income ETF performance, short-term interest rates including money market funds, and a trade idea. We summarize changes and recent developments for a variety of yield curves (UST, bund, Eurodollar, US breakeven inflation and Bespoke’s Global Yield Curve) before finishing with a review of recent UST yield curve changes, spread changes for major credit products and international bonds, and 1 year return profiles for a cross section of the fixed income world.
In this week’s note, we take a look at relative real effective exchange rates across EM economies.
Our Fixed Income Weekly helps investors stay on top of fixed income markets and gain new perspective on the developments in interest rates. You can sign up for a Bespoke research trial below to see this week’s report and everything else Bespoke publishes free for the next two weeks!
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Short Interest Report – Most Heavily Shorted Stocks
Short interest figures for the middle of September were released after the close on Tuesday, so we have just updated our regular report on short interest trends for the market, sectors, and individual stocks for clients. Below we wanted to quickly highlight the stocks with the highest levels of short interest as a percentage of float. The list below shows the 29 stocks in the S&P 1500 that have more than a third of their free-floating shares sold short. Through yesterday’s close, the 29 stocks listed below have been crushing the market with an average gain of 8.14% (median: 6.03%) compared to the 1.24% gain for the S&P 1500. So unlike August where the most heavily shorted stocks were creamed, they’ve seen quite a bounce-back in September.
Of the 29 names listed, just six stocks are down so far this month, and none of them are down by 10%. To the upside, six stocks are up by over 10%, and four of those have rallied more than 25%! In terms of sector representation, Consumer Discretionary has dominated the list with nearly half (14) of the 29 stocks shown. Behind Consumer Discretionary, the sector with the second most number of stocks listed is Energy with just four, so it’s pretty clear that Consumer Discretionary stocks are very much out of favor.
In terms of individual stocks, the most heavily shorted stock in the S&P 1500 is Applied Optoelectronics (AAOI) which has nearly three-quarters of its float sold short, and behind AAOI another nine stocks have more than half of their float sold short. These names include Dillard’s (DDS), RH (where the CEO just purchased 14K shares on Tuesday), and Shake Shack (SHAK).
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Bespoke’s Global Macro Dashboard — 9/27/17
Bespoke’s Global Macro Dashboard is a high-level summary of 22 major economies from around the world. For each country, we provide charts of local equity market prices, relative performance versus global equities, price to earnings ratios, dividend yields, economic growth, unemployment, retail sales and industrial production growth, inflation, money supply, spot FX performance versus the dollar, policy rate, and ten year local government bond yield interest rates. The report is intended as a tool for both reference and idea generation. It’s clients’ first stop for basic background info on how a given economy is performing, and what issues are driving the narrative for that economy. The dashboard helps you get up to speed on and keep track of the basics for the most important economies around the world, informing starting points for further research and risk management. It’s published weekly every Wednesday at the Bespoke Institutional membership level.
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The Closer — The Flexible Fed: Why History Won’t Help You Understand Yellen — 9/26/17
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Looking for deeper insight on global markets and economics? In tonight’s Closer sent to Bespoke Institutional clients, we put Fed Chair Yellen’s speech today in its proper context. We also discuss the Richmond Fed Manufacturing and Services sector indices updated today.
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