After an initial post-election surge which took homebuilder sentiment to its highest levels in over a decade, we’ve seen a bit of a dip in sentiment over the last two months.  In this morning’s report from the NAHB for the month of February, sentiment dropped from last month’s level of 67 (and the consensus expectation for this month) down to 65.  Looking at the long-term chart, however, the upward trend in sentiment remains intact.

The table to the right breaks down this month’s report by present and future sales, traffic, and regions.  Overall, sentiment weakened across the board with Traffic falling back below pre-election levels.  On a regional basis, sentiment in the West was unchanged, the Midwest and South saw modest declines, but in the Northeast sentiment really plummeted, falling from 51 down to 41 for its lowest reading since last July.

Manufacturing activity in the New York region continued to improve this month as the Empire Manufacturing report surged from 6.5 up to 18.7, which was the largest monthly increase since last June and the highest overall reading since September 2014.  Relative to expectations, this month’s report was even stronger as it was the biggest ‘beat’ since May 2014.  While the current conditions index increased this month, optimism about the future saw a bit of a dip, declining from 49.7 down to 41.7.  However, given the wide gap between the two as of January’s report (second largest in five years), some narrowing was inevitable.

The table below breaks down the internals of this month’s Empire Manufacturing report.  With regards to current conditions, breadth this month was very solid with every category increasing.  The largest increases came from New Orders and Shipments, while Inventories, Prices Paid, and Prices Received saw the smallest increases.  While sentiment towards current conditions was strong across the board, sentiment about future conditions was not nearly as rosy.  As shown in the right hand side of the table, only New Orders, Number of Employees, and Average Workweek increased in February.  Conversely, the biggest decline in terms of expectations came in Prices Paid.  With weakness in Prices Paid and Prices Received on both a current and future basis, this should provide some comfort to investors worried about inflation.

After 36 new all-time highs in the S&P 500 on Monday, the number dipped a bit down to 24 in Tuesday trading.  Below is a list of these 24 new all-time highs for 2/14/17.  It was a lovely Valentine’s Day for shareholders of these companies.

Financial stocks dominated the list of all-time highs yesterday.  Within the S&P 500 Financial sector, 12 stocks hit new all-time highs, which represents 19% of the sector.  On Monday it was the Industrials sector with the most new all-time highs, but only 4 Industrials stocks made new ATHs yesterday.

The most noteworthy stock on Tuesday’s all-time high list was Apple (AAPL).  It had been nearly two years since the stock last made an all-time high in mid-2015.

Before the open this morning when we saw the above headline, our natural inclination was to think that equity futures were showing a rather sizable decline.  So we were surprised when we looked at the market and S&P futures were down just one point, even as fair value was down three points.  In other words, despite the negative headline, futures were indicating a flat to positive open!  This morning’s episode is just one more in the long list of examples where investors, pundits, and headline writers have been chomping at the bit to put the nail in this rally.  It seems like every day, there’s a negative headline saying what’s wrong with the market, but by the time the closing bell rings, stocks finish in the green.

Today’s rally has made it six straight days of gains for the S&P 500.  Since the bull market began in March 2009, this is the 18th streak of at least six straight daily gains for the S&P 500.  In the table below, we highlight each of these streaks.  In each row, the date represents day six of the winning streak, and with each streak, we also show how long the streak lasted, how much the S&P 500 gained in the first six trading days, as well as how it traded the following day.  As shown in the list, in the early years of this bull market, the S&P 500 had a hard time making it to lucky number seven as the first ten streaks ended at six trading days.  Since then, though, the S&P 500’s record on day seven has been more evenly split with four gains and three losses.  Overall, just four of the streaks during this bull market have lasted more than six days, and the longest streak was eight days.  Finally, while the current rally has been fun for the bulls, the 1.8% gain is on the weak side.  Overall, the average six trading day gain during prior streaks has been over 3%.  Let’s not get greedy, though!

Over the last ten years, capital markets have seen a lot happen!  The global financial crisis, a downgrade from AAA of the United States, Eurozone political risk emerging, a commodity boom and crash, EM outperformance and underperformance, Chinese stock bubbles and burstings…the list goes on.  Below, we chart the percentage price change in 22 major global equity indices relative to the MSCI World index, starting from Valentine’s Day 2007.  Each index is priced in USD, so currency effects can change outcomes significantly.  For each country, we’ve chosen broad benchmark indices which for the most part are representative of large cap stocks in that country.  The charts might seem pretty small, so if you need to zoom in you can just click the picture for a bigger view.

You’ll notice when looking through the charts that the MSCI World index has outperformed most countries over the last ten years.  The US has clearly been the main driver of performance since it makes up roughly 35% of world market cap and has tripled the performance of the MSCI World.  China, Taiwan, and India are the only other countries that have outperformed the MSCI World by a meaningful amount.