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The S&P 500 Financial sector, Industrial sector, and the small-cap Russell 2,000 index have all gone absolutely bananas since the election on November 8th.  But prices don’t go up forever, and today, all three finally finished in the red.  Have a look at the charts below.  After the trampoline bounces that they’ve had, there’s now A LOT of space between price and 50-day moving average.  Even just a little mean reversion could get painful quickly.

With a monster rally of 16.5% over 15 consecutive up days, the small cap Russell 2000 has seen one of its longest winning streaks on record.  On that subject, in today’s Chart of the Day sent to Bespoke subscribers, we looked at how the Russell 2,000 has historically performed following the four prior periods where it went 15 or more trading days without a decline.  If you would like to see the report, click here to start a 14-day free trial now.

With the Russell 2000 up over 16% in the last three weeks, there have been a lot of big individual winners.  In fact, 56 stocks in the index have rallied more than 50% since 11/3 when the winning streak began, with three of those names rallying more than 100%.  The table below lists the 27 stocks in the index that have rallied 60% or more over the last three weeks.  Looking at the list, a number of things stick out.  First, you have probably never heard of most of these companies.  Of the 27 names listed, just seven have market caps above $1 billion, while 15 have market caps of less than $500 million.  In terms of sector representation, Health Care dominates the list with 14 out of 27 companies.

While the rally in small caps this month has gotten a lot of attention, one thing to keep in mind is that it has been a small-cap rally.  Even with more than 50 companies in the index rallying more than 50%, the index’s total market cap has increased by just $305.9 billion.  That may sound like a lot, and it certainly is, but to put that in the perspective of large cap stocks, the total gain in market cap for the Russell 2000 in the last three weeks has been less than the market cap of Johnson & Johnson (JNJ).  That’s still nothing to sneeze at, but it shows that when it comes to rotation into small caps versus large caps, it takes a lot less to move the needle on small caps than it does large caps.

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.

Labor Markets

Small Businesses Lament There Are Too Few Mexicans in U.S., Not Too Many by Miriam Jordan and Santiago Perez (WSJ)

With labor markets quite tight around the country and a frankly incredible unwillingness from American workers to do many jobs that have so often been filled by Mexican or Central American migrants, many businesses are facing either sharply lower profits or no ability to continue producing; and that’s before any pending restrictions from the Trump Administration. [Link; paywall]

I’m leaving and I want you to join me by Lucy Kellaway (FT)

While perhaps less familiar to American readers, Kellaway’s advice columns area fixture of career commentary in the UK, making this announcement that she’ll depart from the paper to teach one that got some attention. [Link; paywall]

Investing

Q&A With Jack Bogle: ‘We’re in the Middle of a Revolution’ by Michael Regan (Bloomberg)

5000 words with the father of index investing and the man that has done more than anything to push the average investor from high cost active managers to low cost ETFs and mutual funds which simply own the market. [Link]

Fund Flows, Investor Positioning And The “Secular Low in Yields” by Urban Carmel (The Fat Pitch)

Has a new bear market in bonds begun? This excellent evidence-based investigation will help you think about that question, framing a number of different variables in a very sober, clear, and readable approach to evaluating where yields currently stand. [Link]

Hedge Funds

Big Data Is a Big Mess for Hedge Funds Hunting Signals by Saijel Kishan (Bloomberg)

Big data and machine learning are buzzwords in finance as much as Silicon Valley right now and they’ve been deployed successfully in a number of different contexts. But they’re no silver bullet as any model or analysis can only have quality equal to the data plugged into it. [Link]

Inside a Moneymaking Machine Like No Other by Katherine Burton (Bloomberg)

One successful quant fund which has adapted to the world of big data is the employee-only Medallion Fund within Renaissance Technologies, the biggest player in automated and algorithmically-driven trading strategies. [Link; auto-playing video]

Hedge funds slow to adjust champagne tastes to beer budgets by Lawrence Delevingne (Reuters)

An overview of the changing economics for hedge funds where pressure on the top line has created some need to pull back on exorbitant benefit packages and perks. [Link; auto-playing video]

Long Reads

$100 Billion Chinese-Made City Near Singapore ‘Scares the Hell Out of Everybody’ by Pooja Thakur Mahrotri  and En Han Choong (Bloomberg)

The scale of construction under way in a Malaysian special economic zone catering to Chinese nationals is frankly absurd, raising new questions about the global impact of the Chinese model for urban development: massive construction of investment property at scale that seems frankly impossible. [Link]

The Last Unknown Man by Matt Wolfe (New Republic)

A strange tale devoted to finding the identity of a man discovered behind a Burger King in 2004, whose identity was a mystery for over a decade in defiance of every modern convention and even the fully array of available technology like DNA profiling. [Link]

Pastimes

Here’s How Americans Spend Their Working, Relaxing and Parenting Time by Leah Libresco (538)

5 key findings from the latest release of the BLS’ American Time Use Survey show lots of TV, more working from home, very skewed amounts of time spent volunteering, mostly women doing parenting, and very little time spent conversing with or reading to children. [Link]

Switch Off the Football by Leila Aboud (Bloomberg)

While most Americans’ TV viewing time is relatively stable (see previous link), young people are starting to trend further and further away from the bastion of media profitability over  the past several decades: live sports. [Link]

International Oddities

For the first time in India, the rich beg the poor to help them by Amrit Dillon (Sydney Morning Herald/inkl)

Several weeks ago the Indian government announced it would ban high-denomination notes, making them worthless. Those notes are key stores of value in the “black” economy in India, where many wealthy people generate large incomes untaxed. To prevent those stores of value from disappearing those wealthy Indians are forced to turn to their lower paid employees to deposit cash on their behalf. [Link]

Home Alone in Poland: An Unexpected National Tradition
The adventures of Macaulay Culkin’s character battling home invasion during the Christmas season are as fun a holiday tradition as any other, but the people of Poland take the enjoyment to the next level with Home Alone getting repeat airings across the country around Christmas Eve. [Link]

Business Model Struggles

The price of unfounded news hints at the true cost of the web by Izabella Kaminska (FT)

Fake news got a lot of attention in the aftermath of the US election, but the problem it signifies – that there’s a tension between free-to-view media and high standards for the production of that content – is part of a much larger social issue. [Link; paywall]

Munchery’s Struggles Show How Hard the Food Delivery Business Is by Eric Newcomer (Bloomberg)

Inside the logistical struggles that plague efforts to disrupt the way we eat, from food waste to expensive endorsement contracts. [Link]

French Politics

Fillon leads after first round of primary (EIU)

A sober and comprehensive look at the first round of the French right wing primary. Voters return to the polls today (Sunday, November 27) to decide the ultimate candidate for the general election. [Link]

Soaring Consumer Confidence: Are Americans Happy It’s Trump, or Just Happy It’s Over? by Luke Kawa and Julie Verhage (Bloomberg)

A review of consumer confidence and political polarization revealed in the latest post-election surveys of how consumers feel on the economy. [Link; auto-playing video]