the Bespoke 50 — 6/2/16
B.I.G. Tips – May Employment Report Preview
Heading into Tomorrow’s Non Farm Payrolls (NFP) report for May, economists are expecting an increase in payrolls of 160K, which also happens to be what last month’s reported number was. In the private sector, economists are expecting an increase of 150K, which would be a similar level to what the consensus is expecting for the headline number and a 21K decline from last month. The unemployment rate is forecasted to fall back down to an extraordinarily low level of 4.9% from 5.0% last month. Growth in average hourly earnings is expected to decline to 0.2% from 0.3%, while hours worked is forecast to remain unchanged at 34.5. Net net, economists aren’t expecting much of a change from April’s reading.
In a report sent to Bespoke Premium and Bespoke Institutional clients today, we provided the historical performance of the S&P 500, sectors, individual stocks on the day of NFP reports over the last two years. To see the report, please sign up for a monthly Bespoke Premium membership below!
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Consumer Pulse: Pent Up Demand for the iPhone 7
Goldman Cuts Apple Price Target: Goldman Sachs cut Apple’s (AAPL) price target $12, from $136 to $124, citing weakening smartphone unit growth this year. The firm reduced its smartphone growth estimate this year from 6% to 5% and from 7% to 4% for 2017. Interestingly enough, Goldman says other firms still have 2017 sales estimates too low and are not considering the impact of upgrades to the iPhone 7 based on demand from a recent consumer survey.
Survey Says: Our just-published Consumer Pulse survey shows similar trends. According to our survey, a large chunk of current iPhone users own the iPhone 6 or 6 Plus, with a surprising number still holding on to the 5S as well. Most purchase plans for these phones came with two-year upgrade cycles, and the release of the iPhone 7 is two years after the 6 was first released.
You can see our entire data-set of proprietary survey analysis with a 30-day free trial to our Consumer Pulse offering. We have said it before, but we’ll say it again: The value in the Bespoke Consumer Pulse offering is tremendous. We strongly encourage you to give our Consumer Pulse subscription a try!
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B.I.G. Tips — Biotech Bubble Trends
After a six-year rally of nearly 600%, the Biotech group finally broke down in 2015 when it peaked last July 20th. Currently, the group is down 29.3% from its all-time high, although at its lows in February it was down 38.8%. Biotech has made a series of higher lows (a positive formation) over the last 3.5 months, which is certainly a welcome sign. For the trend to really shift, however, Biotech needs to break out of the current downtrend channel that it’s stuck in.
In a report sent to Bespoke Premium and Bespoke Institutional clients this morning, we compared the run that Biotech has had over the last few years to prior bubbles and busts that we’ve seen in other asset classes. Below is a chart from the report that may pique your interest. If you would like to see the full publication to get our thoughts on where Biotech has been and where it may be headed, please sign up for a monthly Bespoke Premium membership below!
See the full B.I.G. Tips report by signing up for a monthly Bespoke Premium membership now. Click this link for a 10% discount ($89/month).
Bespoke CNBC Appearance (6/2)
Bespoke’s Paul Hickey appeared on CNBC’s Fast Money yesterday to talk seasonality patterns for the month of June. To view the segment, please click on the image below.
Dynamic Upgrades/Downgrades: 6/2/16
Huge Shift in Sentiment
After an extremely weak sentiment survey from the American Association of Individual Investors last week, bulls saw a sharp bounce this week, rising to 30.17% from 17.75%. That increase was the largest one-week surge in bullish sentiment since November 2013. To illustrate just how depressed sentiment was, though, even after this week’s increase, bullish sentiment still remains well below average and has now been under 40% for 65 out of the last 66 weeks (and 31 straight).
What’s most interesting about the big increase in bullish sentiment is that practically none of these new bulls came from the bearish camp. As shown in the chart below, bears only saw a slight decline, falling from 29.39% down to 29.05%.
The big decline this week came from the neutral camp, which shrunk from 52.86% last week to 40.78% this week. Last week we noted that every time the S&P 500 approaches 2,100, neutral sentiment surges. With this week’s decline in neutral sentiment even as the S&P 500 remains right near 2,100, will the trend finally break?
Jobless Claims Slightly Better Than Expected
Jobless claims for the latest week came in slightly better than expected again. While economists were forecasting a slight increase in claims to 270K from 268K, the actual level declined to 267K. This is now the 65th straight week that claims have been below 300K. That’s the longest streak since 1973.
This week’s decline in jobless claims brought the four-week moving average down to 276.75K from 278.5K last week. While we haven’t seen much of a decline in the four-week moving average in recent weeks, as shown in the chart below, next week we will be dropping a weekly reading of 294K from the count, so we can expect to see this reading decline by a sizable margin.
On a non-seasonally adjusted (NSA) basis, jobless claims increased by 5K to 245.8K from last week’s reading of 240.8K. While this is 15K above the reading for the same week last year, it is still over 80K below the average for the current week of the year dating back to 2000.
How is the U.S. Consumer Feeling Heading Into Summer?
Along with our unique and thought-provoking stock market coverage, Bespoke has another research offering geared towards investors looking to stay ahead of economic and consumer-related trends. Each month, Bespoke surveys thousands of consumers balanced to census to get basically a real-time look at every aspect of the economy. We then package the survey results into our extremely insightful Consumer Pulse Report, which is available as part of our Pulse subscription offering. Below is a snapshot of page one of this month’s Pulse report that was just sent to Pulse subscribers. This is our interactive dashboard that subscribers use to browse through the report. As you can see, the breadth of coverage in the report is remarkable. If you’d like to read it, you can do so for free by signing up for a 30-day trial to our monthly or annual Pulse package below. Also included with a subscription is access to two Pulse Model Portfolios and additional content released throughout the month!
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The Closer 6/1/16 – “Data Head-Fakes Left And Right”
Looking for deeper insight on global markets and economics? In tonight’s Closer sent to Bespoke clients, we review the evolution of auto sales throughout the day today. We also take a look at internals from the ISM Manufacturing report and Construction Spending data released today before a full preview of catalysts for the next 24 hours.
The Closer is one of our most popular reports, and you can sign up for a trial below to see it and everything else Bespoke publishes free for the next two weeks!
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