Fixed Income Weekly — 4/17/24
Searching for ways to better understand the fixed income space or looking for actionable ideas in this asset class? Bespoke’s Fixed Income Weekly provides an update on rates and credit each week. 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.
Our Fixed Income Weekly helps investors stay on top of fixed-income markets and gain new perspectives 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 for the next two weeks!
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Bespoke’s Morning Lineup – 4/17/24 – Quiet But Positive
See what’s driving market performance around the world in today’s Morning Lineup. Bespoke’s Morning Lineup is the best way to start your trading day. Read it now by starting a two-week trial to Bespoke Premium. CLICK HERE to learn more and start your trial.
“Houston, we’ve had a problem here.” – Jack Swigert, Apollo 13 Astronaut
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
There’s not a lot of news to speak of this morning, but that isn’t stopping futures from drifting higher. Treasury yields, crude oil, and gold are all little changed with a negative bias. Mortgage applications increased in the latest week even after yields surged, but other than that, the economic calendar is empty for the rest of the day.
54 years ago today, Americans were glued to their TVs anxiously watching as Apollo 13 splashed down in the Pacific Ocean after a troubled six-day mission in space. While the world breathed a sigh of relief as Apollo 13 returned safely from orbit and down to Earth, investors today are nervously watching the market as it comes back down to earth. After trading at overbought levels for months, major indices around the world are pulling back and falling from overbought levels and back below their 50-day moving averages. Yesterday, it was the STOXX 600’s turn as the index closed below its 50-DMM for the first time since November 14th.
Yesterday’s decline ended the longest streak of closes above the 50-DMA since June 2017 and just the 11th streak that lasted more than 100 days. The longest of those streaks ended in April 1997 at 160 trading days and also occurred within a year of the second longest streak on record (142 trading days ending on 6/7/1996).
So, when these streaks come to an end, is it a sign of a market calamity on the way? Not necessarily. For more details check out today’s Morning Lineup!
Read today’s entire Morning Lineup.
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Daily Sector Snapshot — 4/16/24
Chart of the Day – Housing Starts
Bespoke Stock Scores — 4/16/24
Bespoke’s Morning Lineup – 4/16/24 – Hope is a Four Letter Word
See what’s driving market performance around the world in today’s Morning Lineup. Bespoke’s Morning Lineup is the best way to start your trading day. Read it now by starting a two-week trial to Bespoke Premium. CLICK HERE to learn more and start your trial.
“Don’t hope. Hope is for people who aren’t prepared.” – Kareem Abdul-Jabbar
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
Futures are higher this morning as positive earnings results lift the mood of investors even as interest rates are higher. Housing Starts and Building permits were just released, and both reports came in lower than expected. Housing Starts were a big miss coming in at 1.321 million compared to forecasts for 1.485. Building Permits were also weaker at 1.458 million versus consensus forecasts for 1.510 million. These reports should have been friendly to rates, but so far there has been very little movement in the 10-year yield. Besides these two reports, the only other items on the calendar are Industrial Production and Capacity Utilization at 9:15. We’ll also be hearing from Fed Chair Powel at 1:15 Eastern.
After the last two trading days, and all of April for that matter, there are probably a lot of overexposed traders and investors hoping for an up day or two. We don’t know where the market will go from here in the short term, but at this point, the S&P 500 is only down 3.66% from its closing all-time high at the end of March. That’s not even close to what most people would call a correction, let alone a pullback. While the current decline is the first of that magnitude since late last year, since 1953 there have been 455 declines of 3% or more on a closing basis without a 3% rally in between. That works out to one about every two months. In other words, the fact that we hadn’t had a pullback of 3% in over five months was more unusual than the fact that the S&P 500 is now down over 3% from its high. In fact, since 1953, there have only been ten other periods where the S&P 500 went longer than the just-ended streak without falling 3% from a local closing high.
Looking at the four major US indices across the market cap spectrum, the Russell 2000 is the only one not up YTD, although it was in the black just a week ago. What’s also notable is that a week ago all four indices were above their 50-day moving averages (DMA) and two (MDY and SPY) were overbought. As of yesterday’s close, all four indices are not below their 50-DMA, and two (QQQ and IWM) are oversold. Change tends to happen fast in the markets.
The fact that all four of the indices shown above closed below their 50-DMA yesterday was notable because it was the first time since November 2nd that all four of them closed below their 50-DMAs. Since 1990, that streak was on the extreme side, but it wasn’t unheard of as eleven streaks were longer and another six lasted longer than 100 trading days. The most recent ended in August of last year (106 trading days), and the longest was 262 trading days ending in January 1996.
Read today’s entire Morning Lineup.
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The Triple Play Report — 4/15/24
An earnings triple play is a stock that reports earnings and manages to 1) beat analyst EPS estimates, 2) beat analyst sales estimates, and 3) raise forward guidance. You can read more about “triple plays” at Investopedia.com where they’ve given Bespoke credit for popularizing the term. We like triple plays as an indication that a company’s business is firing on all cylinders, with better-than-expected results and an improving outlook. A triple play is indicative of positive “fundamental momentum” instead of pure fundamentals, and there are always plenty of names with both high and low valuations on our quarterly list.
Bespoke’s Triple Play Report highlights companies that have recently reported earnings triple plays, and it features commentary from management on triple-play conference calls, company descriptions and analysis, and price charts. Bespoke’s Triple Play Report is available at the Bespoke Institutional level only. You can sign up for Bespoke Institutional now and receive a 14-day trial to read this week’s Triple Play Report, which features 14 new stocks. To sign up, choose either the monthly or annual checkout link below:
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Cintas (CTAS), a workplace health and safety company, is an example of a company that reported an earnings triple play recently.
CTAS has been trending up for quite some time now and has traded above its 50 and 200-DMA consistently since last October.
Looking at the snapshot below from our Earnings Explorer, in its last 20 earnings reports, or five years of earnings, CTAS has beaten both EPS and revenue estimates 100% of the time. Its triple play on March 27th is just the company’s fourth over this stretch, however, which resulted in a one-day gain of 8.25%. Tallying five straight years of earnings beats is no easy task, especially when those five years include a global pandemic. Ultimately, CTAS was able to succeed through the pandemic as revenue for First Aid and Safety Services surged despite declines in Uniform Rental and Facility Services as many businesses suffered.
Fast forward to today, CTAS’s health and safety products remain in high demand in a post-pandemic world. Uniform Rental and Facility Services remains the core of CTAS’s business with steady growth while First Aid and Safety Services grew double-digits versus the prior year due to strong demand and higher margin products, like AED rentals, in that category. This quarter also highlighted the SmartTruck technology to aid efforts in optimizing its delivery and service routes to minimize costs and improve speed. Six Sigma was also mentioned as a benefit for improving manufacturing processes by eliminating defects and guaranteeing quality. You can read more about CTAS and the 13 other triple plays in our newest report by starting a Bespoke Institutional trial today.
Bespoke Investment Group, LLC believes all information contained in these reports to be accurate, but we do not guarantee its accuracy. None of the information in these reports or any opinions expressed constitutes a solicitation of the purchase or sale of any securities or commodities. This is not personalized advice. Investors should do their own research and/or work with an investment professional when making portfolio decisions. As always, past performance of any investment is not a guarantee of future results. Bespoke representatives or clients may have positions in securities discussed or mentioned in its published content.