Bespoke’s Brunch Reads – 6/18/23
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.
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History
“Tear Down This Wall” (National Archives)
Keeping with Bespoke’s Quote of the Day from Monday to commemorate the anniversary of the President Reagan’s famous speech that called for the Berlin Wall to be torn down, this publication tells the story of how the speech came to be despite the forces that suggested a softer approach. [link]
Economy
New Grads Have No Idea How to Behave in the Office. Help Is on the Way. (WSJ)
Recent graduates who spent much of their college and internship experience online are now learning the “soft skills” they never did from being on campus and in the office. Many students say they are ready to ditch Zoom and begin in-person work lives to improve the skills they lack from their remote studies. [link]
Renters Are About to Get the Upper Hand (WSJ)
Rents rose 25% nationally in less than two years. Now, its fastest deceleration in recent history has brought that number to just 2%. The major shift could help ease inflation as housing costs make up the biggest component of CPI, but it will hurt investors who purchased buildings thinking they could continue raising rents. [link]
San Francisco hit again as large mall owner walks away (Yahoo Finance)
After last week’s read about the city’s largest hotel (Park Hotels and Resorts) halting payments toward its mortgage and making an exit from the area, Tuesday’s newest closing spells more bad news for San Francisco. [link]
Corporate
Bud Light Loses Title as Top-Selling U.S. Beer (WSJ)
Modelo Especial is the new top-selling beer in the United States. Following a media debacle around a can featuring a transgender influencer, Bud Light sales have plummeted. Since April, boycotts have sent shares down 15% and distributors of the beer are facing tough financial decisions. [link]
Tesla Got Added to an ESG Index. But Oil and Tobacco Firms Scored Higher (Barron’s)
In an example of the road to hell being paved with good intentions, ESG investing has its merits, but in practice, some of the ways companies are rated is preposterous.[link]
Tesla’s “Self-Driving” System Never Should Have Been Allowed on the Road (The American Prospect)
Tesla introduced self-driving technology in 2016 that made overstated and ambitious promises. Now that technology is associated with more crashes and fatalities than previously thought, and critics are calling for stricter regulations to improve safety. [link]
Microsoft and OpenAI’s Bromance Is Off to a Rocky Start (Gizmodo)
OpenAI and Microsoft are leading the “AI revolution”, but the situation is more complicated than that. Microsoft has invested billions of dollars in OpenAI, but OpenAI isn’t owned by Microsoft outright. The two are not just partners, but also competitors working in the same sphere. Some Situations have raised tensions and trust issues. [link]
Home Depot Is Selling a Modern Tiny Home Kit Complete With a Rooftop Deck and a Spiral Staircase (My Modern Met)
Home Depot has collaborated with the architecture firm Plus 1 to bring a DIY tiny home kit to life. Priced at $43,832, this tiny home comes with a number of luxurious features. You have to check some of these places out! [link]
Science and Technology
A Day on Earth Used to Last Only 19 Hours. Now We Know Why. (ScienceAlert)
We all wish we could have 25 hours in a day, but consider yourself lucky that you weren’t alive 1.4 billion years ago when days were only 19 hours! As the Moon moves further away from Earth, our planet’s rotation slows down, lengthening the day. The research provides valuable insights into Earth’s geological history and the relationship between our planet and the Moon. [link]
Is Betelgeuse About to Become a Supernova? (Discover Magazine)
In late 2019, Betelgeuse, a red supergiant star, exhibited unprecedented dimming, sparking speculation about an imminent supernova event. Scientists concluded that it could be hundreds of thousands of years away. Now, that supernova may be close, as it behaves oddly again and has brightened 50% in the last month. [link]
Investing
New report flashes a warning light over 401(k) account balances (CNN Business)
Alarms have gone off after a report shows 401k balances were down well below 2021’s averages in 2022. The average 20% haircut was driven by the declines in equity and bond markets over the course of 2022. Households also faced financial stress and withdrew from retirement savings. [link]
AI Stock Pickers Grapple With Dot-com Déjà vu (Yahoo Finance)
Investors are being reminded of the dot-com era as technological advancements in AI begin to cause a market frenzy. AI is still in the early stages of development with seemingly unlimited potential, but that makes for FOMO and the ability to decipher winners and losers in the market tough to grapple with. [link]
U.S. Government Owns Way More Bitcoin Than Any Other Country–So Why Aren’t They Selling It? (Forbes)
While none of it was purchased seizures in criminal enterprises have allowed the US Federal Government to amass a larger pile of bitcoin than any other country in the world. Why haven’t they sold any? [link
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Have a great weekend!
The Bespoke Report Newsletter — 6/16/23
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Daily Sector Snapshot — 6/16/23
Bespoke’s Morning Lineup – 6/16/23 – One Way Ride
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.
“Once you know where the roller coaster is going, are you in for the ride?” – Robert Fulghum
Below is a snippet of content from today’s Morning Lineup for Bespoke Premium members. Start a two-week trial to Bespoke Premium now to access the full report.
It’s looking like a flat open to cap off what has been a very strong week, and once again the Nasdaq is outperforming after Adobe (ADBE) reported better-than-expected earnings last night after the close. It’s a quiet day for data, but Fed Governor Waller had some relatively hawkish comments and the University of Michigan Sentiment report will be released at 10 AM. The key item to watch in that report is inflation expectations.
139 years ago today, the first roller coaster in the United States opened in Coney Island, and for ‘just a nickel’, customers could get on board for the thrill of riding six miles an hour through twists and turns of metal and wood. Roller coasters have come a long way since their first introduction in terms of both speed and ups and downs, but If the stock market is a ride, these days the only direction it goes is up.
The S&P 500 closed back above 4400 yesterday and finished in positive territory for the eighth time in ten days. For the last ten trading days now, the S&P 500 has closed more than two standard deviations above its 50-day moving average (what we call short-term ‘extreme’ overbought levels), and yesterday almost closed three standard deviations above its 50-DMA (+2.97). That was its most overbought close since November 2004 which was right after George W Bush won re-election over John Kerry.
Streaks of at least ten trading days of extreme overbought (OB) readings for the S&P 500 haven’t been especially common over the years. Since 1952 when the five-trading day week started, there have now been 35 such streaks. The most recent was in April 2021, and the longest was 17 trading days in December 1995.
Looking at more recent history, the chart below shows the S&P 500 going back to 2000 with the red dots showing each prior ten-day streak of extreme overbought closes (each dot represents the 10th trading day in the streak). While none of these prior streaks occurred near a market low, they didn’t represent short-term or long-term peaks either. The closest any of these streaks occurred to a peak was in April 2021- more than seven months before the ultimate peak.
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Bespoke’s Weekly Sector Snapshot — 6/15/23
B.I.G. Tips – Retail Sales: Upside Surprise
Chart of the Day: New High for Tech
The Bespoke 50 Growth Stocks — 6/15/23
The “Bespoke 50” is a basket of noteworthy growth stocks in the Russell 3,000. To make the list, a stock must have strong earnings growth prospects along with an attractive price chart based on Bespoke’s analysis. The Bespoke 50 is updated weekly on Thursday unless otherwise noted. There were no changes to the list this week.
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To see all 50 stocks that currently make up the Bespoke 50, simply start a two-week trial to Bespoke Premium or Bespoke Institutional.
The Bespoke 50 performance chart shown does not represent actual investment results. The Bespoke 50 is updated weekly on Thursday. Performance is based on equally weighting each of the 50 stocks (2% each) and is calculated using each stock’s opening price as of Friday morning each week. Entry prices and exit prices used for stocks that are added or removed from the Bespoke 50 are based on Friday’s opening price. Any potential commissions, brokerage fees, or dividends are not included in the Bespoke 50 performance calculation, but the performance shown is net of a hypothetical annual advisory fee of 0.85%. Performance tracking for the Bespoke 50 and the Russell 3,000 total return index begins on March 5th, 2012 when the Bespoke 50 was first published. Past performance is not a guarantee of future results. The Bespoke 50 is meant to be an idea generator for investors and not a recommendation to buy or sell any specific securities. It is not personalized advice because it in no way takes into account an investor’s individual needs. As always, investors should conduct their own research when buying or selling individual securities. Click here to read our full disclosure on hypothetical performance tracking. Bespoke representatives or wealth management clients may have positions in securities discussed or mentioned in its published content.
Bespoke’s Morning Lineup – 6/15/23 – Data Dump
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.
“A military is built to fight” – Xi Jinping
Below is a snippet of content from today’s Morning Lineup for Bespoke Premium members. Start a two-week trial to Bespoke Premium now to access the full report.
China’s leader Xi Jinping turns 70 years old today, which in American politics would make him a spring chicken, and who better to celebrate his birthday with than US Secretary of State Anthony Blinken and Bill Gates who are both scheduled to visit with him in the next week. It’s just too bad that Xi couldn’t get some better economic data to celebrate over. Overnight, China reported that youth unemployment had hit a record high of 20.8%, but the PBoC’s gift to China’s leader came in the form of a rate cut in its key policy medium-term lending rate from 2.75% down to 2.65%.
In the US this morning, futures point to a lower open as European equities trade lower and the ECB just hiked rates. There was just a ton of economic data released, and the key items in the data were that initial jobless claims came in higher than expected (262K) and at their highest level since October 2021, Retail Sales and Empire Manufacturing both surprised to the upside with positive readings, but the Philly Fed remained negative coming in at -13.7 vs forecasts for a reading of -14.0. Basically, there was a little for everyone, but more signs of strength than weakness.
For the last few months, investors have been waiting for the rally to broaden away from the mega-caps to the smaller members. While we started to see some of that in the first week of June, the mega-caps have moved back into the lead in the last week. To illustrate, the chart below shows the YTD performance spread between the S&P 500 market cap and equal-weighted indices. Believe it or not, earlier in the year, the equal weight index was actually outperforming the market cap-weighted index, but by February they were pretty much back to even. In early March, though, we all know what happened, and ever since SVB Financial started to collapse, the market cap-weighted index has blown the equal-weighted index out of the water.
At the start of June, the YTD performance spread between the two indices had widened out to a peak of 10.62 percentage points. In the week that followed, the spread narrowed down to as low as 8.62 percentage points, but this week the mega caps have once again started to take the lead. After yesterday’s trading, the spread had once again widened out above 10 percentage points. At some point, the rally will broaden out, but up until this point, there have been more than a few false starts.
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