Chart of the Day – The “Powell Fade” Comes Right on Cue
Daily Sector Snapshot — 5/3/23
The Triple Play Report — 5/3/23
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 above-expectations 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 seven stocks. To sign up, choose either the monthly or annual checkout link below:
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Fixed Income Weekly: 5/3/23
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 every Wednesday. 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.
In this week’s report, we track investment grade corporate bond issuance.
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 free for the next two weeks!
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Bespoke’s Morning Lineup – 5/3/23
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.
“Men in general judge more from appearances than from reality. All men have eyes, but few have the gift of penetration.” ― Niccolo Machiavelli
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.
If you were to apply the quote above to the markets, it would be that you should never invest based on the headlines.
It was nice while it lasted, but the Fed blackout will come to an end this afternoon when the FOMC announces its latest decision on interest rates and Powell holds a 2:30 PM Eastern press conference. There’s a bit of a positive tone in the markets ahead of the announcement, but that will all change later on. The ADP Employment report crushed estimates surpassing forecasts by more than 100K, and while it hasn’t been particularly reliable in forecasting the Non-Farm Payrolls report, the strong reading suggests that the labor market is holding up even after yesterday’s weaker JOLTS report. We’ll have to wait and see jobless claims and Non-Farm Payrolls later this week to get a better read on that sector. As far as the rest of the day is concerned, we still have ISM Services at 10 AM.
As large caps have carried the lion’s share of the weight in market performance this year, the performance gap between the Nasdaq 100 and the Russell 2000 has really widened. Year to date, the Nasdaq 100 has rallied by 19.9% while the Russell 2000 has declined nearly 2%, and over the last six months, the gap has been similar at 19.8%. The chart below shows the rolling six-month performance spread between the two indices, and while the spread has spiked in the last few months, it’s still lower than it was at post-COVID extremes in the fall of 2021 and the middle of 2020. At the other extreme, the peak period of outperformance for the Russell 2000 was in Mach 2021 when US consumers were flush with stimulus cash. Over the last 13 years, though, the performance gap has been in the Nasdaq 100’s favor as the spread has been positive 65% of the time since 2010.
With the gap in performance favoring the Nasdaq 100 nearly two-thirds of the time over the last 13 years, its relative strength versus the Russell 2000 has, up until recent years, been in a consistent uptrend. After going parabolic in the early COVID days, relative strength has been in a sideways range for three years now. Tighter credit conditions from the regional banking crisis this year have recently helped buoy the performance of large caps. Now, with the Fed on tap this afternoon, will Powell continue the hawkish tone and keep a tight grip on the credit spigot for smaller companies, or will he take a softer tone and help grease the skids?
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Daily Sector Snapshot — 5/2/23
Bespoke Stock Scores — 5/2/23
Chart of the Day – Large Declines in Regional Banks
B.I.G. Tips – Big Drop Ahead of the Fed
Bespoke’s Morning Lineup – 5/2/23 – Changing Roles
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.
“Time takes it all, whether you want it to or not.” – Stephen King, The Green Mile
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.
Markets look to be starting off on a sluggish note this morning as Europe returns from the long holiday weekend to some mixed economic data regarding manufacturing and inflation while the Australian central bank announced a hawkish surprise at its policy meeting by hiking rates 25 bps. In the US, futures are just moderately lower ahead of the 10 AM release of the JOLTS- the first of many employment-related indicators on top for the week. Speaking of employment, Bloomberg is reporting that Morgan Stanley plans to lay off 3,000 employees, while IBM will halt hiring and replace up to 7,800 positions and replace them with AI.
The more things change, the more they stay the same. You’ve heard the phrase thousands of times before, and it’s uncanny how often it applies to real-world situations. This morning, though, we wanted to show you an example of how things this year couldn’t be more different than they were last year. Through the end of April last year, the three worst-performing sectors on a YTD basis were Communication Services (XLC), Consumer Discretionary (XLY), and Technology (XLK), while Energy (XLE) was the only sector with any meaningful gains. This year, through yesterday’s close, the three best-performing sectors on a YTD basis have been Communication Services, Technology, and Consumer Discretionary while the worst-performing sector has been Energy. So basically, this year’s market leaders and laggards couldn’t be more opposite from each other.
The only sectors that have been exceptions in any way are Consumer Staples (which is the only sector that was up YTD in both 2022 and 2023) and Financials and Health Care (which are the only two sectors that were down YTD in both 2022 and 2023). When it comes to sector performance so far this year, the more things change, the more they change. Then again, when it comes to broader market concerns, the Fed still seems to be all anyone can focus on, economic indicators suggest weakness or even a recession on the horizon, and the war in Ukraine is still going.
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