B.I.G. Tips – Fed Day on the Way
Bespoke Stock Scores — 1/31/23
Bespoke’s Morning Lineup – 1/31/23 – Ending the Month on a Down Note
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“I would rather hire a man with enthusiasm, than a man who knows everything.” – John D. Rockefeller
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.
Futures are lower heading into the last trading day of the month, but they’re well off their lows of the morning. Treasury yields and crude oil are also lower but like equities, are off their lows of the morning. The Q4 Employment Cost Index was just released and came in at a level of 1.0% versus forecasts for a reading of 1.1%. That’s the third straight quarterly decline from a multi-decade peak in Q1 of 2022, and while it won’t change what the Fed does at its meeting that starts today, it could potentially make Powell slightly less hawkish when he speaks tomorrow.
Yesterday’s 1.3% decline was the third 1%+ decline for the S&P 500 this month and the 8th 1% move (up or down). While futures are only modestly lower now, if there is another 1% move today, it would be the most 1% daily moves in the month of January since 2016 when there were 13 (tied for the third most since 1953 when the current five-trading day week began). If there’s not a 1% move, this January will simply be tied with last year for the most since 2016. Thankfully, the result in terms of performance won’t be the same.
Yesterday’s decline may have been disappointing for bulls but in terms of drivers of the losses, it looks like nothing more than profit-taking following some big YTD gains. The scatter chart below compares the performance of Industry Groups YTD heading into this week (x-axis) versus Monday’s performance (y-axis). The two biggest losers on Monday were Autos & Parts (-5.5%) and Semiconductors (-3.0%), and heading into the week they were the two best performers on a YTD basis with gains of 36.1% and 17.2% respectively. At the other end of the spectrum, two of the only three groups that finished the day higher on Monday (Household & Personal Products and Food Beverage & Tobacco) were also the two worst-performing groups on a YTD basis heading into yesterday.
On the topic of semis, the group is currently tightly wedged between two key levels. About 3% below Monday’s close is the downtrend line that was broken to the upside earlier this month while about 5% above, resistance corresponding to the lows in March and the subsequent highs from June and August.
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Sector Divergence
On this last trading day of January, below is a snapshot of how the major US sector ETFs have performed so far this year. Over these last few weeks as the broad market has rallied, we’ve definitely seen some sector divergence. Defensive sectors like Consumer Staples (XLP) and Utilities (XLU) have come under selling pressure, while cyclical sectors more tied to the business cycle have surged. Communication Services (XLC) and Consumer Discretionary (XLY) are both up more than 12% YTD already, while Technology (XLK), Materials (XLB), Real Estate (XLRE), and Financials (XLF) are up more than 5%. The only sectors down on the year are Consumer Staples, Utilities, and Health Care (XLV). At the moment, four sectors are overbought (more than one standard deviation above their 50-DMAs) versus three that are oversold (more than one standard deviation below their 50-DMAs). Click here to learn more about Bespoke’s premium stock market research service.
Below is a snapshot of price charts for six sector ETFs pulled from our Chart Scanner tool. These are the three sectors up the most YTD (XLC, XLRE, XLY) and down the most YTD (XLP, XLU, XLV).
As we get set to enter a new month, last week we published a report for subscribers looking at historical market seasonality in February and for the remainder of the year based on how the market performs in January. Does a positive January typically mean positive returns going forward or does it not matter? To find out the answer to this question and see everything else Bespoke is publishing for subscribers, sign up for a one-month trial to Bespoke All Access today.
Daily Sector Snapshot — 1/30/23
Chart of the Day – Energy Commodities In Deep Drawdowns, Stocks Not So Much
Bespoke’s Morning Lineup — 1/30/23
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“There is no better teacher than history in determining the future. There are billion-dollar answers in $30 history books.” – Charlie Munger
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.
With just two more trading days left in the month, below is a chart we published in our Chart of the Day from last Tuesday looking at rest-of-year performance when January has been a positive or negative month. Remember, since WW2, the rest of the year has generally been stronger when January has been an up month versus a down month. As shown, the S&P has averaged a decline of 0.27% across all Februarys, but the index has averaged a gain of 0.37% in February when January has been up versus a decline of 1.21% in February when January has been down. The trend is the same when looking at the rest of the first half and the rest of the year.
Drilling down further, there have only been two other instances since WW2 where the S&P gained more than 5% in January after posting a double-digit percentage decline in the prior year: 1967 and 1975. See how things turned out in those years by reading today’s full Morning Lineup.
Our Morning Lineup keeps readers on top of earnings data, economic news, global headlines, and market internals. We’re biased (of course!), but we think it’s the best and most helpful pre-market report in existence!
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Bespoke Brunch Reads: 1/27/23
Welcome to Bespoke Brunch Reads — a linkfest of the favorite things we read over the past week. The links are mostly economy/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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Economy
Big Tech Is Really Bad at Firing People by Chris Stokel-Walker (Wired)
Thousands of tech workers have been laid off over the last few weeks, and they aren’t happy with the way their firings have been handled. [Link]
Corporate Layoffs Spread Beyond High-Growth Tech Giants by Chip Cutter and Theo Francis
It’s not just high-growth tech companies laying off workers, companies like IBM and Dow have also started to announce layoffs. There’s always dog walking. [Link]
How These Dog Walkers Make Over $100,000 a Year by Alyson Krueger (NYT)
Charging upwards of $35 per walk (more than the hourly rate for babysitters), some dog walkers in New York are making six-figure salaries. [Link]
You Quit Your Job, but You’re Still Miserable. Now What? By Eilene Zimmerman (NYT)
Overworked Americans who have quit their jobs have found that the absence of work and structure leaves them unmotivated and unable to move forward. [Link]
CVS, Walmart to Cut Pharmacy Hours as Staffing Squeeze Continues by Sharon Terlep and Sarah Nassauer (WSJ)
Both chains will curtail the operating hours of their pharmacies citing a lack of available pharmacists. Pharmacists were already in short supply before the pandemic, and consumer demand for Covid-19 shots and tests put additional strains on pharmacy operations. [Link]
Chase Locking Up Some ATMs at 5 P.M. Due to NYC Crime by Luke Funk (Fox5NY)
Citing higher crime risk at night and increased vagrancy, the bank will curtail the availability of 24-hour ATMs. [Link]
Smartphone Shipments Suffer the Largest-Ever Decline with 18.3% Drop in the Holiday Quarter by IDC
The drop marks the largest-ever decline in a single quarter and contributed to a steep 11.3% decline for the year. [Link]
Americans Fall Behind on Car Payments at Higher Rate Than in 2009 by Claire Ballentine (Bloomberg)
Higher interest rates and depleted savings have resulted in car repossessions surging to the highest rate since 2009. [Link]
Science
Earth’s Inner Core May Be Reversing Its Rotation, Study Finds by Eric Niier (WSJ)
Researchers believe the Earth’s inner core has reversed its rotation after they analyzed earthquake-driven seismic waves as they pass through the Earth. The result is that the length of a day has been shaved by fractions of a millisecond [Link]
The Food Expiration Dates You Should Actually Follow by J. Kenji López-Alt (NYT)
Believe it or not, most of those expiration dates are meaningless. “Vinegars, honey, vanilla or other extracts, sugar, salt, corn syrup, and molasses will last virtually forever,” and even eggs last much longer than their sell-by dates. [Link]
Humanity May Reach Singularity Within Just 7 Years, Trend Shows by Darren Orf (Popular Mechanics)
“On average, it takes a human translator roughly one second to edit each word of another human translator, according to Translated. In 2015, it took professional editors approximately 3.5 seconds per word to check a machine-translated (MT) suggestion — today that number is just 2 seconds. If the trend continues, Translated’s AI will be as good as a human-produced translation by the end of the decade (or even sooner).” [Link]
ChatGPT Is Coming for Classrooms. Don’t Panic by Pia Ceres (Wired)
ChatGPT has caused fears of rampant cheating in American education, but many educators say that the potential disruption is just what the US educational system needs. [Link]
Google, Not OpenAI, Has the Most to Gain From Generative AI by Mark Sullivan (Fast Company)
Alphabet has been criticized for ‘missing the boat’ on AI, but this article reminds readers that the company has been calling itself “AI-First” since 2017 and has invested heavily in the space. [Link]
Meta Embraces AI as Facebook, Instagram Help Drive a Rebound by Jeff Horwitz and Salvador Rodriguez (WSJ)
Fueled by heavy investment in AI, Meta is starting to see a path to recovery after the toughest year in the company’s history [Link]
Sports
MSG Owner James Dolan Threatens Alcohol Ban at MSG Over Facial Recognition Controversy by Fox 5 Staff (Fox5NY)
Madison Square Garden owner James Dolan has banned lawyers who are suing any of his companies from entering the Garden. The New York State Alcohol board has threatened to pull the Garden’s liquor license, so Dolan has suggested he may stop serving beer at one Rangers game and tell anyone who is upset about it to call the head of the state authority. [Link]
Quality Control Fiasco: George Brett Autograph Ends up on a Babe Ruth Baseball Card by Tyson Shushkevich (Just Baseball)
Can you imagine pulling an autographed Babe Ruth but then realizing that the actual signature was George Brett? You’d be mad. Think George Brett pine tar too high mad. [Link]
Ranking the top five Royal Rumble winners in WWE history: Is Steve Austin or Ric Flair No. 1? By Daniel Yanofsky (Sporting News)
With this weekend’s Royal Rumble, check out this list of the top five Royal Rumble Winners. Who will win the right to face Roman Reigns at WrestleMania 39? Will The Rock make a comeback? [Link]
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Have a great weekend!
The Bespoke Report — Equity Risk Gauge — January 2023
This week’s Bespoke Report newsletter is now available for members.
In this week’s newsletter, we’ve updated our Equity Market Risk Gauge for the month of January, and we also take a look at market technicals, improving internals, international equity market outperformance, interest rate movements, and next week’s upcoming FOMC meeting.
To see our updated Equity Risk Gauge and access everything else Bespoke’s research platform has to offer, join Bespoke Institutional and get half off for the first three months!
