B.I.G. Tips – Disney (DIS) Falls to COVID Crash Lows
Weaker than expected ticket sales for its new Avatar movie were part of the reason Disney (DIS) shares fell another 4.77% yesterday. As shown below, the stock has now round-tripped its entire post-COVID bull market run-up from $85.76 to a high of $201.91 seen on March 8th, 2021. At $85.78, DIS is now just two cents above its COVID Crash closing low.
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Daily Sector Snapshot — 12/19/22
Homebuilder Stocks Hold Steady In Spite of Sentiment
The economic calendar is particularly light today with the only release in the US being homebuilder sentiment from the NAHB. In spite of mortgage rates sitting 0.8 percentage points below their early November peak, homebuilder sentiment has continued to fall reaching a new low of 31 in December versus expectations for a modest increase to 34. December’s reading is now only one point above the spring 2020 low of 30.
The two-point drop in December was entirely a result of the decline in present sales. That reading fell from 39 to 36, matching the April 2020 low. Meanwhile, future sales saw a large increase rising from 31 to 35. That is only back up to the same level as October and a historically muted reading, but the month-over-month increase was the largest since September 2020. The index for Traffic went unchanged at 20 which is the lowest level since April 2020.
The regional readings on homebuilder sentiment echo the weakness from the headline levels, albeit there has been slightly more variability. For starters, the Northeast has seen sentiment hold up the best as current readings are a bit more elevated off of COVID lows. The Midwest is also handily above the spring 2020 lows, but there was massive deterioration with a 5-point drop this month. Meanwhile, the West dropped another 3 points to match the new post-COVID low and the weakest reading since January 2012. Finally, the South was the only region to see improvement in December with the index rising 2 points, but even with that, it is right near the lowest levels since the pandemic.
Homebuilder stocks, proxied by the iShare US Home Construction ETF (ITB), traded lower in the wake of today’s release after months of outperformance. As shown below, the ETF is trading well above its moving averages compared to the S&P 500 which has moved back below both its 50 and 200-DMAs in the past few days. As such, the relative strength line for homebuilders has continued to move higher. Click here to learn more about Bespoke’s premium stock market research service.
Chart of the Day: A Sell the Dip, Sell the Rip Market
Bespoke’s Morning Lineup – 12/19/22 – Less Than Ten
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“Humbug” – Ebenezer Scrooge
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 there’s any consolation to this Monday morning, it’s that there are only nine trading days left to go in 2022, and it’s only fitting that the world was introduced to Ebenezer Scrooge 179 years ago today with the publication of A Christmas Carol by Charles Dickens. Futures are actually slightly higher this morning (but giving up ground as the morning goes on). News-wise, the next two weeks are likely to be rather quiet, and the only economic report on the calendar today is homebuilder sentiment at 10 AM. In international markets this morning, the only headlines of note are the fact that COVID cases in China are reportedly surging as the country rips the band-aid off of its zero-COVID policy, while in Japan, there is talk that the BoJ will finally revise its monetary policy to a more hawkish stance.
Last week was a disheartening one for bulls as the optimism of a break above the 200-DMA and the potential for a break of the S&P 500’s downtrend was quickly erased. Not only were bulls not able to break the downtrend, but the S&P 500 also gave up its 50-DMA as well.
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: 12/18/22
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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Crypto
Exclusive: How a secret software change allowed FTX to use client money by Angus Berwick, John Shiffman, and Koh Gui Qing (Reuters)
A small change in FTX code allowed Alameda Research to borrow indefinitely, regardless of the value of collateral posted by the hedge fund to the exchange. [Link]
All the young dudes carry the bags by Louis Ashworth (FTAV)
Using data from bank customers, JPMorgan made some basic demographic estimates about who bought crypto when. The results are about what you would think. [Link; paywall]
C-Suite
Bob Iger vs. Bob Chapek: Inside the Disney Coup by Joe Flint, Robbie Whelan, Erich Schwartzel, Emily Glazer and Jessica Toonkel (WSJ)
An inside account of the downfall of Disney’s CEO to Disney’s previous CEO, fueled by investor angst over streaming losses and perceptions that Chapek was driving the company into the ground. [Link]
Musk Shakes Up Twitter’s Legal Team as He Looks to Cut More Costs by Ryan Mac, Mike Isaac, and Kate Conger (NYT)
As turmoil mounts at Twitter, the company has stopped paying rent, refused to pay charter flight bills, and mulled the possibility of not paying severance promised to employees fired since the takeover. [Link; soft paywall]
Housing
Why This Housing Downturn Isn’t Like the Last One by Ben Eisen and Nicole Friedman (WSJ)
Few low quality mortgage loans, big equity cushions, and lots of people waiting for a dip in prices make this period of falling prices look very different from the subprime mortgage collapse. [Link; paywall]
Why Are Market Rents Decelerating? It’s Probably Not Because Of The Fed by Alex Williams (Employ America)
Rents started to slow before the rapid interest rate hikes of 2022 started, making them unlikely to be a consequence of Federal Reserve policy to slow the economy. [Link]
EU Politics
EU strikes deal with Hungary, reducing funding freeze to get Ukraine aid approved by Paola Tamma (Politico)
Hungary will see less of its EU funding frozen in exchange for lifting a veto on Ukrainian aid, part of a complicated process of negotiations that is par for the course when it comes to European Union legislating. [Link]
Emergencies
Gun Violence Is Falling In 2022 by Jeff Asher (Jeff-alytics)
National statistics showed a widespread uptick in shootings during the pandemic, but that spike appears to be reversing in 2022 as society returns to something more like normal. [Link]
Calling 911 in Charlotte? Your ambulance might show up without lights and sirens. by Genna Contino (The Charlotte Observer)
Ambulances are starting to run without sirens and lights in an effort to make emergency calls safer in the vast majority of calls to 9-1-1 that do not involve life-threatening emergencies. [Link; soft paywall]
Electric Vehicles
Ford increases F-150 Lightning price, now starts at $56,000 by Fred Lambert (Electrek)
The lowest-priced tier of Ford’s electric pickup now goes for 40% more than its original base price thanks to huge demand and soaring materials costs; higher-end versions are significantly more expensive. [Link]
Trading Education
School of Quant: At $29,000, a Public NYC College Outclasses Princeton by Heather Perlberg (Bloomberg)
An NYC resident will pay less than $30k for a Masters that will let them earn nearly $170k before bonus fresh out of graduation. [Link; soft paywall]
Accounting
The $80tn “hidden debt” and what it really means by Daniel Davies (FT)
When trying to assess financial vulnerability, labels matter. That’s especially true when it’s not entirely clear how those labels should be applied. [Link; paywall]
Grammar
Solving grammar’s greatest puzzle by Tom Almeroth-Williams (University of Cambridge)
A complicated system of 4,000 rules has finally been unlocked in full, with the 2,500 year old algorithm of Sanskrit word assembly’s last rule determined by a Cambridge PhD student. [Link]
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Have a great weekend!
The Bespoke Report — 12/16/22
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Daily Sector Snapshot — 12/16/22
Bespoke’s Morning Lineup – 12/16/22 – Brace Yourself, It’s Friday
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“It isn’t what we say or think that defines us, but what we do.” – Jane Austen
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.
A bad week just keeps getting worse as futures are continuing their post-FOMC sell-off. Heading into this week, the thought of weaker CPI and the Fed signaling a step down to 25 bps hikes at future meetings would have been considered a positive. That’s exactly what we got, but after an initial surge following Tuesday’s CPI, equities have been doing nothing but trading lower. Hawkishness from the FOMC and ECB has investors concerned that rates will be higher for longer raising the odds for a hard landing.
Well, 2022 you’ve finally done it. If there was any doubt about how bad of a year it has been, today’s decline in the S&P 500 will move 2022 into the lead for the largest number of 1% declines to close out the trading week going back to 1952 when the NYSE started the current five-trading day workweek. Heading into today, there were 15 declines of at least 1% in the S&P 500 on the last trading day of the week which was tied with 1974 and 2008 and one ahead of 2000 for the most in a single year.
Despite the record number of 1%+ declines to close out the week, the S&P 500’s cumulative decline this year on the last trading day of the week has been a decline of less than 9%. The reason is that not only has this year seen the highest frequency of 1%+ declines to close out the week, but it also tied with 1999 for the highest number of 1%+ gains (14).
All in, including today, the S&P 500 has ended the week with a gain or loss of at least 1% 30 times this year, or 60% of the time! Talk about an emotional market. And there are still two Fridays left after today!
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The Bespoke 50 Growth Stocks — 12/15/22
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.
The Bespoke 50 is available with a Bespoke Premium subscription or a Bespoke Institutional subscription. You can learn more about our subscription offerings at our Membership Options page, or simply start a two-week trial at our sign-up page.
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.