Bespoke’s Morning Lineup – 12/29/22 – Almost There
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“There is no greater sorrow than to recall in misery the time when we were happy.” – Dante Alighieri
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.
In case you missed it last Friday, we emailed out our annual Bespoke Report which covers everything you need to know about the setup for financial markets and the economy heading into 2023. You can read it here.
There are just thirteen hours left of trading to go and then we can finally bid farewell to 2022. Futures are positive this morning, but if this year has taught us anything, it is that what happens in the futures market doesn’t often follow through to regular trading. The only economic data on the calendar this morning is jobless claims at 8:30 eastern. Initial claims were right in line with forecasts at 225K while continuing claims increased to 1.71 million, which is the highest reading since February.
Individual investor bullish sentiment increased more than five percentage points but still remains depressed at less than 26%. This week’s results also officially confirm that 2022 will be the first year in the history of the survey (since 1987) that bullish sentiment was below its historical average every week of the year.
Can it get any worse than 2022 has been for the Nasdaq? With the index making a new closing low for the year yesterday, it is very close to going wire to wire on the year with the closing high coming on the first trading day and the closing low occurring right near the last trading day.
The two charts below show when the Nasdaq has made its annual closing highs and lows for every year since 1972. Starting at the top, on average, the YTD high occurs on the 176th trading day, which works out to mid-September. In terms of individual years, the YTD high occurs in Q4 nearly 60% of the time and in Q1 just 18% of the time. Furthermore, there have only been five other years where the YTD high occurred in the first two weeks, and 2008 was the only other year that the YTD high was on the first trading day of the year.
Shifting focus to the YTD low, on average, it occurs on the 90th trading day of the year. Even more notable, though, is the fact that there have only been four other years where the Nasdaq’s YTD low occurred in the final two weeks of the year (2022, 2018, 2000, and 1973). Those are also the only four years in the Nasdaq’s history where it made its YTD closing low in December. In other words, 2022 has been rare in terms of both the timing of the YTD high and YTD low.
Looking at the charts, you’ll also notice that the only other year with a similar setup where the Nasdaq made its YTD high in the opening two weeks of the year and its YTD low in the final two weeks was in 1973. In 1973, the YTD closing low occurred 239 trading days after the YTD closing high, but this year it will be at least 248 trading days separating the two.
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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Daily Sector Snapshot — 12/28/22
Country ETFs in 2022
Earlier today we published our Global Macro Dashboard which provides an overview of the main economic and market data of 22 major global economies. In the table below, we show the recent performance of the ETFs tracking those same countries.
With 2022 drawing to a close, there are only two countries that are currently in the green for the year: Brazil (EWZ) and Mexico (EWW). Neither are up much, but up is up, especially in a year like this one.
In terms of month-to-date change, Hong Kong (EWH) has risen the most with a 5.62% gain, while China (MCHI) is up a modest 0.46%. On the other end of the spectrum, Taiwan (EWT) has fallen sharply with an over 20% decline, but most of that drop is actually due to a $5.18/share long-term capital gain that the fund paid out earlier this month. Click here to learn more about Bespoke’s premium stock market research service.
Chart of the Day – Inflation Melting (Slowly)
Bespoke’s Matrix of Economic Indicators – 12/28/22
Our Matrix of Economic Indicators provides a concise summary analysis of the US economy’s momentum. We combine trends across the dozens and dozens of economic indicators in various categories like manufacturing, employment, housing, the consumer, and inflation to provide a directional overview of the economy.
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Falling FAANG+
Yesterday Amazon (AMZN) became the third of the mega-cap FAANG+ stocks (along with META and NFLX) to close below its closing low made during the COVID Crash in March 2020. Not only have all of AMZN’s post-pandemic gains been erased, but it’s now trading below its lowest close made during the COVID Crash!
NYSE’s FAANG+ index is described as an index of “10 of today’s highly-traded tech giants.” Given that most of the FAANG+ stocks account for a massive portion of the market cap weighted S&P 500, they are an impactful group. As shown below, the FAANG+ index peaked in early November last year and has dropped 46% since then. The drop more recently follows a failed breakout above the top of its downtrend channel as the index is now back to within 5% of this past November’s low. On a relative basis, the group has been underperforming the broader market for even longer with a high in February of last year.
Below is a look at the ten FAANG+ stocks. As shown, they came into the year with a combined market cap of $12.3 trillion, and they’re ending the year with a combined market cap of just over $7 trillion. While Apple (AAPL) has fallen the least YTD in terms of share price change, it has lost the most in market cap at $844 billion. Amazon (AMZN) has seen its market cap fall the second-most at $843 billion, essentially getting cut in half. Tesla (TSLA), along with AMZN, is one of two names that lost their “$1 trillion market cap” club status this year. TSLA is now down 69% on the year, and its market cap has fallen from $1.06 trillion down to just $344 billion. The other FAANG+ stocks that are down 50%+ on the year include Meta (META), NVIDIA (NVDA), Netflix (NFLX), AMD, and Snowflake (SNOW).
With markets continuing to drop in these final trading days of December, on an absolute basis, 2022 is going to go down as the biggest year of wealth destruction ever for the US equity market. In 2008, the Russell 3,000 saw its market cap fall by $6.7 trillion. As of today, the Russell 3,000’s market cap has fallen about $11.2 trillion so far in 2022. $5.2 trillion of that $11.2 trillion decline has come from just the ten FAANG+ stocks shown below. Click here to learn more about Bespoke’s premium stock market research service.
Bespoke’s Morning Lineup – 12/28/22 – No News is Good News
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.
“I have no views as to where it will be, but the one thing I can tell you is it won’t do anything between now and then except look at you.” – Warren Buffett (discussing gold)
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.
In case you missed it last Friday while you were out holiday shopping or stuck in an airport. We also emailed out our annual Bespoke Report which covers everything you need to know about the setup for financial markets and the economy heading into 2023. You can read it here.
In a year when all the news tended to push stocks lower, it’s nice to see a day with little in the way of news. Equity futures are higher, bond yields are lower, and WTI crude oil is trading just below $80 per barrel after failing to get back above its 50-day moving average yesterday. The only economic data on the calendar today is Pending Home Sales and the Richmond Fed report, and both of those releases are at 10 AM. A lot of people take the last week of the year off, and one group we’re more than happy to see take a break are Fed officials.
Just like any other investment ‘rule’ there are always exceptions, and when it comes to Warren Buffett’s thoughts on gold, most of the time, he would be exactly right. Who would want to own an asset that has little industrial utility and provides no upside in terms if capital appreciation or income? If you want something that just sits there, get a dog.
Every once in a while though, something that just sits there doing nothing may be the best option, and that’s been the case in 2022. With just three trading days left in 2022, the S&P 500 is down close to 20% on the year and long-term US Treasuries are also down by close to a third. Gold hasn’t escaped 2022 unscathed, but with a decline of just over 1%, it’s been the least of all evils in what has been a nasty year for asset classes of all types.
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!
Start a two-week trial to Bespoke Premium to read today’s full Morning Lineup.