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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Commodities

Permian Basin: high oil price breathes new life into US shale by Myles McCormick (FT)

An on-the-ground report from the heart of US shale country and the good times that are rolling – for now – in West Texas as oil prices run far above break-evens for local producers. [Link; paywall]

Steelmaker CEO Warns North America Market a ‘Falling Knife’ by Joe Deaux (Bloomberg)

Canadian steelmaker Stelco is seeing a sharp drop in demand and building inventories amidst falling steel prices thanks to weak activity in construction and automaking industries and high production from mills [Link; soft paywall]

Government

Police in this tiny Alabama town suck drivers into legal ‘black hole’ by John Archibald (AL.com)

A horror story from a small suburb outside of Birmingham that has turned its police force into a revenue collection agency, complete with shocking over-spending by the department and invented charges designed to justify their budget. [Link]

The strange case of the casino, the Senate leader and the defense bill by Mark Satter (Roll Call)

An effort South Carolina’s Catawba Indian Nation to build a casino in North Carolina has led to strange Congressional bedfellows and a unique example of how the modern Congress functions: interest groups first, regular order out the window. [Link]

Sold To You

Robinhood and Democracy Promotion by Ranjan Roy (Margins)

A feature for Robinhood users that granted them exclusive access to IPOs has created massive losses for retail investors who opted in, blurring the lines between regular customer communications and marketing for the brokerage platform. [Link]

Renaissance Investor Exodus Nears $15 Billion Despite 2021 Gains by Hema Parmar (Bloomberg)

While Renaissance Technologies’ flagship fund delivered 20% returns in 2021, investors aren’t pleased thanks to underperformance versus the fund’s Medallion fund; billions have flowed out of the fund’s public vehicles over the past year. [Link; soft paywall]

Bonds

German Benchmark Bond Yield Briefly Turns Positive for First Time Since 2019 by Anna Hirtenstein (WSJ)

Increases in US Treasury bond yields have helped push up the yields on global government debt, and it actually costs Germany money to borrow in nominal terms now for the first time in almost two years. [Link; paywall]

Bond Market Forecasts Bad Economic News by Greg Ip (WSJ)

While we wouldn’t necessarily frame it as “bad news”, bond prices don’t reflect much worry over inflation or high policy rates needed to combat that inflation. [Link; paywall]

Puzzles

The Best Starting Words to Win at Wordle by Harry Guiness (Wired)

If you’ve gotten deep in to Wordle, you might want to brows this article which helps narrow down the field with some optimal guesses. [Link]

COVID

‘Nocebo’ effect blamed for two-thirds of COVID vaccine symptoms: Study by Hannah Sparks (NYP)

A study of vaccine side-effects report suggest that about two-thirds of side-effects from vaccines were psycho-somatic, given the level of side-effects reported by those who received placebo vaccines during clinical trials. [Link; auto-playing video]

This Week In Tech

‘It’s All Just Wild’: Tech Start-Ups Reach a New Peak of Froth by Erin Griffith (NYT)

More than 900 tech start-ups are unicorns, and investors are getting in to massive scrums over the right to buy in to the latest hot deal. [Link; soft paywall]

Sobriety

I Got Sober in the Pandemic. It Saved My Life. by Danielle Tcholakian (Jezebel)

A wonderful essay about finding community and escaping demons amidst the pandemic, with a little help from caring friends and none at all from booze. [Link]

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Have a great weekend!

With more than half of the S&P 500 lower today, the index is once again looking to end the week in the red and with weak breadth. As a result of the consistent declines lately across the index, the net reading of the percentage of stocks at new 52-week highs versus lows is on pace to see the first negative reading since December 2nd.

Moving down through the spectrum of market caps, the readings on net new highs only get worse.  The S&P 400 which is comprised of mid-cap names has an even lower reading of -6.23% of net new highs today. That is the lowest since November 30th, and prior to that, you would have to go back to the record low readings of March 2020 to find the last time that there were as wide of a margin between the number of stocks hitting new lows versus new highs.

Moving down again to the small cap S&P 600, once again the reading only gets worse.  This index is seeing a double-digit negative reading.  With a net 11.13% at new 52-week lows, it is the weakest reading since March 23, 2020 and is in the 5th percentile of readings going back to the start of the data in 1995.  Click here to view Bespoke’s premium membership options.

Earlier this week in our Sector Weightings report, we highlighted how the weight of the Technology sector remains well above that of any other sector, though, it did come off recent highs. In terms of market cap, the Tech sector is still valued at nearly $11 trillion. The next largest sectors are Health Care and Consumer Discretionary at a little over $5 trillion. Utilities is currently the only sector with a market cap under $1 trillion.  Remember, back in April 2020, the S&P 1500 Energy sector’s market cap got down to just $701 billion!

Taking a look at the changes three weeks into the new year, Tech has already shed over a trillion dollars in market cap. Combined, Consumer Discretionary, Health Care, and Communication Services have also fallen by over a trillion dollars. Meanwhile, only Energy has seen its market cap increase.

As for the individual stocks of the S&P 500, there are currently five members with market caps above $1 trillion, and those five stocks have seen a combined drop in market cap of roughly $850 billion year to date.  Apple (AAPL) and Microsoft (MSFT) are the biggest of these with market caps of $2.69 trillion and $2.65 trillion respectively, and as such, their declines year to date are the largest of any S&P 500 stock. Of the 25 largest S&P 500 members, only a handful have seen their market caps rise so far in 2022. Exxon Mobil (XOM) has seen the largest increase followed by Berkshire Hathaway (BRK/B) and Chevron (CVX).

In the table below, we show the 25 S&P 500 stocks that have seen their market caps rise the most this year. Not only does an Energy stock top the list, but across these 25 names, Energy stocks have the most representation. Financials also have a decent number making the list while not a single Consumer Discretionary or Tech name is to be found.  Click here to view Bespoke’s premium membership options.