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.

While you’re here, join Bespoke Premium with a 30-day free trial!

Collectibles

Al Capone’s Last Haul: The Gangster’s Family Auctions His Mementos by Richard Morgan (WSJ)

A huge batch of pistols, pocket watches, and other curios like a silver-plated cocktail shaker owned by the gangster are set to hit the auction block. [Link; paywall]

Labor Markets

Driver recruitment wars: Cowan to pay $20,000 sign-on bonus by Todd Maiden (Freight Waves)

With huge demand for freight services, drivers are an extremely scare commodity and are driving a bidding war for CDL holders; sign-on bonuses are going as high as $20k. [Link]

Bad Reviews

Yelp Reviews Fuel Fights Over Covid-19 Vaccine Requirements by Charity L. Scott (WSJ)

Small businesses which opt to require vaccination for clients or customers are being mobbed by hordes of anti-vaccine trolls, which seek to drive down their ratings. [Link; paywall]

Supply Chains

Why Is the Supply Chain Still So Snarled? We Explain, With a Hot Tub by Austen Hufford, Kyle Kim and Andrew Levinson (WSJ)

A step-by-step walk-through of the thousands of parts and intricate assembly that goes into a hot tub, all of which has been snarled by delays and shortages across the entire global supply chain. [Link; paywall]

Exclusive-Ford doubles Lightning production target on strong pre-launch demand -sources by Ben Klayman and Joseph White (Street Insider)

Ford’s electric F-150 model is due for launch next year, and the company has seen reservations top more than 120,000. As a result, it’s targeting production of more than 80,000 by 2024 but only 15,000 next year. The contrast between total demand and what the company is planning to build is striking. [Link]

Investors

Yale Taps Matthew Mendelsohn to Succeed Endowment Chief David Swensen by Juliet Chung and Dawn Lim (WSJ)

Yale’s massive $31bn endowment will have new leadership to replace legendary investor David Swensen, who passed last May. [Link; paywall]

God, Money, YOLO: How Cathie Wood Found Her Flock by Matt Phillips (NYT)

A profile of the manager who has built a massive active ETF empire out of relentless optimism and business analysis that presses that optimism for all it’s worth. [Link; soft paywall]

COVID

Those Anti-Covid Plastic Barriers Probably Don’t Help and May Make Things Worse by Tara Parker-Pope (NYT)

Aerosolized COVID virus is best fought with air flow, not plastic barriers which prevent the turnover of air in a given space by blocking movement. [Link; soft paywall]

Weird News

Baby on cover of ‘Nevermind’ sues Nirvana alleging child pornography by Nadine El-Bawab (CNBC)

The infant baby who was used in the iconic cover of Nirvana’s album is suing on the grounds that the use of his image constitutes child pornography. [Link]

Read Bespoke’s most actionable market research by joining Bespoke Premium today!  Get started here.

Have a great weekend!

ln today’s Morning Lineup, we noted the inverse correlation between performance this week and market caps.  As shown in the major US Indices screen of our Trend Analyzer tool, the two best performers over the past five days have been Micro-Caps (IWC) followed by small caps like the Russell 2000 (IWM) and the Core S&P Small-Cap ETF (IJR).  Mid-cap ETFs are the next best performers with high 2% gains then most large cap indices have only risen around 1.5% this week with the exception of the Dow (DIA) which has not even gained 1%.  As for where these indices are trading relative to each one’s trading range, it is partially a mean reversion story.  Small caps were deeply oversold one week ago and are now sitting just below their 50-DMAs. While not to as extreme of a degree, mid-caps were similarly trading a full standard deviation below their 50-DMAs last week. Today, they are on the opposite side of their 50-DMAs and on the verge of overbought readings.

As previously mentioned, small caps like the Micro-Cap ETF (IWC) and Russell 2000 ETF (IWM) were oversold last week. From a charting perspective, each of these indices’ rallies this week are not only bounces from extreme oversold levels, but they also follow brief dips below their 200-DMAs. But whereas the past five days have seen solid gains, yesterday saw IWC and IWM reject their 50-DMAs and the high end of their ranges that have been in place since late July. In other words, even though small caps have led the market this week, they are not out of the woods yet.

Looking at the relative strength lines of small caps like IWC and IWM versus the large cap S&P 500 (SPY) over the past year, the past week’s outperformance again is a blip on the radar and has only put a small dent in the longer term trend of underperformance.

Where that is not necessarily the case is small market caps versus the smallest market caps.  As shown below, the relative strength line of the Micro-Cap ETF (IWC) versus the Russell 2000 (IWM) broke out of the past few months’ downtrend over the past few days.  Click here to view Bespoke’s premium membership options.

As the major indices have set more record highs in the past week, bullish sentiment has rebounded.  The American Association of Individual Investors’ (AAII) weekly reading on bullish sentiment rose 6.4 percentage points to 39.4% this week. That is the highest reading of optimism since the week of July 8th when bullish sentiment was a hair above 40%.  While recovered, that reading is still muted versus the past year’s range and is only 1.5 percentage points above their historical average. In other words, bullish sentiment has rebounded but is far from elevated.

While the AAII survey showed an increase in bullish sentiment, another survey of newsletter writers from Investors Intelligence saw the opposite result.  This survey’s reading on bullish sentiment dropped to just 50% this week which is the lowest level since May of last year.  Although this reading has now fallen out of the past year’s range, it is still slightly elevated versus the historical average of 45%.

Given the uptick in bullish sentiment, the AAII survey saw only a third of respondents report as bearish versus 35.1% last week. Like bullish sentiment, this reading remains outside of the range it has occupied for most of the past year although that current reading is also not far away from the historical average of 30.5%.

As we noted in last Thursday’s Chart of the Day, the bull-bear spread dipped into negative territory last week for the first time since late January and it was at the lowest level since October 2020.  With the inverse moves in bullish and bearish sentiment this week, the spread has moved back into positive territory to its highest level since the last week of July.

Not all of the gains to bullish sentiment came from the bearish camp.  Neutral sentiment saw an even larger decline of 4.2 percentage points.  That brings the reading down to 27.5% which is the lowest reading since April 15th when it stood at just 21.6%.  Click here to view Bespoke’s premium membership options.

For the first time in four weeks, seasonally adjusted jobless claims came in higher with claims ticking up to 353K. Additionally, last week’s reading was also revised 1K higher to 349K.  Albeit higher, this week’s print does remain at the low end of the range since the pandemic began and is less than 100K away from the March 13, 2020 level of 256K (the last print before claims rose into the millions).

It continues to be a point in the year that regular state claims have the benefit of seasonal tailwinds. The current week of the year has historically only seen claims rise week over week 16.7% of the time on a non-seasonally adjusted basis. This week, claims fell by 11.7K resulting in the first sub-300K print of the pandemic. While regular state claims were lower, PUA claims rose for a fourth week in a row even with the program’s expiration (September 5th) rapidly approaching.  This week’s 9.63K increase was the largest of the past few weeks bringing PUA claims up to 117.71K.  That is the highest level since the week of April 23rd.

Seasonally adjusted continuing claims were also disappointing this week. Last week’s print was revised higher by 45K to 2.865 million, and while this week’s number was lower at 2.862 million, it was worse than expectations for a decline to 2.72 million. Thanks to that higher revision, claims have now fallen for three weeks in a row and are once again at pandemic lows.

Including all other programs adds another week of delay so the most recent read on continuing claims across all programs is through the week of August 6th.  Total claims rose to 12.02 million that week versus 11.84 million in the final week of July. Two of the largest programs, regular state and Pandemic Emergency Unemployment Compensation (PEUC), saw significantly lower claim counts that were offset by increases in PUA and extended benefit claims.  PUA claims rose back above 5 million due to a 104.71K increase erasing most of the decline from the second half of July.  Extended benefits remain particularly volatile, and this week saw another big move with claims rising 173.5K. At 351.4K, this program is at one of the highest levels since April.  While there are still several weeks until the data would catch up, through those most recent readings there are 8.8 million slated to lose benefits with the September 5th expiration for pandemic programs. Click here to view Bespoke’s premium membership options.