While earnings are likely to be a key catalyst over the next few days, from a seasonal perspective, the current week of the year has historically been one of the best.  As shown in the snapshot from our Seasonality Tool below, the current week of the year (April 19th through April 26th) has seen the S&P 500 post a median gain of 1.44% over the last ten years.  Going out a bit further, the one-month return is only slightly better with a median gain of 1.47%, which is more middling relative to all other one-month periods throughout the year.  The same can be said for the 3-month period although it is a stronger period of the year which stands in the top quartile of all three month periods.

Expanding this beyond just the S&P 500, in the chart below we show the median performance across all sectors and market cap indices for the next week (4/19-4/26) based on the last ten years of trading.  As shown, Technology is right in line with the S&P 500 with a 1.44% gain while the small-cap Russell 2,000, the Energy sector, and Consumer Discretionary have notched slightly stronger performance. While mid-caps (S&P 400), Utilities, and Financials have all managed to also typically rise over 1%, there has historically been some weakness from Communication Services and the Dow Transports as both have median declines. Consumer Staples has only marginally moved higher with a 3 bps gain.

Taking a bit more of a granular look at this period, in the chart below we show the intra-month performance of the S&P 500 so far in April this year as well as a comparison to the historical average for the month of April since 1983.  With the S&P 500 already up around 5% on the month, performance thus far is better than the average gain of around 1.5% by this time. Even though the next week has historically been a very strong time of the year from a seasonal perspective, the S&P 500 is starting off trading lower today.  But we would note that it is not necessarily unusual.  As shown below, even though it has been a strong period, the first couple of days typically have seen the S&P 500 drift lower before reversing higher in a move that typically lasts through the end of the month.  Click here to view Bespoke’s premium membership options for our best research available.

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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Profiles

This Vegan Billionaire Disrupted the Crypto Markets. Stocks May Be Next. by Alexander Osipovich (WSJ)

The founder of FTX is introducing 24-hours-per-day stock trading, betting markets in anything, and more as he seeks to new markets for his exchange, FTX. [Link; paywall]

Quantum Leap by Akshat Rathi (Bloomberg)

One of the largest battery SPACs has spent a decade chewing through venture capital funding and is still years from a final product, despite being a lynchpin in VW’s plans for electrical vehicles. [Link; soft paywall]

Big Geography

China’s hydropower grab in the Himalayas by Michael Cruickshank (Substack)

A remote valley high in the largest mountain range on earth is the likely site of China’s next massive infrastructure project: the largest dam on the planet. [Link]

Google Earth is now a 3D time machine by Ron Amadeo (Ars Technica)

A new feature will allow users to move backwards in time as much as 20 years in order to see how landscapes are changing. [Link]

International Politics

Notes on the Political Economy of Britain by Matthew Zeitlin (Substack)

A dissection of what makes the UK such a complicated picture in terms of both economics and politics: a heavy reliance on services and a output highly concentrated in and around just one city. [Link]

The Dollar’s Sliding Share in Global Currency Reserves Is a Red Herring by Mike Bird (WSJ)

While the share of the dollar hit a 25 year low as a share of official reserves, driven by increases in the share of reserves held in euros and yen. But those shifts mask important details underpinning the dollar’s still-dominant role in the global financial system. [Link; paywall]

Texas Innovation

Fifty Years Ago a Texan Changed Happy Hour Forever by Patricia Sharpe (Texas Monthly)

Early in the 1970s, a young restauranter in Dallas gave up on blended margs and introduced the first frozen margarita, taking inspiration from 7-11’s ubiquitous Slurpee machines. [Link]

Domino’s, Nuro to begin autonomous pizza deliveries in Houston by Rebecca Bellan (TechCrunch)

An autonomous delivery company will start dropping pizzas off to customers without involving a driver this week in Houston. [Link]

Vaccines

CDC Identifies Small Group of Covid-19 Infections Among Fully Vaccinated Patients by Robbie Whelan (WSJ)

The CDC has been able to identify less than 6,000 COVID cases among the more than 66 million Americans who have been fully vaccinated against the disease. [Link; paywall]

How Long Do Covid-19 Vaccines Provide Immunity? by Sumathi Reddy (WSJ)

Follow-up studies to the initial approvals of COVID vaccines suggest immunity lasts at least six months, and could be significantly longer; unfortunately we won’t know how long the shots ward off the disease until more time has passed from the initial doses. [Link; paywall]

Sports

Pitcher Hope Trautwein Throws A Perfect Game Of All Strikeouts by Chad Campbell (NPR)

A softball hurler from the University of North Texas made history Sunday, striking out the entire opposing side in each at-bat; the feat has never been pulled off in NCAA Division 1 softball history. [Link]

The Pop Warner Offense That Confounded Sean Payton, and What It Says About Offensive Innovation in the NFL by Chris Brown (Grantland)

A Pop Warner coach managed to get the best of an NFL signal caller not once but twice thanks to a throwback offense that dates to the earliest days of the game. [Link]

Personal Finances

Two thirds of adults haven’t used cash in over 12 months by George Iddenden (Charged Retail)

A UK survey found that 64% of UK adults haven’t used physical cash in the past year, driven by the growing use of contactless payments. [Link]

New Investors Discover Tax Pitfalls of Robinhood and Other Trading Apps by Laura Saunders (WSJ)

Free-to-trade equity market apps make it easy to move in and out of positions, but a lot harder to optimize for taxes, which many new traders are finding out the hard way. [Link]

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Have a great weekend!

Data on Housing Starts and Building Permits for the month of March came in better than expected on Friday morning. That provided some relief to the concerns that surfaced from February’s weak and weather-impacted report.  With March’s rebound, Housing Starts are now back at their highest levels since 2007.  Building Permits still remain below January’s peak but also managed to rebound.

We pay a lot of attention to trends in residential real estate because it is such a large part of the US economy, and therefore has done a good job tracking trends in the overall economy. The chart below shows the 12-month average of Housing Starts relative to recessions going back to 1967.  Looking at the chart, it’s easy to see how leading up to every prior recession, Housing Starts always started to roll over in advance of the recession.  That didn’t happen leading up to the current recession, but given the suddenness of the contraction, there was really no way to anticipate it. Conversely, coming out of prior contractions, the recession was usually over before the 12-month average started to rebound.  Here again, the current recession re-wrote the script.  Not only did starts never meaningfully rollover, but they are also back at new post-financial crisis peaks.  In the periods leading up to, during, and now after this current recession (even though the NBER hasn’t officially called, the COVID recession is over), the patterns of Housing Starts looks nothing like the trends we have seen in prior periods.

Taking a closer look at the current period, the chart below shows the 12-month average for Housing Starts and Building Permits going back to 2010.  While Permits weren’t as strong as Starts in March, their 12-month average is actually considerably higher as both series climbed to new post-housing bubble highs.

Within both the Housing Starts and Building Permits data, we have also broken out the trends in single-family units.  In terms of their economic impact, single-family units are thought to have more of an economic impact than a multi-family unit.  Here again, the current trend remains positive as both series reached their highest levels of the post-financial crisis period in March. Click here to view Bespoke’s premium membership options for our best research available.

While housing data is still running hot, recently it has hit a bit of a rough patch as indicators like weekly purchase applications have shifted lower (we noted some of the reasons for this in last night’s Closer). This morning’s release of homebuilder confidence gave further pause.  The NAHB’s Housing Market Index measuring homebuilder confidence rose by one point to 83 in April.  Albeit higher month over month, the index has been in a couple of point range over the past few months and several points off the record high of 90 from November.  While that range is still above any levels observed prior to the past year, it shows homebuilders are still optimistic but less so than last year.

Of the three indices contributing to the headline number, Present and Future sales have been a bit stagnant while Traffic has experienced a much more notable rise.  That index has risen to 75 which is the highest level since the record of 77 in November. In other words, there still appears to be demand but it is not translating directly into sales.

Breaking down sentiment by geographic region shows varying levels of optimism.  Starting with the bad news, sentiment in the Midwest is the worst having fallen without much respite over the past several months.  Meanwhile, the Northeast has also continued to pull back but sits just off the record highs of 87 from November and February.  The South and West, on the other hand, both rebounded in April but remain further off their prior highs. Click here to view Bespoke’s premium membership options for our best research available.