Among the many strong economic data points out this morning, jobless claims was one of the more impressive ones. Last week’s print was revised upwards to 769K from 744K. This week’s number was anticipated to fall back down to 700K, but the actual results were far better as seasonally adjusted initial claims fell by 193K to a pandemic low of 576K. That is the biggest one-week drop since a 219K decline at the end of July.  Additionally, this week’s decline also brings claims back below the pre-COVID record high of 695K from October 1982.

On a non-seasonally adjusted basis, the picture was just as impressive.  Regular state claims dropped 152.9K to 612.9K. Again this was the lowest level of the pandemic.  The same can be said for Pandemic Unemployment Assistance (PUA) too. Although the 20K decline is on the smaller side for the past several weeks’ moves, claims from this program reached a new low of 131.98K.  PUA claims are now down to around a quarter of where they stood just two months ago.

Over the past several months, continuing claims have consistently been making new lows for the pandemic.  Since the high in claims last May, there have only been 8 weeks in which continuing claims did not fall with this week being one of them.  Claims rose by a meager 4K from last week’s downwardly revised reading of 3.727 million.  That snapped a streak of 12 consecutive weeks of declines. Additionally, outside of the week of September 11th when claims went unchanged, the 4K increase this week was tiny relative to other moves of the past year. Overall, while continuing claims increased, it came in the context of a long, albeit slowing, streak of declines.

Including all other programs creates another week’s lag for the data meaning the most recent reading is through the final week of March. Taking a look at continuing claims in this light, there were broad improvements with the only program to see an uptick being the very small State Additional Benefits which rose from 1.8K to 2.15K.  As for the larger and more impactful programs, regular state claims fell by half of a million while PUA claims were not far behind dropping 474.7K.  The third-largest program, Pandemic Emergency Unemployment Compensation (PEU), also saw a significant decline falling by 174.4K.  That was the program’s fourth-largest week-over-week decline of the past year.  Altogether, total continuing claims across all programs fell to 16.96 million. That is the second-lowest level of the past year.

In addition to the drop in the overall level of claims, another improvement comes from the composition of claims. Over the past several months we have noted how an increased share of claims are on account of programs that extend benefits past the expiration of various programs. In other words, a larger share of people on unemployment have been out of work for extended periods of time. For the time being, that trend has peaked. The most recent week showed further improvements with respect to those programs as they now account for a combined 34% of all claims. That is down for a third week in a row since the high of 36.9%. Click here to view Bespoke’s premium membership options for our best research available.

On Monday, short interest data through the end of March was released.  ln aggregate for Russell 3,000 stocks, short interest as a percent of equity float is little changed versus where it stood in mid-March. But on an industry basis, there have been some large moves.  Compared to midway through last month (red dashes in the chart below), the Pharma, Biotech, and Life Sciences industry saw short interest build by the most rising 0.68 percentage points. Of the other industries, there were eight that also saw higher short interest than the prior report. Conversely, the Telecom Services industry saw short interest fall the most of any sector dropping 0.46 percentage points between reports. While the moves between the most recent and the prior report were not very large, across the board, just about every industry has significantly lower average short interest levels now than at the start of the year (green dashes).  That is especially the case for Retailing which has seen average short interest fall by 4.89 percentage points.

Earlier in the year, short interest appeared to be a key driver of performance. During the GameStop (GME) saga, the most heavily shorted stocks were some of the best performers. Fortunately for short-sellers, over the past month, the opposite has been the case.  The stocks that had the highest short interest as a percent of float at the end of March have averaged a decline of 10.99% over the past month.  Comparatively, stocks with low short interest have fared much better albeit still lower on average.

We would also note that while every decile based on short interest has averaged a decline over the past month, the Russell 3,000 has actually pushed to new highs.  That is because the largest stocks by market cap have been driving the capitalization-weighted index higher.

In fact, one other notable theme of performance recently has been market cap.  The deciles of the largest stocks (deciles 9 and 10) are the only ones whose stocks have averaged a move higher over the past month.  On the other hand, the other deciles have averaged declines with the severity of those declines getting worse with smaller market caps.

In the table below, we show the 30 most heavily shorted stocks in the Russell 3,000 at the end of March.  Health Care stocks, namely those of the Pharma, Biotech, and Life Sciences industry, dominate this list. That includes IGM Biosciences (IGMS) which is the most heavily shorted stock with 44.8% of shares shorted.  Of the other top 30 most shorted stocks, 25 have at least a quarter of their shares sold short.   Some of these like Academy Sports & Outdoors (ASO) and Gogo (GOGO) have that high short interest in spite of big declines in short interest recently. Others like IGMS as well as Discovery (DISCA), Frequency Therapeutics (FREQ), and Rackspace Technology (RXT) have seen short interest rise considerably.

In fact, those names are the stocks in the Russell 3,000 that have seen short interest rise the most versus the last report.  RXT, IGMS, FREQ, as well as SeaChange International (SEAC) and iTeos Therapeutics (ITOS) have all seen short interest rise by double-digit percentage points. There is an even larger number of stocks that have seen short interest fall double-digit percentage points, though, with Sumo Logic (SUMO) having seen the biggest decline falling 32.07 percentage points.  Lastly, while the majority of stocks with high short interest or big increases/decreases in short interest are smaller in size, two standouts are Discovery (DISCA) and Rocket (RKT) with market caps of $26.57 billion and $45.6 billion, respectively.    Click here to view Bespoke’s premium membership options for our best research available.

While the surge in oil prices today will likely have some impact on gas prices in the days ahead, recent trends in prices at the pump have really done an about-face.  After a record YTD surge that took prices as high as $2.88 per gallon as of March 19th, the national average price of a gallon of gas has dropped to $2.86 according to AAA.  A two-cent decline in the price of a gallon of gas may not sound like much, but for this time of year, it’s extremely uncommon for prices to decline.  Since 2005, prices have only declined in the period from 3/19 through 4/14 three times in 16 years.

To further illustrate, the chart below compares the change in average gas prices this year to a composite of every year since 2005.  While it’s typical for gas prices to rise at this time of year, the surge we have seen in 2021 has been much larger than average.  However, whereas prices typically continue to rise right up through late May, this year’s increase in prices stalled out nearly a month ago.

Even after this modest pullback, though, prices are still high relative to history for this time of year on both an absolute basis and in terms of their YTD change.  At an average of $2.86 per gallon, prices haven’t been this high at this time of year since 2014 and are two cents above the historical average for 4/14.  Similarly, the YTD increase of 27.0% in prices is more than twice the historical average at this time of year.

On a y/y basis, prices have also seen a major surge. At current levels, the national average price of a gallon of gas is up over 55% in the last year, and if prices simply stay at their current levels between now and the end of April, the y/y change would top out at 61.9%.  While still slightly less than a record y/y change, it would still be pretty darn close. Start a two-week free trial to Bespoke Institutional to access all of our analysis and market commentary.

Last night in The Closer we reviewed the BLS report on March CPI reported yesterday, including a couple of interesting long-term sources of inflation that have decelerated dramatically of late.

Two categories have long been a source of angst for consumers and policymakers for their persistent gains: medical care goods and tuition/child care. Prior to the last couple of years, it was extremely unusual for the prices of medical care goods to drop more than 1% or so below their prior record high.  Instead, we saw slow and persistent price gains. Since COVID hit, though, prices have plunged by a record of more than 3% from their highs. The drivers are two-fold. First, after huge price gains relative to overall inflation for most of their history, prescription drug prices, which account for the largest weighting in the sector, have barely budged over the last couple of years.

The second factor behind the decline has been what is likely to be a temporary sharp drop in medical equipment and supply prices.

Turning to tuition, the steady above-headline growth of the cost of school has been a permanent feature of American life for decades, but that has started to shift. Tuition and childcare prices were actually negative year-over-year at one point in 2020, and demographics mean that the student cohorts are gradually getting smaller; college inflation may be starting to leave the picture after years of consistent pressure. Start a two-week free trial to Bespoke Institutional to access all of our analysis and market commentary.

On the same day that Coinbase (COIN) is set to IPO, Bitcoin traded above $64,000 for the first time ever.  The leader in the cryptocurrency space has gone on a massive run over just the past few months having more than doubled just year to date.  Over the past year, bitcoin is up well over 800%.

Those eye-popping returns in a relatively short span of time may seem like a bit of déjà vu from only a few years ago, but we would note that the comparison does not quite stack up. For starters, while Bitcoin has been a nine-bagger over the past year, the rate of change was much gaudier back in late 2017 when it rose upwards of 2,400% year over year by the time of its high around $19,000.

In the chart below we show the performance of Bitcoin in the year leading up to the December 2017 peak versus the run over the past year. Both runs are extremely impressive and at times have tracked each other fairly well, but there is one distinguishing difference.  In weeks leading up to the prior peak in 2017, Bitcoin went into orbit gaining over 240% from mid-October to the December high. By comparison, Bitcoin is up only around 30% from mid-February through today.

In addition to the move having been smaller recently, Bitcoin also appears to have seen interest fall off. As shown below, Google Trends data showing searches for “Bitcoin” peaked in late 2017 at the height of the crypto craze as people rushed to learn about the asset. Search interest has been mostly muted since then, but it did pick up within the past several months.  Bitcoin is on the tips of more tongues today especially given the direct listing of Coinbase (COIN), but Google searches for the crypto are still well below the highs from a few years ago and are even well below the more recent peak from the start of this year. In other words, from a sentiment perspective Bitcoin appears to be less of a frenzy now than it has been in the past. Click here to view Bespoke’s premium membership options for our best research available.