Bespoke’s Morning Lineup – 12/17/20 – Let the Countdown Begin
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 free trial to Bespoke Premium. CLICK HERE to learn more and start your free trial.
“An end is only a beginning in disguise.” – Craig D. Lounsbrough
Futures are indicated higher this morning as European equities rally on a plan for a rollout of the COVID vaccine in that region. French President Macron announced that he will be self-isolating due to a positive test for COVID, and as a result, several other EU leaders announced plans to self-isolate after coming into contact with Macron in recent days.
Just-released economic data was mixed with Housing Starts and Building Permits topping expectations, Philly Fed missing forecasts, Initial Jobless Claims higher than expected while Continuing Claims were lower than expected.
Be sure to check out today’s Morning Lineup for updates on the latest market news and events, a recap of economic data out of Asia and Europe, an update on the latest national and international COVID trends, and much more.
In what to many seems like the year that would never end, just ten trading days remain in 2020. We’ve mentioned in the past how the month of December has typically been back-end loaded, and that is also evident in a look at the S&P 500’s performance during the last ten trading days of the year. Going back to 1945, the last ten trading days have experienced a median gain of 0.93% with positive returns 73% of the time. Performance in the last ten years has been similar with a median gain of 1.04% and gains 70% of the time.
The Bespoke 50 Top Growth Stocks — 12/17/20
Every Thursday, Bespoke publishes its “Bespoke 50” list of top growth stocks in the Russell 3,000. Our “Bespoke 50” portfolio is made up of the 50 stocks that fit a proprietary growth screen that we created a number of years ago. Since inception in early 2012, the “Bespoke 50” is up 395.6% excluding dividends, commissions, or fees. Over the same period, the S&P 500 is up in price by 168.8%. Always remember, though, that past performance is no guarantee of future returns. To view our “Bespoke 50” list of top growth stocks, please start a two-week free trial to either Bespoke Premium or Bespoke Institutional.
Daily Sector Snapshot — 12/16/20
Chart of the Day: Dow’s Dogs Underperform
Homebuilder Sentiment Unfazed
In every month from August through November, NAHB’s reading on homebuilder sentiment came in at record highs. That streak was bound to come to an end eventually, and it happened this month. The December reading released today was expected to decline from a record of 90 down to 88. Instead, the drop was even larger as the index fell to 86. Although lower, that is still the second-highest reading on record dating back to 1985.
Each of the sub-indices were also lower this month with the declines in the bottom decile of all monthly moves, though again, the indices remain at historically strong levels in the top 1% of all readings. For the sub-index that tracks present sales, just like the headline number, the four-point decline in December hasn’t done much damage as it was also still the second-highest reading on record. The indices for future sales and traffic likewise fell an identical four points. For future sales, the decline only brings it back to where it stood in September and the index for Traffic is at the lowest level since August. Those are the third and fourth highest readings on record, respectively.
The picture also remains strong based on regions in spite of broad declines. While every region experienced a decline, the West’s was the smallest. Additionally, the index for the West is the highest of the four regions. The Northeast, on the other hand, has the lowest reading for sentiment, though, it too is in the top 2% of all readings.
Elsewhere in housing data today, the MBA’s weekly mortgage application data showed another uptick in purchase applications. Purchase apps rose 1.8% week over week, and while still off the highs from the last week of November, purchases are running at the strongest level in over a decade.
Even though this data remains broadly strong, homebuilder stocks have not been reflecting it. As shown below, the S&P 1500 Homebuilders group has yet to take out its October 15th high, currently trading 11.51% below that level. Since that high, the index has also fallen below its 50-DMA with multiple failed attempts to move back above. In fact, of the 43 trading days since that high, the group has closed below its 50-DMA on all but 10 days. While that paints a somewhat negative technical picture, on the bright side, the group has yet to make a lower low. Click here to view Bespoke’s premium membership options for our best research available.
Bespoke CNBC Appearance (12/14)
Bespoke co-founder Paul Hickey appeared on CNBC’s Closing Bell yesterday on Monday to discuss the market outlook in a post-vaccine world. To view the segment, click on the image below.
B.I.G. Tips – Wretched Retail Sales
If Congress was looking for any evidence that additional relief for Americans was needed, the November Retail Sales report should provide some ammunition. At the headline level, Retail Sales fell 1.1%, which was nearly four times the decline of consensus forecasts. Stripping out Autos and Gas, the numbers were just as bad. As if that wasn’t enough, October’s report was also revised significantly lower dropping from a gain of 0.3% at the headline level to a decline of 0.1%. Adding it all together, Retail Sales for November were 1.5% lower than what was originally reported in October’s report.
Breadth in this month’s report was also weak. Of the thirteen sectors that comprise the total pie, all but three of them were lower on the month. If you were expecting a new sweater this Christmas, don’t hold your breath as sales of Clothing were down close to 7%. Other big decliners included Bars & Restaurants (-3.99%) and Electronics & Appliances (-3.49%). With more cities imposing restrictions on activity, sales at Gas Stations also declined 2.41%. Were it not for the historic declines we saw earlier this year, drops of this magnitude would be considered pretty steep, but after the COVID shutdowns, nothing is a surprise anymore. Not every aspect of the Retail Sales report was weak, though. Bright spots included Food & Beverage Stores, Building Materials, and Online– all sectors you would expect to see hold up well as Americans hunker down.
The characteristics behind the total level of sales have changed markedly in the post-COVID world. In our just-released B.I.G. Tips report, we looked at these changing dynamics to highlight the groups that have been the biggest winners and losers from the shifts. For anyone with more than a passing interest in how the COVID outbreak is impacting the economy, our monthly update on retail sales is a must-read. To see the report, sign up for a monthly Bespoke Premium membership now!
Bespoke’s Morning Lineup – 12/16/20 – Big-Coin
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 free trial to Bespoke Premium. CLICK HERE to learn more and start your free trial.
“Buying’s easier, selling’s hard – [it’s] hard to know when to get out.” – Seth Klarman
On a day when the FOMC is scheduled to announce a decision on interest rate policy and Congress is attempting to hammer out a stimulus bill, the latest data on Retail Sales is providing ammunition on the part of policymakers to go big. Retail Sales for the month of November were weak on all counts both relative to expectations and on an absolute basis. The headline index, for example, was expected to decline by 0.3% but actually saw a much larger decline, falling 1.1%. Later today, we’ll also get updates to Markit’s Manufacturing and Services Indices, Business Inventories, and Homebuilder Sentiment for the month of December.
Be sure to check out today’s Morning Lineup for updates on the latest market news and events, a recap of economic data out of Europe, an update on the latest national and international COVID trends, and much more.
Along with just about every other asset priced in dollars, the price of bitcoin has been on the rebound in recent days, and in early trading today, prices are back above $20,000 to record highs. Again, as we discussed a couple of weeks ago when bitcoin was taking out its highs from late 2017, the latest run to $20,000 hasn’t been accompanied by nearly the amount of hype as there was back in 2017. All those people must be too busy focusing on SPACs.
Daily Sector Snapshot — 12/15/20
VIX Run Above 20 Tops 200 Days
With today’s close, the VIX has now stuck above 20 for 207 trading days and counting. That marks the fourth-longest streak since the inception of the volatility index, and is approaching the late-1990s and early-2000s record runs. The index was above 20 for 239 trading days through the end of June 1999, and 236 trading days through May 8th, 2003. Of course, from 2008 to December 21st of 2009, the VIX was over 20 for 331 trading days (more than a year).
Surprisingly, the current VIX streak has had an average reading higher than the two longer streaks in 1999 and 2003. The average 32.0 reading over its course so far is second only to the streak recorded over the global financial crisis. It’s also interesting to note that at this stage in the streak (207 trading days), the current run has a higher reading than the three streaks which actually lasted longer.
