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 trial to Bespoke Premium.  CLICK HERE to learn more and start your trial.

“If you fail to prepare, you’re prepared to fail.” – Mark Spitz

Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.  

Equity futures are skewed to the upside as yields rise, but a weaker-than-expected ADP Employment report at 8:15 has put a modest damper on the tone in equities. The 8:30 batch of data showed that Unit Labor Costs were weaker than expected, while Non-Farm Productivity came in better than expected. Jobless claims were mixed, with initial claims rising slightly while continuing claims saw a modest decline.

In Asia, most equity indices in the region were higher, with Japan leading the way (+1.5%), but China bucked the trend and traded lower on reports that the government is considering restrictions on stock trading to reduce speculation. European equities are also higher this morning, with France being the exception, following a sharp decline in shares of Sanofi.

As concerns over an uptick in inflation continue to simmer (even as employment slows), raising questions about how much the Fed will realistically be able to cut rates, the yield on the 10-year US Treasury doesn’t seem overly worried. Since peaking early in the year at just over 4.8%, yields have been steadily trending lower with a series of lower highs since Spring. During this period, there has been a floor at the 4.20% level, but this morning that level is being tested again as the yield briefly moved below 4.2%.

The drop in yields has also occurred against a backdrop of chatter over whether global investors were looking to exit US assets. In global fixed income markets, that doesn’t appear to be the case. While the 10-year yield has declined 37 basis points (bps) YTD, the sovereign 10-year yield of every other G7 country has increased anywhere from 5 bps in Italy to 51 bps in Japan.

In global equity markets, US exceptionalism hasn’t been as evident. While the S&P 500 is up 9.6% YTD, the benchmark equity index of every other G7 country is up by a larger amount. Japan is the closest in terms of performance to the US (+13.1%) while Italy and Germany are both up over 30%!

While US equities entered September right near all-time highs with healthy gains for the year, investor sentiment remains skeptical. The latest sentiment survey from the American Association of Individual Investors (AAII) showed a decline in bullish sentiment to 32.7% while bearish sentiment increased to 43.4%. The results pushed the bull-bear spread further into negative territory, marking the fifth straight week that bears outnumbered bulls in what has been a relatively consistent trend of negative sentiment this year.

The chart below shows the percentage of weeks by year when the weekly AAII survey had a positive bull-bear spread. So far this year, the spread has been positive just 28% of the time, which stands in stark contrast to last year, when the bull-bear spread was positive 96% of the time, tied only with 1995 for the most ever in a year. If the current pace of negative readings continues, it will be just the fourth year that the bull-bear spread was positive less than 30% of the time, with the only other years being 1990, 2008, and 2022.  It’s understandable to see negative sentiment in bear market/recessionary environments like 1990, 2008, and 2022, but what’s the excuse this year?

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 trial to Bespoke Premium.  CLICK HERE to learn more and start your trial.

“Not only strike while the iron is hot, but make it hot by striking.” – Oliver Cromwell

Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.  

September may have started on a poor footing. Still, after a bounce yesterday afternoon, the positive tone carried over overnight and into this morning, following positive news for Alphabet (GOOGL) and, by extension, Apple (AAPL). Asian stocks were mostly lower overnight, with the Nikkei falling nearly 1% and China falling more than a percent. In Europe, though, there has been broad-based strength with the STOXX 600 trading up over 0.6%. On the economic calendar today, the only reports on the calendar are JOLTS and Factory Orders.

Yesterday was an unsurprising start to September, and the silver lining was that the ‘buy the dip’ mentality of investors that we discussed in Friday’s Bespoke Report remained intact. The S&P 500 sold off sharply early in the session, tested those lows right around midday, and then rallied throughout the session to finish right at the highs for the day. From a short-term perspective, the S&P 500 has now made two higher highs and two higher lows, reinforcing the overall upward trend.

Both the S&P 500 and Nasdaq are priced to continue yesterday afternoon’s bounce this morning, and the key driver is Alphabet (GOOGL) following last night’s ruling that it would not be required to sell its Chrome browser. In response, the stock is on pace to gap up nearly 6%. If these levels hold through the opening bell, it would be the largest upside non-earnings related gap higher since 2008.

With today’s gain, we also wanted to provide an update on the comparison between GOOGL and Microsoft (MSFT) since the launch of ChatGPT. The overall consensus has been that MSFT’s quick action and investments into OpenAI helped it to win the AI race among the hyperscalers, but the market has a different opinion. While MSFT has nearly doubled since the launch of ChatGPT in November 2022, at the open today, GOOGL will be up over 121%. While MSFT has won in the court of public opinion, GOOGL has won in the wallet.