As Covid case counts were rising in the South and Southwest earlier this month, Consumer Confidence took a hit in July as the Conference Board’s Index of Consumer Confidence dropped from 98.3 down to 92.6, which was below the consensus forecast of 95.0.  While many economic indicators have seen significant bouncebacks in recent weeks, Consumer Confidence hasn’t been one of them.  However, if the recent declines in case counts among many of the problem states continue to recede that could provide a boost to sentiment in August.

Underneath the surface, this month’s report was mixed.  While the Expectations component dipped along with the headline inline, the reading on current conditions saw a modest increase.

Due to the diverging paths of the Expectations and Present Situations indices, the spread between the two actually moved back into positive territory.  This is notable in that normally once the spread turns meaningfully negative, it takes months for it to bounce back to positive levels.

The last item we wanted to highlight is the index of Jobs Plentiful. In July this reading bounced to 21.3 from 20.5. Two things to note with this index concern the recent low reading and the current level.  Regarding the recent trough of 16.5, if that low holds, it would be the highest trough for the indicator during and coming out of a recession since the mid-1960s.  In terms of the current level, we would note that back in the early 2000s we saw a similar bounce before the index started to roll over again.  Based on July’s pullback in the overall headline reading, a rollover in this index next month (like the one in 2002) wouldn’t be a welcome development. Click here to view Bespoke’s premium membership options for our best research available.

The final regional Fed manufacturing index of the month came out today from the Richmond Fed.  The headline index continued to improve rising 10 points in July indicating the first expansion in the region since March and the highest reading for the index since January.

Along with the headline index, just about every sub-index posted expansionary readings. Shipments, Capacity Utilization, and Availability of Skills are in the upper decile of historical readings. When it comes to the indices for future expectations. even more categories are around some of their highest readings on record. For example, the indices for future conditions for Shipments, New Orders, Order Backlogs, Capacity Utilization, Vendor Lead Times, Local Business Conditions, and Number of Employees are all in the 90th percentile or better.

The only areas that remain on the weak side for both present and future conditions are for expenditures.  For current conditions, Capital Expenditures, Equipment & Software Expenditures, and Services Expenditure are all at the low end of historical readings with little improvement in July. Additionally, a greater share of companies continue to report decreases than increases in their workforce as the index for the Number of Employees remained below zero for a fifth consecutive month. Altogether, this points to a generally improved backdrop for mid-Atlantic manufacturing businesses, though they remain hesitant to invest back into and expand their businesses.

Even though the manufacturing sector has staged a massive turnaround, the same cannot be said for the services sector.  Service sector businesses did report Local Business Conditions improved in July, but Demand, Revenues, Expenditures, and employment all remain in contraction.  Expectations are more optimistic, but there were some large declines this month, namely in the expectations indices for Revenues, Demands, and Local Business Conditions. Click here to view Bespoke’s premium membership options for our best research available.

Throughout the pandemic, we have frequently highlighted how Google searches for things like boats, camping, gardening, and many other outdoor activities have been sharply on the rise.  Consumer shifts towards outdoor recreational activities from sea to shore have been the benefit of many names. Below we show just over two dozen stocks that are in some form related to things like recreational vehicles, camping, sporting goods retailing, boating, golf, gardening, and the likes.  As shown, while they had fallen by nearly 50% during the bear market, off the lows they have surged.  21 of these names have risen by at least 100% and their average gain since 3/23 is more than 200%.  We find it fascinating how much these stocks got “thrown out with the bathwater” in the initial stages of the pandemic.  With an average decline of 48% during the 2/19-3/23 bear market, investors certainly were not thinking about a big shift towards socially-distanced outdoor activities at the time.

Given the runs they’ve had, they’re generally very elevated.  On average, these stocks are 23.81% above their 50-DMAs and 52.9% above their 200-DMAs. Granted, there is a sizeable range in regards to distance from the moving averages.  For example, Winnebago (WGO) is less than 1% from its 50-DMA while Big 5 Sporting Goods (BGFV) is over 90% above its 50-DMA.  The same goes for the 200-DMA   Camping World (CWH), which we highlighted in a post yesterday, is almost 150% above its 200-DMA while Columbia Sportswear (COLM) is actually under its 200-DMA; the only of these stocks that this applies to.

Given the elevated price levels and massive runs, short interest has built up for several of these names.  Hibbett Sports (HIBB) is the worst of these with 34.57% of float sort.  Camping World (CWH), OneWater Marine (ONEW), and Dick’s Sporting Goods (DKS) also all have readings above 20%. By comparison, the average stock in the S&P 1500 has 6% of float short.

Below, we show all of the charts of these names over the past year and five years. The huge rallies over the past few months are glaring, especially since many of these stocks have been in long term downtrends headed into the COVID pandemic. The strong returns over the past few months have obliterated those downtrends. For others like TSCO, YETI, PII, and MBUU, the longer-term trends have been stronger with uptrends or breakouts of some sideways price action. In the case of PII, an earnings triple play today resulted in the breakout to the upside to a 52-week high. We have created a custom portfolio of all these names to keep track of them in the Trend Analyzer and Chart Scanner tools.

Bespoke co-founder Paul Hickey appeared on CNBC’s Closing Bell yesterday to discuss the current state of the markets and company performance based on international exposure.  To view the segment, click on the link or image below. Click here to view Bespoke’s premium membership options for our best research available.

Company Performance Based on International Exposure

The Renaissance IPO ETF (IPO) tracks several of the past couple of years’ major initial public offerings.  The current class of IPOs that find themselves as a holding of the ETF include many COVID economy stocks that have gone on huge runs like Zoom Video (ZM), Moderna (MRNA), and Slack (WRK) as well as high flying electric vehicle names like NIO (NIO). As shown in the second chart below, that resulted in massive outperformance relative to the S&P 500 (SPY). But more recently, that has lost its footing.  On July 13th, IPO saw a sizeable gap up but sold off sharply intraday for an outside day reversal lower.  In the days since then, it has put in a lower high and lower low. Additionally, it has broken its uptrend line off of its March lows in the past few days. While that broken uptrend is a negative with regards to the technicals, some mean reversion should be welcome. On Friday, IPO came within 2.2% of its 50-DMA which is the closest it had come since April 22nd. Across all days since it first crossed its 50-DMA back in April, IPO has traded on average 14.3% above its 50-DMA.  Click here to view Bespoke’s premium membership options for our best research available.