Bespoke’s Morning Lineup – 5/18/22 – Retail Wreck

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.

“Inflation is a form of tax, a tax that we all collectively must pay.” – Henry Hazlitt

Morning stock market summary

Below is a snippet of content from today’s Morning Lineup for Bespoke Premium members.  Start a two-week trial to Bespoke Premium now to access the full report.

This week the tax of inflation is being felt most by retailers as two of the nation’s largest retailers have gotten absolutely destroyed in the last two days. Futures are indicated lower this morning, but one could make the case, given the plunge in Target (TGT) shares this morning, that it could even be worse. Oil prices are also trading up close to 2%, the ten-year yield is back up to 3%, and the dollar is trading lower.

On the economic front, we’re about to get the latest updates on Housing Starts and Building Permits for April, but if mortgage data is any indication, the data isn’t likely to be very strong.

In today’s Morning Lineup, we recap the continued developments in retail earnings (pg 4), market action in Asia and Europe (pg 4), economic data in Asia and Europe (pg 5), and a lot more.

If you thought yesterday’s 11% pounding of Walmart (WMT) was bad, meet Target (TGT). After reporting significantly weaker than expected earnings on better than expected revenues, shares are trading down more than 20% in the pre-market. The company blamed ‘unexpectedly high costs’ that it faced throughout the quarter for the earnings miss, and didn’t provide much additional detail in its release.  Investors aren’t waiting for further clarity, though. With margins falling more than 400 basis points (bps), the stock is trading down more than 20% in the pre-market and is easily on pace for not only its worst earnings reaction day in at least 20 years, but also its worst one-day drop since the 1987 crash.

Yesterday, WMT had its largest one-day decline since the 1987 crash and now TGT is on pace to do the same!  The experiences of both companies further reinforce the point that we are operating in one of the most complicated macro environments that any company or investor has had to deal with.  Few companies are so entwined into so many aspects of the US economy as WMT and TGT, and their logistics and supply chain operations rival or exceed those of most other companies.  If they’re having these types of issues keeping up with the rapidly changing environment, who isn’t?

Target (TGT) Daily Performance

Walmart (WMT) Daily Performance

Start a two-week trial to Bespoke Premium to read today’s full Morning Lineup.

Bespoke’s Morning Lineup – 4/6/22 – Hard Time to be a “Vampire”

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.

“Bond investors are the vampires of the investment world. They love decay, recession – anything that leads to low inflation and the protection of the real value of their loans.” – Bill Gross

It’s looking like it’s going to be one of those days.  Futures were just modestly negative overnight but then started to really weaken as Europe opened for trading and things haven’t stabilized since.  The S&P 500 faces losses of around 1% at the open with the Nasdaq down over 1.5%.  If equities were looking to rally coming into the week, yesterday’s Fed commentary put at least a temporary stop to that. Interest rates are higher across the curve and the 2s10s yield curve has steepened well out of inverted territory, but that comes along with yields on the 10-year above 2.6% to its highest level in just over three years.

The economic calendar is light today as weekly mortgage applications were the only release, and they fell 6.3% following a 6.8% last week and an 8.1% decline the week before that.  Besides that, Energy inventories will be released at 10:30 and the Minutes from March’s FOMC meeting will be released at 2 PM.  Philly Fed President Harker and Richmond Fed President Barkin will also be speaking this morning.

Read today’s Morning Lineup for a recap of all the major market news and events from around the world, including the latest US and international COVID trends.

For bond investors, these days are tough indeed.  With inflation rampant around the world and central banks finally putting the brakes on the gravy train of liquidity, the increase in interest rates has been relentless with bond prices seeing some of their largest declines in years.  A case in point is the iShares 20+ Year US Treasury Bond ETF (TLT).  It’s already down 13% YTD and indicated to open lower today by another 1%.  The chart below shows historical drawdowns from record closing highs in TLT since its inception in late 2002.  Based on where the ETF is trading this morning, it has now declined 26% from its last record closing high back in early August 2020.  Throughout its history, there have only been a handful of other periods where TLT ever experienced a peak to trough decline of more than 20%, and the only other time it dropped more was coming out of the Financial Crisis.

Start a two-week trial to Bespoke Premium to read today’s full Morning Lineup.

Bespoke’s Morning Lineup – 4/4/22 – Elon Flips the Bird

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.

“Given that Twitter serves as the de facto public town square, failing to adhere to free speech principles fundamentally undermines democracy.” – Elon Musk

Heading into today, it was looking like a quiet start to what was looking like a slow week as the economic calendar is light and earnings season doesn’t kick off for at least another week.  That changed a bit following news that Elon Musk had taken a passive 9.2% stake in Twitter (TWTR) pushing the stock up by more than 25% in pre-market trading to its highest level since late November.  Last week on Twitter, Musk made the statement at the top of this note and then followed up with the question, “What should be done?”  Well, this morning we appear to be getting an answer. Twitter has long been criticized for not realizing its full potential, and TWTR shareholders are hoping Musk can move the company in that direction.

Read today’s Morning Lineup for a recap of all the major market news and events from around the world, including the latest US and international COVID trends.

With the stock poised to open up more than 20% this morning, it will be just the fourth time in its history as a public company in 2013 that TWTR has gapped up more than 20%.  Two of those days were in reaction to earnings (July 2014 and February 2018), and then on the day of its IPO in November 2013.  Today, it’s all Elon.

Start a two-week trial to Bespoke Premium to read today’s full Morning Lineup.