Apr 11, 2022
The S&P 500 has fallen in four of the past five sessions continuing to pull back from its lower high, but surprisingly, the net percentage of the index hitting new 52-week highs actually saw one of the strongest readings of the year on Friday as we show in the chart from our Sector Snapshot below. To cap off last week, a net 11% of S&P 500 stocks were at new 52-week highs; the highest reading since January 5th which was only a couple of days after the index’s last all-time high. Typically, we look at net new highs as a way to confirm moves in the broader market. In other words, it is viewed as better to see a larger number of stocks trading at new highs versus new lows. While net new highs are so far lower today, Fridays’ double-digit positive reading was unusually high for a down day. Historically going back to 1990, the average net new high reading when the S&P 500 has been lower on the day has only been 1.6%. It was even a strong reading compared to the average for up days (4.77%) as well.
As for how new highs have held up relatively well as the broader market has pulled back, defensive sectors—Consumer Staples, Health Care, Utilities, and Real Estate—are almost entirely the ones to thank. To illustrate this, below we show the daily percentage of S&P 500 stocks hitting new highs that are from one of the four defensive sectors just mentioned. There is plenty of precedent in the past several years for these four sectors to account for all of a day’s new highs including several days in late January and early February. At the high last Wednesday, over 90% of S&P 500’s new highs came from defensive sectors. On a 50-DMA basis, this reading is now at the highest level since the spring of 2020.
In other words, defensives have been a notable pocket of strength recently. As for just how large of a run they have been on, in the charts below we show the rolling one month change of these sectors going back to 1990 (2001 for Real Estate). While the rates of change have peaked, Health Care and Utilities are up double digits in the past month while Consumer Staples and Real Estate have risen high single-digit percentage points. For all sectors except for Real Estate, those rallies rank in the top 3% of all monthly moves since 1990 and Real Estates is still in the top decile of all monthly moves going back to 2001. Click here to view Bespoke’s premium membership options.
Apr 10, 2022
Welcome to Bespoke Brunch Reads — a linkfest of the favorite things we read over the past week. The links are mostly market related, but there are some other interesting subjects covered as well. We hope you enjoy the food for thought as a supplement to the research we provide you during the week.
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The Masters
Augusta family next to Masters golf course keeps turning down millions for their 1,900-square-foot house by Cork Gaines (Insider)
The crowds at Augusta National often walk past the Thacker family abode at 1112 Stanley Drive, just across the street from Gate 6A. The Thackers have repeatedly turned down millions for the property. [Link]
Masters 2022: Anything but the green jacket — tales from player shopping sprees by Josh Weinfuss (ESPN)
What’s the point in attending the most exclusive golf tournament in the world if you don’t bring home some swag to prove you were there? [Link]
China
China’s $2.3 Trillion Infrastructure Plan Puts America’s to Shame by Tom Hancock (Bloomberg)
The already investment-intensive Chinese economy is going to plough another $2.3trn into infrastructure to offset slowing property markets and an economy wracked by COVID, high debt, and weak consumer spending. [Link; soft paywall]
Shunned Oil Piling Up Off China as Virus Outbreak Worsens (Bloomberg)
Amidst extreme oil shortages around the global economy, more than 20 million barrels of crude from Russia, Iran, and Venezuela are sitting offshore in China as domestic demand collapses thanks to interventions seeking to contain the spread of COVID. [Link; soft paywall]
Inflation
Shoppers Face ‘Shrinkflation’ at the Supermarket by Donna Fuscaldo (AARP)
In addition to raising the price of goods, companies are also reducing the size of packaged goods without changing the price. This shows up in official inflation measures (because they are adjusted for the weight or volume of a given item) but may sneak up on consumers at the store. [Link]
Inflation fears force Americans to rethink financial choices, CNBC and Acorns survey says by Michelle Fox (CNBC)
A somewhat hard-to-believe 48% of Americans report thinking about rising prices “all the time”. More than half of respondents to a recent survey reported cutting back on dining out, the most common response to inflation reported. Though that’s also tough to square with restaurant spending at a record level in February per BEA data. [Link]
New York
NYC’s Priciest Seafood Spots Skyrocket Further Into the $1,000 Stratosphere by Ryan Sutton (Eater)
Won’t someone think of the Nobu patrons? A dinner for two at Sushi Noz now costs $1k, amidst a wave of higher prices around the highest-end meals in New York City. [Link]
The world’s skinniest skyscraper is ready for its first residents by Lydia Armstrong (CNN)
The Steinway Tower at 111 West 57th is 24x as tall as it is wide, making it the third-tallest building in New York but at 84 stories it will be the most slender tower in the world. [Link]
NYC landlords filing so many eviction cases that firms for low-income tenants have run out of lawyers by Molly Crane-Newman (New York Daily News)
More than 10,000 eviction proceedings were filed in New York during the last two months, on top of more than 200,000 suits filed during the pandemic; there are so many suits that there aren’t enough lawyers to represent all the tenants. [Link; auto-playing video]
Social Studies
U.S. life expectancy falls for 2nd year in a row by Rob Stein (NPR)
Despite the country moving on from the pandemic, thousands of Americans are still dying of COVID, and provisional statistics showed that drove down life expectancy for the second consecutive year in 2021. [Link]
America’s internet is splitting along party lines by Sara Fischer and Scott Rosenberg (Axios)
Investors are betting on durable partisan splits in media consumption, as media consumers gravitate towards similar viewpoints at siloed sites. [Link]
The Workplace
This Is What Happens When There Are Too Many Meetings by Derek Thompson (The Atlantic)
White collar workers are increasingly finding productivity late into the night, with workers increasingly returning to tasks after dinner and before the end of the night. [Link; soft paywall]
“Great Resignations” Are Common During Fast Recoveries by Bart Hobijn (FRBSF)
Fast labor market recoveries generally lead to elevated job turnover, making the much-heralded “great resignation” of the current post-COVID jobs boom wholly unremarkable. [Link]
Bearish Bets
If Stocks Don’t Fall, the Fed Needs to Force Them by Bill Dudley (Bloomberg)
An argument that for the economy to slow as desired by the Federal Reserve, even more shock therapy is needed in the form tighter financial conditions. [Link; soft paywall, auto-playing video]
Crypto
The Metaverse Has Bosses Too. Meet the ‘Managers’ of Axie Infinity by Edward Ongweso Jr (Vice)
A dystopian vision of a crypto-fueled gaming future that outsources the hard work of collecting in-game rewards to workers in the Global South and exposes anybody playing to wild variations in market prices which have nothing to do with underlying game. [Link]
Conspicuous Consumption
The Real Yacht Rock: Inside the Lavish, Top-Secret World of Private Gigs by David Browne (Rolling Stone)
Some of the biggest paydays in music come from private bashes for the world’s wealthy: millions for a single quick show performed to a small private audience. [Link]
Drones
Amazon, Alphabet and Others Are Quietly Rolling Out Drone Delivery Across America by Christopher Mims (WSJ)
Consumers are starting to get deliveries from drones after years of promises that they are right around the corner. Air dropped packages, quadcopter deliveries, and rapid Prime from the sky are all part of the landscape. [Link; paywall]
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Have a great weekend!
Apr 8, 2022
This week’s Bespoke Report newsletter is now available for members.
The US equity market is facing big valuation headwinds from rapid shifts in expectations for Federal Reserve policy near-term and a market view that rates will be higher in the long term. With yields surging, the market has relied on ever-higher earnings estimates to stay afloat as we approach Q1 earnings. High earnings estimates make this season a unique risk for the market as the post-COVID bonanza in beats trails off. Foreign central banks are also getting in on the game as interest rates surge into positive territory in the Eurozone. We discuss French elections with the first round of voting this Sunday, as well as touching on policy in Russia and China. Global trade frictions appear to be easing, and used auto prices have started to fall, both of which offer a sunnier picture for inflation. We also look at earnings Triple Plays, credit markets, the strong dollar, the outlook for the Fed’s balance sheet, oil markets, big NASDAQ drops, equity market dividend yields, recession probabilities, and more in this week’s Bespoke Report.
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Apr 7, 2022
After peaking at 32.8% two weeks ago, bullish sentiment continues to roll over as the S&P 500 has erased some of the March gains this week. After this week’s decline of 7.2 percentage points in bullish sentiment, less than a quarter of respondents reported as bullish. While low, that is still a few percentage points above the weaker levels from February.
Bearish sentiment in turn rose 13.9 percentage points which was the biggest one-week uptick since August 2019 when it rose 24.14 percentage points. At 41.4%, bearish sentiment is now at the highest level since the week of March 17th. That is an elevated reading and a big move week over week, but it is also well off recent highs from the past few months that were more than 10 percentage points higher.
The bull-bear spread tipped into positive territory for the first time in 2022 last week, but the big inverse moves between bulls and bears erased much of the past few weeks’ move. The spread is down to -16.7 which is still 13.6 points above the late February low of -30.3.
The big pickup in the number of respondents reporting as bearish didn’t entirely come from the bullish camp. Neutral sentiment also shed a significant amount falling from 40.6% last week to 33.9%. That is essentially mean reversion as neutral sentiment now sits only a couple of points above the historical average. Click here to view Bespoke’s premium membership options.
Apr 6, 2022
Log-in here if you’re a member with access to the Closer.
Looking for deeper insight into markets? In tonight’s Closer sent to Bespoke Institutional clients, we begin with a summary of the minutes from the March FOMC meeting. We follow up with a note on balance sheet runoff and the market’s reaction to today’s release of the minutes. We then recap some data South and North of the border in the form of Mexican vehicle production and the record Ivey PMI in Canada. We close out with a recap of this week’s petroleum stockpile data from the EIA.
If you’re wondering what the Closer is like each day, click here or on the thumbnail image below for a sample of a few pages from the report.
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