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.
Why Debt is both Interesting and Important by Toby Nangle (Principles And Interest)
Musing on the macroeconomics of household debt; what it is, what it isn’t, why it’s important, and why it’s sometimes talked about in the wrong way. [Link]
Data Analysis Ahead of Theory by Sri Thiruvadanthai (Yeah, But….Thoughts on Economics)
A list of stylized facts about macroeconomics designed to inform the current conversation around reforming the discipline. [Link]
A surge of sites and apps are exhausting your CPU to mine cryptocurrency by Dan Goodin (ArsTechnica)
Brooklyn Bitcoin Mine Causes Static for T-Mobile Users by Todd Shields (Bloomberg)
A custom mining rig in a New York City borough was using so much power and creating so much background radio frequency that it interfered with cell phone frequencies, causing FCC intervention. [Link; auto-playing video]
Coinbase is erratically overcharging some users and emptying their bank accounts by Adrianne Jeffries (The Verge)
In a technical error, Coinbase began emptying bank accounts of some customers to the pointof incurring overdraft fees. [Link]
Next-Generation Crypto-Ledgers Take the Block Out of Blockchain by Olga Kharif (Bloomberg)
An overview of efforts to deploy blockchain technology beyond bitcoin, including payments aggregation and cheaper, faster alternatives to the bitcoin network. [Link; auto-playing video]
What Really Happened on Easter Island? by Catrine Jarman (Sapiens)
One of the most popular cautionary tales about the impact of human beings on the environment bay have been a radical misinterpretation of the history of Easter Island. [Link]
Big History by Blair Reeves (Blair Reeves)
An argument that context is both badly missing and deeply necessary for understanding history properly, especially at very large timescales. [Link]
This Short Seller Pressed ‘Tweet.’ Then the FBI Showed Up by Greg Farrell and Anders Melin (Bloomberg)
Former Bespokecast guest and notable short seller Marc Cohodes made some ill-advised tweets that somehow ended up garnering him a visit from the FBI. [Link]
N.Y. landlord obliterated dozens of graffiti murals. Now he owes the artists $6.75 million. by Samantha Schmidt (WaPo)
Legally painted graffiti on the walls of dilapidated warehouses were covered with white paint in preparation for sales to developers. The result is a landmark judgement in favor of artists whose work was destroyed by the owner of the property. [Link; soft paywall]
Here’s How New Fed Chief Powell Is Changing Things Up by Christopher Condon (Bloomberg)
In an effort to flatten the hierarchical institutional design of the FOMC, Chair Powell is working to get in closer contact with staff economists and researchers. [Link; auto-playing video]
Churches Are Still Filing Bankruptcy by Pamela Foohey (Credit Slips)
While consumer bankruptcies are starting to even out, churches are still in relatively dire financial straits as evidenced by the still-high bankruptcy filings they make. [Link]
The Big Risk in China Isn’t Stocks by Nisha Gopalan (Bloomberg)
With lots of eyes on the size of Chinese credit markets, bank lending, and equity markets, the real risks in the country may be more specific to the real estate market. [Link]
A culprit for financial site glitches: you and your apps by Ross Kerber (Yahoo!/Reuters)
During the height of the equity market pullback last week, retail investors flooded brokerage website to the point they crashed, a possible sign of what made the difference in lower prices: investor behavior. [Link]
Poll: GOP gains on generic ballot, Trump approval ticks upward by Steven Shepard (Politico)
After falling behind Democrats by a historic margin, Republicans have come storming back in the wake of tax reform passage. [Link]
Hockey language divergence between North Korea and South Korea by Victor Mair (Language Log)
In order to play together in the PeoyongChang Olympics, North and South Korean hockey players needed remedial language classes. [Link]
Science and research policy at the end of Moore’s law by Hassan N. Khan, David A. Hounshell and Erica R. H. Fuchs (Nature)
The authors argue that while Moore’s Law is likely to break down as the industry fractures into distinct research paths, progress is likely to continue along discrete paths; possible solutions include public funding of more general research and leadership from outside private industry. [Link]
Too Much Power to the People? A Food Safety Site Tests the Limits by Kevin Roose (NYT)
The internet has unleashed consumers’ voices, but there are drawbacks: false reports, anonymous submissions, and fearmongering are all significant issues. [Link; soft paywall]
America’s Real Digital Divide by Naomi Schaefer Riley (NYT)
Excessive time in front of screens has widely reported drawbacks, and it turns out that children from lower income families are even more exposed to the perils of a digital babysitter. [Link; soft paywall]
The ‘Black Panther’ Movie Deal That Didn’t Get Made by Ben Fritz (WSJ)
Sony’s misguided purchase of rights to Spiderman but intentional pass on the rest of the Marvel universe looks like one of the worst decisions in the history of the movies. [Link; paywall]
The Forecaddie: Nothing quite like Mark Wahlberg’s approach to golf (Golf Week)
Marky-Mark’s entourage for a round: a personal chef with eight daily meals in coolers, a playing partner (CAA agent Rob light), and three caddies. One caddy handles clubs and raking, one shot selection, and a third is there simply to run sprints with Wahlberg between shots. [Link]
Sources: College hoops corruption case poised to take down Hall of Fame coaches, top programs, lottery picks by Pete Thamel (Yahoo!)
Five months ago a federal probe led to 10 arrests of college basketball coaches and other hangers-on. Sources report that the next round (featuring 4000 calls wire tapped as well as thousands of documents and bank records) could splash across 50 programs. [Link; auto-playing video]
St. John’s Is On The Most Unlikely Hot Streak In College Basketball History by Neil Paine (538)
Starting 10-2, losing 11 straight, and then wins over number 4 Duke, number 1 Villanova, and a solid Marquette squad, has meant the biggest turnaround in college basketball history. [Link]
US craft beer slowdown sends hops market from boom to bust by Emiko Terazono (FT)
After hoppy craft beers saw a surge in popularity, hops prices exploded and production surged, but tastes have since started to shift again, leading to a bust. [Link; paywall]
Why I don’t use my real photo when messaging with customers on my website by Julia Enthoven (Kapwing)
A woman using her picture or the picture of another woman saw a dramatic difference in harassment and rude or profane comments from users seeking tech support on her company’s website. Using a male picture or that of the firm’s logo, the harassment stopped. [Link]
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Have a great Sunday!
Here’s a cool table from this week’s Bespoke Report. A little over a week ago, the S&P 500 closed down 10.1% from its all-time record high only nine trading days earlier. That confirmed the first official correction for the index in what seemed like forever. Just like that, though, equities have come roaring back and have now closed higher for six straight trading days heading into this weekend. With that streak, we wondered if the S&P 500 had ever seen a similar six-day winning streak from the closing low of a 10% correction. Looking back at prior corrections, we were surprised to see that there have actually been eight prior periods where the S&P 500 saw a similar streak from a closing low. In this week’s Bespoke Report, we examined each of these periods to see how the S&P 500 performed going forward after the initial six-day gain off of the low.
To see how the market performed following these prior periods, click the button below to start a trial and read our popular Bespoke Report newsletter.
Each weekend as part of our Bespoke Premium and Institutional research service, clients receive our S&P 500 Quick-View Chart Book, which includes one-year price charts of every stock in the S&P 500. You can literally scan through this report in a matter of minutes or hours, but either way, you will come out ahead knowing which stocks, or groups of stocks, are leading and lagging the market. The report is a great resource for both traders and investors alike. Below we show the front page of this week’s report which contains price charts of the major averages and ten major sectors.
Because of the big decline off the January highs, even though most US equities surged this week, there weren’t a whole lot of 52-week highs or lows. What you will see throughout the chart book, however, is a bunch of v-looking formations. Hopefully, they don’t turn in to Ws! Once sector that has seen little in the way of a bounce off the lows is Energy. On a closing basis, the sector is up less than 2% from its recent low.
To view our entire S&P 500 Chart Book, sign up for a 14-day free trial to our Bespoke Premium research service.
Looking for deeper insight on global markets and economics? In tonight’s Closer sent to Bespoke clients, we recap weekly price action in major asset classes, update economic surprise index data for major economies, chart the weekly Commitment of Traders report from the CFTC, and provide our normal nightly update on ETF performance, volume and price movers, and the Bespoke Market Timing Model. This week, we’ve added a section that helps break down momentum in developed market foreign exchange crosses.
The Closer is one of our most popular reports, and you can sign up for a free trial below to see it!
See tonight’s Closer by starting a two-week free trial to Bespoke Institutional now!
In an interview Thursday evening on Bloomberg’s What Did You Miss?, Bespoke’s Macro Strategist George Pearkes talked to Julia Chatterley, Scarlet Fu, and Joe Weisenthal about recent changes in the US fiscal outlook, the impact that will have on inflation, how the Fed is likely to react, and the way the US dollar has moved recently. To watch the full interview, please click the image below.
Today the University of Michigan Consumer Confidence survey was released. One of the data points the survey includes is an inflation expectation series, asking consumers what they expect as far as consumer price changes go. In recent years, economists have worried that relatively low inflation may lead consumers to expect lower inflation, leading to a downward cycle of weakening inflation. The good news is, since late 2016 the University of Michigan series have stabilized, as shown in the chart below.
We also like to compare various inflation expectations series from different surveys on a like-for-like basis. To do so, we z-score all of them by taking a given period’s reading and measuring its departure from its all-period average in standard deviations. That adjusts them all for volatility and different levels. As shown, these series have all stabilized around similar levels over the past year or so. That’s good news for members of the FOMC that are worried about inflation expectations getting too low. But at the same time, while recent inflation readings have been strong, there hasn’t been an uptick in expectations for future inflation from consumers.
Bespoke’s Morning Lineup is the top pre-market report on Wall Street. We cover everything you need to know to get your trading day started, including international market moves and events, post-market and pre-market earnings news, upgrades and downgrades, dividends and splits, economic indicators and estimates, big stock movers, market internals and much more. It’s all presented in the original and concise format that Bespoke is known for so you can digest lots of information quickly and efficiently.
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Looking for deeper insight on markets? In tonight’s Closer sent to Bespoke Institutional clients, we take a look at rising delivery times, and underwhelming industrial production report, and strong producer price inflation.
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We’ve just released our weekly Sector Snapshot report (see a sample here) for Bespoke Premium and Bespoke Institutional members. Please log-in here to view the report if you’re already a member. If you’re not yet a subscriber and would like to see the report, please start a two-week free trial to Bespoke Premium now.
Below is one of the many charts included in this week’s Sector Snapshot, which highlights how much each S&P 500 sector fell from its 52-week highs to its recent low as well as how much each sector has now rallied off of its low. As you can see, Tech has bounced the most off of its low, followed by Financials and then Materials. Energy has struggled the most. It had been down 14.8% from its 52-week high, but it’s only up 1.4% off of its low.
To see our full Sector Snapshot with additional commentary plus six pages of charts that include analysis of valuations, breadth, technicals, and relative strength, start a two-week free trial to our Bespoke Premium package now. Here’s a breakdown of the products you’ll receive.
Homebuilder sentiment for the month of February came in right in line with expectations today and remains right near its highest levels of the expansion. At a current level of 72, sentiment has only been at more optimistic levels a handful of times. In fact, during the years of the housing bubble in the early 2000s, homebuilder sentiment was never higher.
Below we show the breakdown of this month’s report by traffic, sales, and region. As far as traffic and sales is concerned, there wasn’t much in the way of big moves, although Future Sales has only been higher in one other period (the late 1990s). Regionally, sentiment in the Northeast and West saw moderate declines, while the Midwest and South (where property and local taxes are relatively low) was unchanged. This is a trend to watch going forward.