The Closer — Boring Fed, Intraday vs Overnight, New 5y Yield Highs — 11/8/18

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Looking for deeper insight on markets?  In tonight’s Closer sent to Bespoke Institutional clients, we review today’s FOMC decision, the last one for the foreseeable future without a press conference. We also take a look at the intraday versus overnight performance of a wide range of US sector and non-equity ETFs over time. Finally, we make some cross-asset observations including the persistent run of new 5 year highs for the 10 year yield, a phenomenon we haven’t seen in a very long time.

See today’s post-market Closer and everything else Bespoke publishes by starting a 14-day free trial to Bespoke Institutional today!

Individual Investors Continue To Be Optimistic

The sentiment of individual investors in the weekly AAII survey saw a huge jump in bullishness last week. This week, while the number did not skyrocket, there was another increase after a solid week of equity market gains. The bullish camp saw a 3.4 percentage point increase to 41.28% from 37.93%.

Bearish sentiment fell to 31.19% from 34.48%.  It is now well below the high of 41% from only a couple weeks ago. According to these sentiment levels, it would be fair to say any fear stemming from the October decline has now tapered off.

The share of investors sitting on the fence went basically unchanged, only falling 0.07%. Suffice to say that the influx of bulls has not come from the neutral camp.

Jobless Claims Inline With Expectations

Jobless claims came in right inline with expectations this morning falling from 215K last week to 214K.  With this week’s report, claims have now been at or below 300K for a record 192 straight weeks, at or below 250K for 57 straight weeks, and at or below 225K for 18 straight weeks.

The four-week moving average was essentially unchanged, falling from 214K down to 213.75K.  That’s less than 8K above the multi-decade low of 206K that we saw back in mid-September.

On a non-seasonally adjusted (NSA) basis, claims ticked up to 214K from last week’s reading of 198.5K.  This is the first weekly reading above 200k for NSA claims since late July but is still well below the average of 337K for the current week of the year dating back to 2000.  In fact, for the current week of the year, NSA claims still haven’t been this low since 1969.

the Bespoke 50 — 11/8/18

Every Thursday, Bespoke publishes its “Bespoke 50” list of top growth stocks in the Russell 3,000.  Our “Bespoke 50” portfolio is made up of the 50 stocks that fit a proprietary growth screen that we created a number of years ago.  Since inception in early 2012, the “Bespoke 50” has beaten the S&P 500 by 86.1 percentage points.  Through today, the “Bespoke 50” is up 190.1% since inception versus the S&P 500’s gain of 104%.  Always remember, though, that past performance is no guarantee of future returns.

To view our “Bespoke 50” list of top growth stocks, click the button below and start a trial to either Bespoke Premium or Bespoke Institutional.

Morning Lineup – Calm After the Storm

Markets are extremely quiet this morning following Wednesday’s fireworks.  There’s still been a number of big earnings reports from the likes of Qualcomm (QCOM), News Corp (NWSA), and Square (SQ) to name a few.  Jobless claims came in at 214K, which was right around expectations of 213K.  At 2 PM we will hear from the FOMC where traders are hoping that the statement will imply a slightly less hawkish tone.

Also, we just released the latest episode of our Bespokecast featuring Patrick Wyman, who hosts the popular podcast Tides of History.  Make sure to check it out.  It’s a bit different from some of our prior episodes, but you’ll definitely like it!

Bespokecast Episode 27 featuring Patrick Wyman

With all the talk about market performance around and after midterm election years, we wanted to provide a quick comparison of the S&P 500’s quarterly performance during the first two years of President Trump’s tenure to the media quarterly returns of the S&P 500 during the first two years of the four-year Presidential cycle. Looking at the chart, while there have been a number of quarters where returns have been similar under Trump to the historical norm, as one might expect, there have also been some wide disparities.  This quarter, for example, the S&P 500 is down 3.5% in a quarter where it has historically rallied 7.9%

Start a two-week free trial to Bespoke Premium to see today’s full Morning Lineup report. You’ll receive it in your inbox each morning an hour before the open to get your trading day started.

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The Closer — Midterms Made It, EIA Hated — 11/7/18

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Looking for deeper insight on markets?  In tonight’s Closer sent to Bespoke Institutional clients, we break down how equity markets reacted to the midterm elections last night. This was the best one day change in the S&P 500 on the day after the midterms since 1982, but the drivers of the rally are totally unrelated to what sent up stocks in the post-Presidential election rally. We also review weekly EIA petroleum market data and some fixed income price action.

See today’s post-market Closer and everything else Bespoke publishes by starting a 14-day free trial to Bespoke Institutional today!

Bespokecast Episode 27 — Patrick Wyman — Now Available on iTunes, GooglePlay, Stitcher and More

Our newest episode of Bespokecast is now available!  Be sure to subscribe to Bespokecast on your preferred podcast app to gain access to our full collection of episodes.  We’d also love for you to provide a review as well!

In this episode of Bespokecast, we sit down with Patrick Wyman, the host of popular podcast Tides of History. Patrick is a historian with a PhD from the University of Southern California with a broad range of knowledge on antiquity, the middle ages, and the early modern period. Instead of our usual focus on investing and contemporary analysis, this week Patrick helps us compare and contrast how four very different economies (late Roman, Medieval, early modern, and our own) compare, where similarities lie, and how they were different. Using four different institutions as focal points for comparative analysis, Patrick helps us understand the functioning of a Roman estate, a medieval manor, an early modern trading house, and a modern corporation and what key drivers of activity, market intensity, and relationships to the state they all have. This conversation was a significant departure from our typical format, but we found it fascinating and hope you do too. You can follow Patrick on Twitter here.

To listen to our newest episode or subscribe to the podcast via iTunes, GooglePlay, OvercastFM, or Stitcher, please click the button or links below. Please note that third-party podcast feeds may update at a lag of a few hours to this blog post.

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Fixed Income Weekly – 11/7/18

Searching for ways to better understand the fixed income space or looking for actionable ideals in this asset class?  Bespoke’s Fixed Income Weekly provides an update on rates and credit every Wednesday.  We start off with a fresh piece of analysis driven by what’s in the headlines or driving the market in a given week.  We then provide charts of how US Treasury futures and rates are trading, before moving on to a summary of recent fixed income ETF performance, short-term interest rates including money market funds, and a trade idea.  We summarize changes and recent developments for a variety of yield curves (UST, bund, Eurodollar, US breakeven inflation and Bespoke’s Global Yield Curve) before finishing with a review of recent UST yield curve changes, spread changes for major credit products and international bonds, and 1 year return profiles for a cross section of the fixed income world.

This week we take a look at the biggest slate of ballot initiatives for state/local bond issuance since 2006.

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Our Fixed Income Weekly helps investors stay on top of fixed income markets and gain new perspective on the developments in interest rates.  You can sign up for a Bespoke research trial below to see this week’s report and everything else Bespoke publishes free for the next two weeks!

Click here and start a 14-day free trial to Bespoke Institutional to see our newest Fixed Income Weekly now!

Global Stock Market ETFs Bounce Back

Just as US index ETFs have moved higher, global stock markets have moved higher recently as well.  Below is a snapshot of regional stock market ETFs from our popular Trend Analyzer tool.  As you can see, while YTD changes are still deep in the red and ETFs are still well below their 50-day moving averages, the 5-day percentage change is extremely strong.  The move higher over the last week has pushed every ETF in the group out of oversold territory and into neutral territory.  One ETF (Latin America) has actually moved to overbought levels.

While all of these ETFs have moved higher recently, note that because of the severe weakness experienced for global stocks over the last few months, they’re nearly all in long-term downtrends.  It’s going to take more than just a week of gains for new uptrends to emerge.  There’s still a lot of work for the bulls to do!

Midterm Election Results Relative to History: Something For Everyone

The midterm elections are behind us, so we can finally move on to the 2020 contest!  Just kidding.  With the results of yesterday’s election, both sides are out there claiming victory and justifiably so.  The table below breaks down the results of historical midterm elections in the post-WWII period.  For each midterm, we show the political makeup in Washington before and after the election results, showing how many seats the incumbent President’s party gained or lost in each chamber of Congress.  At the bottom of the table, we also include a look at the average and median swing in the balance of the Senate for Democratic Presidents as well as Republican Presidents.

Based on how things stand now according to ABC News, Republicans are expected to lose 34 seats in the House and gain 3 seats in the Senate.  From the perspective or Republicans, they are writing off the loss of House seats as ‘typical’ losses in a midterm, while pointing to the gain in Senate seats as a major victory and validation of the President’s policies.  Democrats, on the other hand, are dismissing the weak showing in the Senate as a ‘bad map’ and hanging their hats on the pickups in the House.  So which party is right?

They actually both are.  As shown at the bottom of the table, while the party of the incumbent President typically loses seats during the first midterm election year, Democrats usually do much worse than Republicans, losing an average of 40 seats in the House and 5 seats in the Senate.  Losses for Republicans tend to be much smaller on average at 17 seats in the House and just one seat in the Senate.  Based on these numbers, the results in the House yesterday for Republicans were worse than average, while the gains in the Senate were much better than average.  In fact, the only midterm in the post-WWII period where the GOP lost more seats in the House during a President’s first term in office was in 1974 under President Ford right after the Watergate scandal and Nixon’s resignation.  That year the GOP lost 48 House seats.  Reagan’s first midterm in 1982 also saw big losses at -26, but that was still 8 better than this year.  The Senate, however, is another story.  With what looks like a pickup of 3 seats in the Senate, Republicans have never picked up that many seats during a Republican President’s first midterm election in office.

“The Biggest Senate Pickup During a President’s First Midterm Since at Least WWII” or “The Biggest Loss of Seats in the House for a First-Term Republican President since Ford” — Which headline do you think Republicans and Democrats will latch on to?

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