Mar 12, 2025
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“It must be the policy of the United States to support free peoples who are resisting attempted subjugation by armed minorities or by outside pressures.” – Harry Truman, 3/12/47
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
Can we squeeze out a positive day in the market? The S&P 500 finished the day down 0.76% yesterday, but it almost seemed like a positive day in some ways. That’s how miserable the last three weeks have been for bulls! This morning, US futures were firmly in the green heading into the February CPI report. That report came in weaker than expected, providing a further boost- at least for now.
78 years ago today, President Harry Truman asked Congress to appropriate $400 million to provide economic, military, and political assistance to democratic countries facing the threat of communist forces. His proclamation set in motion the journey of the US on the path from isolationism to a leader on the global stage, taking an active role in pushing back against the growth of the Soviet Union during the Cold War. Whether the US became too active in global affairs in the ensuing eight decades is up for debate. However, whatever direction US foreign policy has headed over the last eighty years, it appears to be going the other way now.
Focusing more on the short-term, the S&P 500 peaked three weeks ago today. In the 14 trading days since then, the S&P 500 has declined 9.3%, and all eleven sectors have posted declines. On the downside, just three sectors – Communication Services, Technology, and Consumer Discretionary – are underperforming the S&P 500. Health Care has held up better than any other sector with a decline of less than 1%, but Real Estate and Consumer Staples have also held up relatively well.
With a decline of nearly 15%, the Consumer Discretionary sector has been the worst performing sector in the market, and the bulk of that decline has been the result of mega-cap stocks in the sector like Tesla (TSLA) and Amazon.com (AMZN). These declines have pushed the sector’s margin of underperformance versus the S&P 500 over the last three weeks to historical extremes.
The chart below shows the 15-day performance spread between the Consumer Discretionary sector and the S&P 500 since 1990. Just recently, it had underperformed the S&P 500 by over eight percentage points, which was an extreme reached just a handful of other times in the last 35 years. As extreme as the underperformance has been in the last three weeks, it has mostly been a reversal of the extreme outperformance the sector experienced late last year.
Mar 11, 2025
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“A man who has made no enemies is probably not a very good man.” – Antonin Scalia
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
After getting the pulp kicked out of them yesterday, bulls are looking to regroup this morning, and futures are marginally higher ahead of the opening bell, with the S&P 500 and Nasdaq both indicated up about 0.50%. Now, if you put any trust in those numbers, where have you been for the last three weeks? That’s not to say the market can’t squeak out an up day today, but lately, there has been little correlation between where futures look an hour before the opening bell versus where they finish the day.
Earlier this morning, small business sentiment from the NFIB came in weaker than expected for the second month. The only other report on today’s calendar is the January JOLTS report at 10 AM. In political news, the House is expected to vote on a continuing resolution to fund the government. While there is optimism that the vote will pass to help avoid a shutdown this weekend, the higher hurdle will be the Senate, where 60 votes are required to pass.
President Trump is also scheduled to meet with several CEOs at a meeting of the Business Roundtable today, so we’ll see what, if any, headlines come out of that meeting. The market’s main concern up until this point has been that the deteriorating levels of confidence on the part of consumers and businesses would translate into actual declines in activity. That remains to be seen in actual data, but Delta (DAL) may be showing hints of that effect starting to happen as the company cut guidance last night noting “the recent reduction in consumer and corporate confidence caused by increased macro uncertainty”. This morning, we’re also getting similar comments from several other airlines citing weakness in Q1 but expecting a rebound later in the year. CEOs at the meeting will voice their concerns to the President, so we’ll see how much he listens.
The Nasdaq Composite moved firmly back into correction territory yesterday as the drawdown from its December high reached 13.4%. Looking at the chart of the index over the last year shows an interesting pattern where it made numerous unsuccessful attempts to break above its December high in the last few months. After failing again less than three weeks ago, the Nasdaq ran out of gas and has collapsed to its lowest level since September 11 of last year.
No one can tell you when this decline will run its course, and it will depend on several factors. The only thing we can do at times like this is look back at history for a guide to see the range of possible outcomes. The chart below shows Nasdaq drawdowns from all-time highs since its inception, with the red line showing the level of the current decline. Believe it or not, the Nasdaq has been further from an all-time high than it currently is on 49% of all trading days, a lot of which were during the dot-com bust. That’s one extreme period we all hope is in the cards!
Mar 10, 2025
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“Everybody in the world is a long-term investor until the market goes down.” – Peter Lynch
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
The NFL season ended a month ago, but Carrie Underwood’s “Waiting All Day for Sunday Night” has remained as applicable as ever. With the S&P 500 teetering just above its 200-DMA and the market feeling vulnerable, investors now spend Sundays waiting for the inevitable opening of futures markets to see how bad the damage will be.
Once again, yesterday, the picture wasn’t good as futures have been weak all night. The S&P 500 finished last Friday just about 1% above its 200-day moving average (DMA), and this morning’s indicated weakness will put the level to the test for the fifth day in a row. There’s only so much testing a moving average can take before it gives way. Even European equities, which have been outperforming US stocks by a wide margin this year, are also feeling the pressure. What makes this morning’s weakness notable, though, is that there hasn’t been a specific catalyst.
The equal-weighted S&P 500 hasn’t been as weak as the cap-weighted index this year, but it finds itself in the same situation. It closed out last week just about 1% above its 200-DMA and is indicated to open down by a similar amount.
Normally, when doubts over the economy start to arise and markets start experiencing weakness, any comments that come from the Federal government attempt to take a soothing tone, but like a team having a tough season looking to improve their position in the next season’s draft, investors have been watching comments coming from administration and asking if they’re borrowing from the ‘tank-job’ playbook.
On CNBC last Friday, Treasury Secretary Bessent remarked, “Could we be seeing that this economy that we inherited starting to roll a bit? Sure”. He then added what has already become a now famous line, “There’s going to be a detox period.” It’s not common to see a Treasury Secretary talk down and pile on to what is an already shaky economic and market picture. Even in 2008, just ahead of the Financial Crisis, Treasury Secretary Paulson would regularly make comments like “I think the economy is — long-term fundamentals are very healthy, that I believe we’re going to continue to grow”.
In a Fox News interview that aired this weekend (recorded earlier in the week), President Trump took a similar stance, saying “There will be a little disturbance, but we are OK with that.” He added. “It won’t be much.” With regards to the stock market, the President claimed, “I’m not even looking at the market.” Come again? President Trump not looking at the stock market????
For anyone who was still using President Trump’s first four years as a playbook for the next four, you can burn it. Look on the bright side, though: maybe the economy will get some good draft picks.
Mar 7, 2025
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“The most terrifying fact about the universe is not that it is hostile but that it is indifferent.” – Stanley Kubrick
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
US equity futures were higher earlier but have given up those gains (what else is new) as we approach the release of the February Non-Farm Payrolls report. Overnight and this morning, we’ve seen global weakness, although they haven’t seen nearly the level of weakness this week that US equities have. Germany and Japan were notable losers with declines of about 2%, while the STOXX 600 is down less than 1%. Treasury yields are lower as the 10-year sits under 4.25%
For the week, the S&P 500 is on pace for a decline of 3.6%, while the Nasdaq is on pace for a loss of over 4%. For both indices, this week is likely to be the worst week since the week ending 9/6, and for the Nasdaq, it will be the third straight weekly decline of 2%+, which would be the longest such streak since late July/early August of last year.
Certainty has been lacking lately, but efficiency has been abundant on the part of the market in pricing that in. The chart below is from page two of the Morning Lineup and shows the S&P 500’s 50-day moving average (DMA) spread, as measured in standard deviations. The S&P 500 has gone from firmly overbought to ‘extreme’ oversold territory in only eight trading days. These kinds of swift moves have been very uncommon over time.
It’s not just the S&P 500 that has moved deep into oversold territory. The snapshot below from our Trend Analyzer shows that as of yesterday’s close, every major US Index ETF except the Dow (DJIA) was at ‘extreme’ oversold levels (2+ standard deviations below their 50-DMA).
Mar 6, 2025
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“The greatest danger for most of us is not that our aim is too high and we miss it, but that it is too low and we reach it.” – Michelangelo
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
Beggars can’t be choosy, but is a rally that lasts just one session the best we can do these days? As good as days like yesterday feel during waves of selling, when most of those gains get washed away before the next session’s opening bell, it’s grueling. Futures for all the major indices are down over 1% this morning on no specific news other than continued uncertainty related to tariffs, trade, and almost everything else. While administration officials periodically dangle a carrot to the market, the threat of a much broader blanket of tariffs coming within a month looms larger.
Despite the uncertainty, markets will still open for trading at 9:30. Before that we’ll get several economic indicators, including Non-Farm Productivity, Unit Labor Costs, and most importantly jobless claims at 8:30. Last week’s initial claims report came in 21K ahead of expectations, and if there’s another upside surprise in that reading, look for the stagflation chatter to pick up in intensity. Adding to concerns over the employment picture, Challenger, Gray, and Christmas reported this morning that US employers announced 172K layoffs in February, the largest for a single month since July 2020.
It’s been a painful couple of weeks for US equities. As shown in the snapshot below from our Trend Analyzer, both the S&P 500 and Nasdaq 100 remained in oversold territory even after yesterday’s bounce, and they’re both down roughly 2% over the last week. The action in US equities stands in stark contrast to international equities, which are mostly higher over the last week and at varying degrees of overbought levels. European equities, as tracked by the ETF VGK, are up over 15% YTD and headed into today at ‘extreme’ overbought levels (2+ standard deviations above 50-day moving average).
Mar 5, 2025
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“I am convinced that there is nothing they admire so much as strength, and there is nothing for which they have less respect than for weakness” – Winston Churchill
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
The term ‘weakness’ has a lot of applicability to the current market environment. There has been little positive to say about how equities have performed since the S&P 500’s record high two weeks ago. Has it only been two weeks?
With the S&P 500 finishing the day down by more than 1.2%, the only positive thing to say about yesterday was that the 200-day moving average (DMA) provided some level of support. After trading down near that level in the morning, the S&P 500 bounced through the afternoon and even briefly peeked into positive territory. The good times didn’t last long. With President Trump being more of a mush on stock prices lately than Fed Chair Powell, there was a barrage of selling into the close ahead of last night’s address to Congress.
This morning, equity futures are putting in a valiant effort with gains, but they’re already well off the overnight highs and barely higher. Where they finish is anyone’s guess. Treasury yields are modestly higher, crude oil is back down to $67 per barrel, gold is marginally higher, and Bitcoin is surprisingly back above $90K.
European markets have bounced back from yesterday’s weakness following news in Germany after yesterday’s close that the country would increase deficit spending, and that has 10-year German Bund yields surging over 20 bps to their highest levels in over a year.
On the economic calendar, ADP Payrolls were just released, and the headline reading came in at 77K versus forecasts for an increase of 148K. With market concerns shifting from inflation to the health of the economy, this report is likely to raise some concerns. It’s important to remember that ADP has often varied widely from Non-Farm Payrolls, but the miss will put added significance on tomorrow’s jobless claims report. Outside of that, the only two other reports are ISM Manufacturing and Factory Orders at 10 AM.
While the 200-DMA provided support for the S&P 500 yesterday, we’d caution about getting too excited. Remember, it was only Friday that the Nasdaq ‘successfully’ tested its 200-DMA, but that support lasted less than one trading session.
The short-term direction of the market is anyone’s guess, but from a longer-term perspective, we’d note that as extreme as the last two weeks may seem in the moment, the market has been there and done that. Since WWII, there have now been 64 pullbacks of 5%+ from an S&P 500 record high. This decline seems especially swift as it took the S&P 500 less than two weeks to reach the 5% milestone, but we would point out that a third of the prior 63 pullbacks reached the 5% level just as fast or even faster. For all 63 prior streaks, it took an average of less than four weeks (25 calendar days) to fall 5% from an all-time high.
The top chart below shows every time the S&P 500 experienced a 5% pullback from an all-time closing high, and the second chart shows the same occurrences over just the last ten years. Some of these pullbacks expanded to become full-fledged extended bear markets where, in some cases, the S&P 500 lost a significant percentage of its value. In most cases, though, the declines were short-lived, and you’d have a hard time even remembering what caused them in the first place.
In his speech last night, President Trump told Congress, “There’ll be a little disturbance, but we’re OK with that.” For everyone invested in the stock market, how little is little?
