The Dollar and Domestics
As noted in today’s Morning Lineup, the US dollar among other assets has continued to rise post election. The Bloomberg Trade-Weighted Dollar Index is now up 1.66% versus the close on election day. With those gains, the dollar is now trading at some of the highest levels of the past year.
In last week’s Bespoke Report, we discussed the market’s winners and the losers from the election, and obviously as shown above, the dollar has fallen into the winners category. As we have discussed in the past, generally in strong dollar environments, the stocks most poised to benefit are those that generate the highest share of revenues domestically. Conversely, in weak dollar environments, it’s the stocks that generate the majority of their revenues outside the US that tend to perform relatively well as their goods and services become cheaper for international customers.
That dynamic has exactly played out. Below, we show the average performance since Election Day by deciles of Russell 1,000 members based on their international revenue exposure. Decile one is comprised of all stocks with 100% domestic revenues (domestics), and each group moving up the chain to decile 10 has an increasingly higher share of international revenues. The top performers, with an over 5% average gain, are the domestics whereas the most internationally exposed stocks are up a meager 1%.
Chart of the Day: More Post-Election Market Stats
Bespoke’s Morning Lineup – 11/11/24 – The Rally Storms Ahead
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“It doesn’t take a hero to order men into battle. It takes a hero to be one of those men who goes into battle.” ‒ H. Norman Schwarzkopf
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
Fixed income markets are closed this morning in observance of Veterans Day, but the equity markets are open for a full session, and futures suggest a continuation of the post-election rally as crude oil and gold continue to pull back and Bitcoin surges above $80,000. Given the holiday, there’s no economic data on the calendar and little in the way of earnings news, but that will change in the days ahead with CPI on Wednesday and PPI on Thursday. These reports will take on added significance given the upward move in rates lately and comments from Federal Reserve officials that the pace of rate cuts may slow in the months ahead. For now, though, Newton’s first law of motion still applies.
Overnight in China, inflation for the world’s second-largest economy showed more downward pressure as CPI declined 0.3% m/m in October taking the year/year rate down to 0.3% while PPI fell 2.9% relative to last year. Between this data and China’s underwhelming stimulus measures announced after the local market close on Friday, stocks in the country had a mixed start to the week with the Shanghai Composite trading up 0.5% while Hong Kong’s Hang Seng fell 1.5%.
The tone has taken a more decidedly bullish tone in Europe, where the STOXX 600 spiked more than 1% higher to start the week, even with no specific catalyst driving the gains.
The election has come and gone, and with it, the S&P 500 surged 4.7% last week in the third-best Presidential election week performance for the index since 1928. The only two weeks with better returns were the 11.6% gain in 1932 as FDR was elected and the 7.3% gain in 2020 after President Biden was elected. We’d also note that the 3.8% gain following Trump’s 2016 election ranks the fourth best tied with former President Clinton’s re-election in 1996.
Brunch Reads – 11/10/24
Welcome to Bespoke Brunch Reads — a linkfest of some of our favorite articles 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.
Semper Fidelis: The United States Marine Corps was founded on November 10th, 1775, in Philadelphia, Pennsylvania, during the early days of the American Revolutionary War. The Continental Congress authorized the formation of two battalions of Marines to serve as an amphibious infantry force, capable of fighting both on land and at sea. Led by Captain Samuel Nicholas, the Marine Corps was established with a mission to enforce naval discipline, protect American ships, and carry out raids along enemy coastlines.
The Marines’ first major mission came in March 1776, when they successfully stormed the British-held island of New Providence in the Bahamas, marking the Corps’ first amphibious landing and setting the stage for its storied legacy. Over the years, the Marine Corps has grown from a small battalion into one of the world’s most respected military forces, known for its discipline, versatility, and unique esprit de corps. Today, the Marine Corps celebrates its founding every November 10, honoring nearly 250 years of service to the United States, just days after JD Vance was elected to become the first Vice President who served as a Marine.
Space Exploration
China’s New Heavy Lift Rocket Looks a Whole Lot Like SpaceX’s Starship (WIRED)
China’s latest update to its Long March 9 rocket makes it look like a direct take from SpaceX’s playbook, with a reusable first stage and methane-fueled engines that are almost a carbon copy of Starship. With a focus on landing and establishing a presence on the moon’s south pole, China is moving fast toward reusable tech, while NASA is still tied to the pricey, single-use Space Launch System. The real goal isn’t just a moon landing anymore, it’s the ability to make multiple repeat trips. [Link]
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