The Bull’s Biggest Hits and Misses
The bull market turned two years old over the weekend, so we wanted to take a quick moment to highlight some of the S&P 500’s biggest winners and losers over the last two years. Since the S&P 500’s closing low two years ago, 73 stocks in the S&P 500 have rallied at least 100% while just 71 are down. The table below lists the 19 stocks that have rallied at least 200%, and below that we list the 24 stocks that have declined at least 25%.
AI has been a leading theme of the bull market, so most people already know that NVIDIA (NVDA) — with its ten-bagger — tops the list in terms of performance. Even the big gains in Super Micro (SMCI) and Vistra (VST) probably won’t surprise many people, but looking through the list, some names will likely be eye-openers. Take General Electric (GE). Wasn’t that an also-ran from the 1990s? After two decades in a ‘penance’ working off the financial engineering before 2000 and some questionable leadership and strategic decisions, GE has gotten a new lease after breaking up into three units. Its aerospace unit, which trades under the old ticker GE, has rallied more than 350% during this bull market, and even the two other spin-offs, GE Vernova (GEV), which consists of its electric power business, has doubled, while GE Healthcare (GEHC) is up 50%. Besides GE, other names that may come as a surprise to investors are Royal Caribbean (RCL), Axon Enterprises (AXON), Howmet Aerospace (HWM), and KKR. At the sector level, Technology leads the list with seven of the 19 names listed while Consumer Staples, Energy, Materials, Health Care, and Real Estate aren’t represented at all.
Of the 24 stocks that have declined at least 25%, seven come from the Consumer Staples sector, including Walgreens Boots Alliance (WBA) and Dollar General (DG), which are both down over 60%. Health Care is the second most represented sector with six stocks, while Materials is the only other one with more than two stocks on the list. Overall, eight sectors are represented, with Consumer Discretionary, Financials, and Real Estate being the only ones missing.
Moderna (MRNA) and Pfizer (PFE) were two of the biggest winners during Covid as investors couldn’t get enough of the stocks given their exposure to the vaccine. Now that Covid is well in the rearview mirror and jabs of the treatment have slowed to a trickle relative to the rates of 2021, investors want little to do with these former market darlings.
The lists of winners and losers during this bull market illustrate the importance of first-mover advantages. In the table above, streaming pioneer Netflix (NFLX) ranked 15th in performance with a gain of 227%. Contrast that to names like Paramount Global (PARA) and Warner Brothers Discovery (WBD) below. In 2021, these companies and others were convinced by NFLX’s streaming success that launching their own services would be a breeze. However, as the years have passed, the competitive nature of the streaming market has become apparent. There’s a limit to how many services consumers are willing or able to pay for.
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Bespoke’s Morning Lineup — 10/14/24
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“You can’t stay in your corner of the forest waiting for others to come to you. You have to go to them sometimes.” – A.A. Milne
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
Dow futures are trading just south of the flat line this morning, while S&P 500 and Nasdaq futures are trading slightly higher. There are no earnings reports to speak of today, but tomorrow morning we’ll hear from three more of the “big six” US banks and brokers: Bank of America (BAC), Citigroup (C), and Goldman Sachs (GS).
The Q3 earnings season began last Friday with five companies reporting before the open. All five beat consensus EPS estimates, while four of five beat sales estimates (WFC was the lone miss). As shown below, four of the five companies that reported to kicks things off posted strong share-price gains on Friday. While BNY Mellon (BK) posted a “meh” reaction with a small drop of 0.4%, BlackRock (BLK) gained 3.6%, JP Morgan (JPM) gained 4.4%, Wells Fargo (WFC) gained 5.6%, and Fastenal (FAST) gained 9.8%. FAST’s 9.8% gain was its best earnings reaction day in five years, while Wells Fargo had its best earnings day since July 2022.
Brunch Reads – 10/13/24
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.
If you’re looking for a good podcast to listen to this weekend, Paul Hickey joined Schwab’s On Investing with Liz Ann Sonders and Kathy Jones. Click the image below to listen.
Zero Degrees Longitude: On October 13th, 1884, Greenwich, England was chosen as the Prime Meridian by delegates from 25 nations meeting at the International Meridian Conference in Washington, DC. Before the conference, different countries and regions used different prime meridians, which you might imagine would be confusing. Creating a single reference point for navigation and timekeeping worldwide would make travel, trade, and communication much easier. The Royal Observatory in Greenwich, England was already a recognized reference given the British Empire’s maritime dominance at the time. Its meridian was already used by about two-thirds of the world’s ships, which made it the clearest choice for 0 degrees longitude. The adoption of Greenwich Mean Time (GMT) laid the foundation for the standardized system of time zones we use today and has also been instrumental in geographical mapping and modern GPS. Below is a photograph of the Royal Observatory in Greenwich, England.
Housing & Real Estate
Billy Joel Is Selling the Mansion He First Saw While Dredging Oysters (NYT)
From working on an oyster boat and cursing at the mansions on Long Island’s Gold Coast to eventually owning one himself, Billy Joel’s life has come full circle. His sprawling 26-acre estate, “MiddleSea,” is now on the market for $49.9 million, complete with a beach house, guesthouses, a bowling alley, and a helipad. Joel originally bought the mansion he used to admire from afar, naming it after a piano note that launched his legendary career. As his family settles in Florida and taxes climb (yearly property taxes are $567,686), he’s preparing to part ways with the property he once dreamed of owning. [Link]
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The Bespoke Report – 10/11/24 – Earnings Arrive, Elections Loom
To read our weekly Bespoke Report newsletter and access everything else Bespoke’s research platform has to offer, start a two-week trial to Bespoke Premium. In this week’s report, we review the start of earnings season in the US as elections start to become a real focus rather than background noise. We also discuss weakness in Germany, strength in US labor markets (despite a shock from hurricane Helene in data this week), a breakout for AI stocks, strong GDP growth, this week’s inflation data, and much more.
Daily Sector Snapshot — 10/11/24
Bespoke’s Consumer Pulse Report — October 2024
Bespoke’s Consumer Pulse Report is an analysis of a huge consumer survey that we run each month. Our goal with this survey is to track trends across the economic and financial landscape in the US. Using the results from our proprietary monthly survey, we dissect and analyze all of the data and publish the Consumer Pulse Report, which we sell access to on a subscription basis. Sign up for a 30-day free trial to our Bespoke Consumer Pulse subscription service. With a trial, you’ll get coverage of consumer electronics, social media, streaming media, retail, autos, and much more. The report also has numerous proprietary US economic data points that are extremely timely and useful for investors.
We’ve just released our most recent monthly report to Pulse subscribers, and it’s definitely worth the read if you’re curious about the health of the consumer in the current market environment. Start a 30-day free trial for a full breakdown of all of our proprietary Pulse economic indicators.
Bespoke’s Morning Lineup – 10/11/24 – Happy Earnings Season
See what’s driving market performance around the world in today’s Morning Lineup. Bespoke’s Morning Lineup is the best way to start your trading day. Read it now by starting a two-week trial to Bespoke Premium. CLICK HERE to learn more and start your trial.
“Age needs the company of youth” – Eleanor Roosevelt
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
Welcome to earnings season! The unofficial start to earnings season kicked off this morning, and the overall tone has been positive. Of the five companies reporting, all five exceeded EPS forecasts, and only Wells Fargo (WFC) came up short in revenues. In response to the reports, all five stocks are up in the pre-market with gains ranging from 1.2% for JPMorgan (JPM) to a 5.3% rally for Fastenal (FAST). If first impressions meant anything, this would be a good thing!
The only economic reports on the calendar today are PPI and Michigan Sentiment. Yesterday’s higher-than-expected CPI pushed rates higher and raised concerns of a slower pace of rate cuts, so today’s weaker-than-expected headline number helped to offset the negative sentiment. Headline PPI came in weaker than expected at 0.0% versus expectations for a gain of 0.1%. Core PPI was in line with estimates at 0.2%. On a y/y basis, both readings were 0.2 ppts higher than forecasts at 1.8% for the headline reading and 2.8% on a core basis. A few Fed speakers are also on the calendar today with Goolsbee at 9:45, Logan at 10:45, and Bowman just after 1 PM.
Since tomorrow is Saturday, the market will not be open to celebrate the second anniversary of the bull market but looking at the S&P 500’s performance over the last two years, the gain of slightly more than 60% ranks as the best two-year gain since the two years ending in April 2022 when we were in the early months of the bear market. While the two-year rolling rate of change only briefly dipped into negative territory, it has come roaring back in the last year, and at current levels, the performance ranks in the 95th percentile of all periods since 1954.
The stock market will be open on Monday, but for some of you, it will be a holiday in observance of Columbus Day. The chart below shows the S&P 500’s performance on Columbus Day since it was officially designated as the second Monday of October 1971. During this period, the S&P 500’s median performance has been a gain of 0.16% with positive returns 60% of the time. The best Columbus Day was in 2008 when the S&P 500 rallied 11.6%, and the 3.4% gain in 2011 wasn’t too shabby either. The weakest Columbus Day occurred in 2014 (-1.6%), and in the nine years since then, the S&P 500’s median performance has been a decline of 0.04% with declines in five out of nine years.
The Closer – CRE, CPI, Real Wages – 10/10/24
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Looking for deeper insight into markets? In tonight’s Closer sent to Bespoke Institutional clients, we begin with some commentary on commercial real estate (page 1) followed by a dive into the latest CPI data (page 2). We then pivot over to the latest headlines regarding auto stocks (page 3) before closing with a recap of the 30-year bond reopening (page 4).
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Bespoke’s Weekly Sector Snapshot — 10/10/24
Helene Spikes Claims
It was a busy morning for economic data, and there wasn’t much to like at first glance. On top of a hotter-than-expected inflation print, weekly jobless claims came in above expectations on both an initial and continuing basis. The previous week’s seasonally adjusted initial claims reading was unrevised at 225K, and this week’s reading was expected to tick up to 230K. Instead, claims surged up to 258K matching the high from the week of 8/5/23 for the most elevated reading since 8/17/23. Outside of the extremely elevated readings observed through the pandemic, current levels are some of the highest since the fall of 2017.
On a non-seasonally adjusted basis, claims were up to 234.8K. As shown in the second chart below, claims have generally followed the usual seasonal track this year with declines throughout the first half followed by a brief bump in the summer that reversed until bottoming in the early fall. From September through year-end, claims have historically tended to rise, and that exact result appears to be playing out again.
While a week-over-week increase in the current week of the year is typical (such has been the case 86% of years historically), this week’s jump of 53.6K was more than twice as large as the historical average. Furthermore, the last time the comparable week of the year saw as large of an increase was in 2013. In other words, the direction of claims could be expected, but the magnitude of the move was more of a surprise.
Fortunately, most of the big jump in claims this week can be explained. For starters, Michigan alone accounted for 30% of initial jobless claims as it saw an outsized increase with claims more than doubling to 16.27K versus 6.8K the prior week. The report indicated that these were due to layoffs in the manufacturing sector. The even larger contributors to claims were the states affected by Hurricane Helene. In the heatmap below, we show each state’s week-over-week percentage change in non-seasonally adjusted initial jobless claims. As shown, those states in the direct path of Hurricane Helene and where the most severe damages occurred like South Carolina, Tennessee, Kentucky, and Florida all saw a massive increase in claims and accounted for more than half of all national claims on a combined basis.
The state with the single largest percentage jump was North Carolina where claims surged 290% WoW. Going back to 1986 when state data starts, the only other times (outside some seasonal blips around year-end) when claims rose as much were the onset of the pandemic, Hurricane Florence in September 2018, and during the recession in September 1990.
To summarize, national jobless claims have deteriorated with the caveat that a significant portion of that damage is weather-related. Below we show the national claims count (adjusted for seasonality) as well as claims excluding those storm-effected states (Florida, North Carolina, Tennessee, and Kentucky) with national seasonal factoring applied. As shown, with or without those storm-hit states, seasonally adjusted claims have risen in the past few weeks. Excluding those states, though, claims wouldn’t even be at summer highs let alone some of the highest levels in recent years.
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