Daily Sector Snapshot — 10/7/24
Chart of the Day: Generac (GNRC) Around Hurricanes
B.I.G. Tips – Analysts Turning More Bearish Ahead of Earnings Season
Bespoke’s Morning Lineup – 10/7/24 – The Calm Before the Storm
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.
“We learn from history that we don’t learn from history!” – Desmond Tutu
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
It’s a quiet morning on the economic calendar today, but things will pick up later in the week with the releases of CPI on Thursday and then PPI and Michigan Sentiment on Friday. Besides the economic data, earnings season will kick off later this week when the big banks like Blackrock (BLK), JPMorgan Chase (JPM), and Wells Fargo (WFC) report on Friday morning. Outside of the Financials, we’ll also get reports from Pepsi (PEP) tomorrow, and Delta (DAL) Thursday morning. So, enjoy the calm while it lasts. More importantly, the west coast of Florida is anxiously watching the path of Hurricane Milton which is expected to rip through the state from west to east later this week.
Last week may have been the fourth straight week of gains for the S&P 500, but the gain’s magnitude was the smallest of the last four weeks. While the week ending 9/13 saw the S&P 500 rally over 4%, every week since has seen a smaller percentage gain. Gains are still gains, though, and outside of the Russell 2000, other major US indices finished last week higher and remained at overbought levels.
At the sector level, the picture looks different. While just three sector ETFs finished last week up by more than 1%, four finished down by over 1%. Leading the way lower, Consumer Staples, Materials, and Real Estate were down more than 1.5%. On the upside, geo-political worries in the Middle East pushed the Energy sector ETF (XLE) up by close to 7%, and it was the best week for the sector since mid-October 2022. While there was a lot of dispersion in sector performance last week, one consistent across all eleven sectors has been that they are all up by double-digit percentages.
Looking at the Energy sector specifically, in addition to last week being the best week for the sector in nearly two years, it also broke the downtrend it has been in since the spring highs. The big gains for Energy may spark concerns over inflation, especially with CPI and PPI coming up this week, but at this point, the bulk of the rally in the sector can be chalked up to geopolitics. If the gains were more due to concerns over inflation and higher demand, Materials should have also rallied, and with a decline of 1.8%, it was the second worst-performing sector last week.
Brunch Reads – 10/6/24
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.
Bad Blood Bout: On October 6th, 2018, UFC 229 became the most-watched event in UFC history and certainly in Mixed Martial Arts. The event drew massive attention for its main event between Conor McGregor and Khabib Nurmagomedov, generating more than 2.4 million pay-per-view buys. That staggering figure is only behind two Floyd Mayweather boxing matches, one against McGregor. Anybody who pays attention to the fighting world knows the huge draw of Conor McGregor. Couple that with a matchup against the undefeated Khabib and a bad-blood backstory, and people are bound to tune in. It’s a recipe that has worked for decades.
In retaliation to McGregor’s friend being confronted by Khabib and his team in a hotel lobby, McGregor infamously attacked a bus carrying Khabib and other fighters at UFC 223, throwing a dolly at its window. Personal attacks were made in dark press conferences, and the stage was set. Khabib controlled most of the fight with his signature wrestling ability before ultimately submitting McGregor in the fourth round with a neck crank. Immediately after, Khabib made a shocking move, jumping the caging and attacking McGregor’s cornerman. While an all-out brawl ensued outside the cage, another began inside as members of Khabib’s team ambushed McGregor. Whether you bet on the Irishman or Russian, UFC 229 lived up to the hype.
Education
Sorry, Harvard. Everyone Wants to Go to College in the South Now. (WSJ)
More Northern high school seniors are choosing Southern universities like Clemson, Alabama, and Georgia Tech, drawn by lower tuition, school spirit, and a more laid-back, politically neutral atmosphere. The pandemic played a big role, with students seeing life carry on in Southern schools while the Northeast remained locked down. It’s led to an 84% increase in Northerners attending Southern public schools over the past two decades, and many are staying in the region post-graduation to take advantage of booming job markets. The trend is reshaping both college landscapes and local economies. [Link]
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The Bespoke Report – Q4 Equity Market Pros and Cons
This week’s Bespoke Report is an updated version of our “Pros and Cons” edition for Q4 2024.
With this report, you’re able to get a complete picture of the bull and bear case for US stocks right now. It’s heavy on graphics and light on text, but we let the charts and tables do the talking!
On page three of the report, you’ll see a full list of the pros and cons that we lay out. Slides for each topic are then provided on page four and beyond.
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Daily Sector Snapshot — 10/4/24
Bespoke’s Morning Lineup – 10/4/24 – Show Us The Jobs!
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.
“Being an intellectual creates a lot of questions and no answers.” – Janis Joplin
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
Call it the calm before the jobs storm, but equity futures have drifted into positive territory as we approach the September non-farm payrolls report. A tentative agreement on the port strike has also helped sentiment. In Asia, Chinese markets remain closed for the National Holiday, but the Hang Seng was open, and it rallied another 2.8% taking its weekly gain to 10.2%. Hong Kong’s Manufacturing PMI for September ticked up to 50.0% from 49.4 in August, so that helped investor sentiment heading into the weekend. The Nikkei gained a more modest 0.2% in Japan and finished the week down 3%. India finished the day down 1.0% as the September Services PMI fell more than expected to 57.7 from 60.9 in August.
In Europe this morning, the tone is mostly positive as markets look to end a negative week (STOXX 600 down over 2%) on a positive note. While French Industrial Production came in higher than expected (1.4% vs 0.3% forecast), Retail Sales in Italy and Spanish Industrial Production unexpectedly declined.
For a Federal Reserve that is more concerned about the job market than inflation, it feels as though this morning’s employment report hasn’t had quite the buildup of other reports in the past. Be that as it may, history would suggest a weak report. As shown in the chart below, since 1998, the September change in non-farm payrolls (reported in early October) has consistently come in weaker than expected. Of the 26 prior reports, the initial headline reading has missed expectations nearly 70% of the time, and the median spread relative to expectations has been a miss of 47K.
With economists expecting a headline reading of 150K, history would suggest a possibility of a sub-100K number. That would be just the second such reading since the start of 2021 and the last three months! So does that mean a weaker-than-expected print is in the bag? Nothing is ever that easy, and while the September report has historically been weak, last year’s initially reported number was the biggest beat relative to expectations since at least 1998 (although it was ultimately revised down by 90K in the ensuing months).
It has been over two weeks since the Fed cut rates, so we wanted to step back and see how various asset classes and market sectors have performed. Starting with asset classes, commodities have been the biggest winners with gold up over 4% and crude oil rallying 3.8%. After that, the Nasdaq, US Dollar Index, Bitcoin, and the S&P 500 have rallied between 1% and 2%. Lastly, on the downside, US Treasuries and the Russell 2000 have declined.
At the sector level, given the surge in oil prices, the Energy sector has been the top-performing sector with a gain of over 6%. Communication Services and Utilities have followed with a rally of over 3.5%. No matter what the environment has been this year, it seems there’s no stopping the Utilities sector. On the downside, Consumer Staples, Health Care, and Real Estate have all declined over 2% as interest rate-sensitive sectors (besides Utilities) have felt the pressure of rising rates.
The Closer – Auto Credit, ISM, Blue/White Collar Jobs – 10/3/24
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Looking for deeper insight into markets? In tonight’s Closer sent to Bespoke Institutional clients, we start out with a look into auto credit markets (page 1) followed by a review of the latest service PMIs (page 2). We then recap the latest housing data (pages 3 and 4). We then finish with a dive into the latest Indeed job postings data (page 5) including a look at the discrepancies between white and blue collar postings (page 6).
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