Friday
Jan302015

So Long, January

Markets really could have gone either way this afternoon, but they ended up taking a decidedly negative turn over the final 90 minutes of trading, and it left market bulls licking their wounds for the month of January.  Below is a look at the performance of various asset classes in January using our key ETF matrix (which we draw from with our ETF Trends report over at Bespoke Premium).  

The left side of the matrix contains mostly US-equity ETFs.  As you can see, there's not a lot of green on the board.  The S&P 500 SPY ETF finished the month down 2.96%, while the Dow (DIA) did even worse with a decline of 3.61%.  In terms of sectors, Financials got crushed, falling 6.96%.  Even Energy did better than Financials in January with a decline of 4.56%.  While 8 of 10 sectors closed down on the month, we did see Health Care and Utilities finish in the green. 

Returns were mixed in international markets.  Brazil, Canada, Mexico and Spain were down 5%+ in January, but European markets like Germany and France both finished in the green.  Asia did even better, with Japan, India and Hong Kong all gaining 2% or more.

Commodities were volatile in January.  While oil bounced significantly today, it was still down 12.5% on the month.  Natural Gas ended up falling 7.5% in January, but we saw gold and silver gain nearly 10% on the month.

Finally, Treasuries continued their epic run to start the year.  As shown in the matrix, the 20+ year Treasury ETF (TLT) is already up 10% year-to-date.  Simply unreal.

Sign up for a 5-day free trial to our Bespoke Premium service for a closer look at the weak start to the year and whether or not we'll see a turnaround in February.

Friday
Jan302015

S&P 500 Higher or Lower from Here?

The S&P 500 looked like it wanted to close the month on a positive note with a nice bounce in the middle of the day.  But right when 2:30 PM ET hit today, a wave of selling was triggered, and we ended up trading down sharply into the close.  The sell-off today pushed the S&P 500 down more than 3% for the month of January.  So how will February shape up?  Please take part in our Bespoke Market Poll below by letting us know whether you think the S&P 500 will be higher or lower one month from now.  We'll report back with the results on Monday before the open.  Thanks for participating, and have a great weekend!

If you're struggling trying to find out how to position your portfolio in this market, be sure to check out our just-published Bespoke Report newsletter.  This week we really focus on the hundreds of earnings reports that have been released this earnings season and how their results will impact things moving forward.  Sign up for a 5-day free trial to any of our subscription services to access the Bespoke Report today!  If you're not happy after five days, you can walk away with no charge.  If you are happy -- which we think you will be -- you can access our reports for as low as $1/day. Head on over to our Subscribe page to try it out now.

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Friday
Jan302015

Friday Data Leaves Months To Hike Unchanged

The Fed Funds futures markets continues to see little change in the timing of Fed hikes in 2015, with the most likely scenario a hike at the December meeting.  Our Countdown to Liftoff estimate of the timing of Fed hikes stands at 9.5 months to hike, versus early January lows of 8.2 months.

Friday
Jan302015

Q4 2014 GDP Misses With Consumer Surging

After a blow-out revised reading on Q3 GDP (5.0% quarter-over-quarter real growth at a seasonally adjusted annual rate), the market and economists were much more circumspect in their expectations for Q4.  Going in to the report, Wall Street's consensus was for 3.0% growth and the Atlanta Federal Reserve's GDPNow estimate was calling for 3.5% growth, but both proved to be overly optimistic as the report came in at 2.6% QoQ SAAR.  Investment added much less to growth in Q4 than it had of late, while a collapse in government spending at the federal level (primarily defense outlays) kneecapped the fiscal contribution to growth.  Imports also exploded higher as the stronger USD fueled purchases of goods from overseas.  The bottom line for growth: the consumer is looking stronger, government and trade held back the economy this quarter, and investment slowed somewhat, driven by slower purchases of equipment.

Friday
Jan302015

Companies as Negative Since the Depths of the Financial Crisis

Below is a chart showing the spread between the percentage of companies raising guidance versus lowering guidance for each quarterly earnings season going back to 2002.  So far this earnings season, the spread between companies raising versus lowering guidance is -8.6 percentage points.  As shown, this is by far the worst reading of the current bull market, and it's close to the two extremely negative levels we saw in the fourth quarter of 2008 and the first quarter of 2009.  

A negative guidance spread is nothing new for this bull market.  As you can see, from 2011 through 2014, we saw negative spreads every single earnings season.  The first quarter of 2014 is the only time over the last three years that the spread has been positive, and it was just barely positive at that.  That being said, the spread so far this season is much worse than any of the other negative spreads seen in recent years.  It looks like either companies were caught way off guard or they are throwing in the towel on 2015.  Looking on the bright side, though, this gives the market a big opportunity to surprise on the upside.

You may think that all of the negative guidance is coming from the Energy sector, but that's not actually the case, and is among the sectors that are lowering guidance the least.  As shown below, Consumer Staples has seen the highest percentage of companies lowering guidance at 37.5%.  20% of Health Care companies have lowered guidance, while 17.5% of Consumer Discretionary companies have lowered.  Clearly, companies in the consumer sectors have negative outlooks even in the face of a big drop in oil prices.  

Interested in more earnings season analysis?  Sign up for a 5-day free trial to Bespoke Premium and check out our Bespoke Report newsletter when it's published this evening.  We'll have a full rundown of the current earnings season and what it means for the market.

Thursday
Jan292015

Bullish Sentiment Rebounds

What down market?  With the snow in the northeast, the bears apparently went into hibernation this week.  According to the weekly survey from the American Association of Individual Investors (AAII), bearish sentiment declined from 30.8% down to 22.39%.  One would have thought that with the weakness we have seen in the last few days that bearish sentiment would have increased.  While bearish sentiment declined, bullish sentiment rose from 37.1% up to 44.2%, bringing the weekly reading back above the bull market average of 38.8%.

Wednesday
Jan282015

Dow Stocks Having a Rough January

Earnings season has not been kind to blue-chip Dow Jones Industrial Average stocks.  Below is our trading range screen for the 30 index members, in which we also include each stock's year-to-date change and its current dividend yield.  The average stock in the Dow is currently down nearly 4% year-to-date, but names like American Express (AXP), Caterpillar (CAT), Goldman Sachs (GS), JP Morgan (JPM) and Microsoft (MSFT) are already down more than 10% after experiencing big declines on earnings.  As shown, 18 of the 30 Dow members are currently in oversold territory, with Intel (INTC), Microsoft (MSFT) and Procter & Gamble (PG) at the most extreme levels.  Boeing (BA) is the only stock that has really experienced upside momentum over the last week.

24 of the 30 Dow stocks currently have a higher dividend yield than the 1.72% that the 10-Year Treasury Note is yielding.  Key Tech stocks in the index like Cisco (CSCO), Intel (INTC), Microsoft (MSFT) and IBM are all yielding at or close to 3% right now.  After steep drops for a lot of these largecap names to start the year, these dividends are looking more and more enticing compared to a "risk-free" rate of 1.72%.

Wednesday
Jan282015

New Reports from Bespoke Market Intelligence

Our January Bespoke Consumer Pulse Report -- brought to you by Bespoke Market Intelligence -- is due out later this week.  For those unfamiliar, our monthly Pulse report makes up the backbone of our Bespoke Consumer Pulse subscription offering.  The report is an analysis of a 75-question survey we conduct on a statistically significant sampling of more than 1,500 US consumers.  From this unique, detailed survey, we're able to get an early read on trends in the economy ahead of the big economic data dump that comes out at the start of each month, including the widely-followed Nonfarm Payrolls report set for release this Friday.  Our Pulse report comes out a week before the monthly Nonfarm Payrolls report, giving subscribers ample time to position themselves properly based on the results from our survey.  Click here to view a sample of a past report to see if a subscription is something you're interested in.  You can sign up for a 5-day free Pulse trial today to receive this week's January publication free of charge!  As a Bespoke reader, we're happy to offer you a 20% discount on the life of your new Pulse membership.  Simply enter "thinkbig" in the coupon code section of the Pulse subscribe page to receive the 20% discount.

At Bespoke Market Intelligence, we continuously offer a large basket of quarterly survey studies available for purchase.  Below are links to fact sheets for four studies that have just gone live.  Learn more about these in-depth primary research offerings by visiting our What It Is, Who We Survey, The Survey Process, and Who We Are pages.  At those links, you'll learn exactly what we provide and why it's must-see research in this quickly-expanding field.

Bespoke Market Intelligence -- Consumer Electronics Quarterly Survey: January 2015

Bespoke Market Intelligence -- Streaming Media Quarterly Survey: January 2015

Bespoke Market Intelligence -- Social Media Quarterly Survey: January 2015

Bespoke Market Intelligence -- Video Gamers Quarterly Survey: January 2015

Wednesday
Jan282015

Countdown To Liftoff Unchanged Following FOMC

Today the FOMC released its January policy decision and statement, and following the release there's been a big intraday rally in bonds.  But Fed Funds futures remain mostly unchanged, and as a result so does our Countdown To Liftoff estimate of the Fed's hike date.

We've added a second version of our Countdown To Liftoff chart below.  In the right-hand version, we show the date that a hike is expected (vertical axis) versus the date recorded (horizontal axis).  The inputs for the estimate are the same for both charts.

Wednesday
Jan282015

Domestics Outperforming Internationals in 2015

A week ago we did a post on the impact that the geographical breakdown of revenues can have on stock performance.  In the example, we cited the huge outperformance that Altria (MO) has seen over Philip Morris International (PM) over the last year or so due to the strength of the US Dollar.

Yesterday, after multiple Dow stocks reported weaker than expected revenues due to the strength of the US Dollar, our International Revenues Database became as relevant as ever.  For those unaware, our International Revenues Database breaks down the percentage of international versus domestic revenues that each company in the Russell 1,000 and S&P 500 generates.  When the dollar is rising, companies that generate revenues domestically do well, while companies that generate revenues outside of the US get hurt.  Geographical revenue exposure is extremely important when building a portfolio in this market.  To access our International Revenues Database, you'll need to sign up for either the annual Bespoke Premium membership or the Bespoke Institutional membership.  For a limited time, you can use "database" in the coupon code section of our Subscribe page to get $50 off the price of an annual Bespoke Premium membership.  You can also use "database" to get $200 off the cost of an annual Bespoke Institutional membership.

To further highlight the dollar's impact on stock performance recently, below is a chart that shows the year-to-date performance of Russell 1,000 companies in our International Revenues Database.  As shown, the average stock in the index is currently down 0.91% year-to-date.  But the average performance of companies in the index that are 100% domestic is +0.61%, while the average performance of companies in the index that generate 50% or more of their revenues outside of the US is -3.34%.  Clearly the dollar is impacting the big internationals negatively, while the domestics are outperforming.

Wednesday
Jan282015

Heavily Shorted Stocks Still Hurting: What Else is New?

Short interest figures for the middle of January were released after the close yesterday, and earlier today we sent out our regular Short Interest update to subscribers highlighting the trends of the first two weeks of 2015.  The table below is from that update and it lists the 35 stocks in the S&P 1500 with more than 25% of their free-floating shares sold short.  For each stock in the table we have also included its performance so far in 2015.

As you can see in the table, there is a sea of red in the performance figures of the 35 stocks shown.  Through early afternoon, just nine of the stocks listed are even up this month.  On the other end of the spectrum, ten of the stocks shown are down over 10%.  Leading the way lower are shares of Swift Energy (SFY) and REXX Energy.  These two stocks are down 44% and 37%, respectively, and not surprisingly they are both from the Energy sector.  While most people have probably never heard of those two companies, two large cap Energy sector stocks that most people have heard of (Diamond Offshore-DO and Transocean-RIG) also made the current list.

Even though the Energy sector has been under selling pressure for months now, up until recently the list above only had a handful of stocks from the sector on it.  That has now changed, though.  As shown above, ten of the 35 stocks listed above (29%) are from the Energy sector.  Bearish sentiment towards the Energy sector is also showing up in the aggregate short interest figures for the Energy sector.  The chart below shows the average short interest as a percentage of float for stocks in the Energy sector.  At a current level of 9.5%, the current level is at its highest since at least 2008, and is 55% above the average reading over that time period.  Just to show how quickly sentiment has shifted.  At the end of June, this reading was only slightly above average at 6.7%.

Wednesday
Jan282015

S&P/Case-Shiller Home Price Update

The November 2014 S&P/Case-Shiller home price data came out yesterday, and below is an updated look at the most recent numbers.  For awhile there in 2013 and 2014, we were seeing month-over-month gains in home prices for every city tracked.  More recently, there has been a mix of gains and losses from city to city.  As shown below, in November, 11 cities saw month-over-month home price increases, while 9 saw declines.  Tampa and Miami -- the two Florida cities tracked -- saw the biggest month-over-month gains, while Chicago, Detroit and New York saw the biggest month-over-month declines.  

In terms of year-over-year changes, San Francisco and Miami are up the most at 8%+, while Cleveland, Minneapolis and New York are up the least with gains of 1.5% or less.

Below is a chart showing how much each city's home prices are now up off of their housing-bust lows.  As shown, San Francisco (think Silicon Valley) is up the most at +67%, followed by Las Vegas, Detroit and Phoenix.  Nationally, prices are up around 25%, but in cities like New York and Cleveland, prices have only increased a little over 10% off their lows.

Below is a chart showing how much home prices in each city are still down from their housing-boom highs.  Las Vegas is still down the most from its record highs at -41%, while Phoenix, Miami and Tampa are off 30%+ still.  The national reading is right around 10% from its highs, and two cities -- Denver and Dallas -- have already gained back all of their declines and then some.

Below are charts showing the S&P/Case Shiller home price levels for each city since 1989.  Check out the chart for Dallas.  Prices have blown past their prior highs and have gone parabolic since 2012.  It will be interesting to see if the recent drop in oil has an impact on prices there.  We'll have to wait a few months since the price data has a two-month lag.

Tuesday
Jan272015

One Third of Dow 30 Within 10% of a 52-Week Lows

With what can only be described as a bad earnings report, shares of Caterpillar (CAT) traded down over 7% today and in the process hit a 52-week low.  While CAT is the only Dow 30 stock hitting a 52-week low today, one third of the stocks in the index are currently within 10% of making a new one-year low.  Stocks that are closest to that threshold include IBM, McDonald's (MCD), Verizon (VZ), AT&T (T), and General Electric (GE).

While a third of the stocks in the DJIA are closing in on 52-week lows, the vast majority are still trading near their respective 52-week highs.  As shown in the table below, 18 of the remaining 20 stocks in the index are still less than 10% below their 52-week highs.  Names that are currently the closest to their individual 52-week highs include Home Depot (HD), Merck (MRK), Travelers (TRV), and Pfizer (PFE).

Tuesday
Jan272015

Countdown To Liftoff Steady In Face of Economic Data

After a huge miss in Durable Goods Orders and a so-so S&P/Case-Shiller Home Prices report this morning, there were big beats in Consumer Confidence and New Home Sales.  After all the excitement, stocks have been getting hit hard (the S&P 500 currently trades 1.4% lower and Treasury yields have sunk), but the Fed Funds Futures markets isn't predicting any huge changes to the outlook for rate hikes.  Our estimate of the first hike based on Fed Funds futures estimates a hike in November; but since there isn't a Fed meeting in November, this would imply a hike in either December or October.  Further complicating matters is the fact that Fed policymakers are expected to hike at a meeting that features a press conference from Chair Yellen, which would be in either December or September.  Therefore interpreting the below: most likely, December, possibly October, least likely September.

Tuesday
Jan272015

End of a Record Streak

While it may have gotten overlooked due to the weak equity market, weak economic data, and weak earnings reports, there was one record losing streak that actually came to an end yesterday.  According to AAA, the average price of a gallon of gas rose from $2.033 up to $2.038, ending a record streak of 123 days without a gain.  Prior to yesterday, the last time the daily average price of gasoline increased was way back in September of last year.