Friday
Dec052014

S&P 500 Higher or Lower from Here?

The S&P 500 was relatively flat this week, but overall the trend was slightly higher.  So which way will the market head from here?  Please take part in our weekly 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!

Will the S&P 500 be higher or lower than its current level one month from now?
Higher
Lower
  
Free polls from Pollhost.com

One of our most popular products over at Bespoke Premium is our "Bespoke 50" list of our 50 favorite growth stocks.  To make the list of 50, a stock must have strong earnings growth prospects along with an attractive price chart based on Bespoke's proprietary fundamental and technical analysis.  

Heading into the final few weeks of the year, the Bespoke 50 is now up 100.5% since inception in 2012 versus a gain of 52% for the S&P 500 over the same time period.

So which stocks currently make up the Bespoke 50?  To find out, simply sign up for a 5-day free trial to our Bespoke Premium service.  The Bespoke 50 is updated on a weekly basis every Thursday, and this week's list of 50 stocks was just published this afternoon.  Click here to start your free trial today with a 10% discount on the price of your membership.  To take advantage of the 10% discount, enter "endofyear" in the coupon code section of our Subscribe page.

Thursday
Dec042014

Just Published: the Bespoke 50 -- Up 100% Since Inception

One of our most popular products over at Bespoke Premium is our "Bespoke 50" list of our 50 favorite growth stocks.  To make the list of 50, a stock must have strong earnings growth prospects along with an attractive price chart based on Bespoke's proprietary fundamental and technical analysis.  

Heading into the final few weeks of the year, the Bespoke 50 is now up 100.5% since inception in 2012 versus a gain of 52% for the S&P 500 over the same time period.

So which stocks currently make up the Bespoke 50?  To find out, simply sign up for a 5-day free trial to our Bespoke Premium service.  The Bespoke 50 is updated on a weekly basis every Thursday, and this week's list of 50 stocks was just published this afternoon.  Click here to start your free trial today with a 10% discount on the price of your membership.  To take advantage of the 10% discount, enter "endofyear" in the coupon code section of our Subscribe page.

Thursday
Dec042014

Classic Downtrend Break In Shanghai

On July 24th, we sent Bespoke Premium clients a B.I.G. Tip report highlighting the price action for the Shanghai Composite.  

"The move today has resulted in a break through long-term downtrends in both the Shanghai
Composite and the FXI ETF."
"In the long-run these charts are increasingly attractive."

We also included the following chart in the July report:

Since that date, the Shanghai Composite has rallied an astounding 37.7%, as illustrated in an updated chart below.

Below is a second chart showing an even stronger technical pattern: the downtrend since 2008.

The Shanghai composite has now broken well above both downtrend lines.  Financial market liberalization (including allowing foreigners to hold onshore Chinese equities) is assisting.  As a result of connections between Hong Kong and Shanghai, the number of equity brokerage acccounts is surging, and new account openings have thus far been highly correlated with Shanghai Composite returns.

While the breakout has been huge recentlty and leaves significant room for a short-term pullback, in the long-term these charts are still very bullish.  When a long-term trend breaks, it can have a powerful effect on prices.

For more analysis of global equities and trends like the Shanghai Composite that we identified back in July, make sure to sign up for a 5-day free trial to Bespoke Premium today!  Right now you can get 10% off the price of your new subscription with our holiday special.

Thursday
Dec042014

Bullish Sentiment Back Below 50%

Even though the S&P 500 is still hitting all-time highs, individual investors are feeling a little bit less optimistic.  In the latest weekly survey from the American Association of Individual Investors (AAII), bullish sentiment dropped from 52.15% down to 42.68%.  That 9.5 percentage point decline is the largest since mid-June, and brings bullish sentiment down to its lowest levels since mid-October, which was the height of the market pullback.

Of those investors who left the bullish camp, just about half of them moved into the bearish camp, while the remaining investors shifted to neutral.  As shown in the chart below, bearish sentiment rose from 20.79% up to 25.94%.  This was the largest weekly increase since late September, and brought bearish sentiment up to its highest level since mid-October.

Thursday
Dec042014

Jobless Claims Back Below 300K

Jobless claims for the latest week came in slightly higher than expected, but still managed to get back into the sub 300K range after last week's jump higher.  While economists expected first time claims to drop down to 295K, the actual reading came in at 297K, which was down 17K from last week's revised reading of 314K.

In spite of the decline this week, the four-week moving average still rose from 294.25K up to 299K.  This marks the 12th week in a row that the four-week moving average has come in below 300K.  However, in order stay below 300K for a 13th week, we are going to need next week's level of claims to come in below 297K.

 On a non-seasonally adjusted (NSA) basis, claims dropped from 357.1K down to 294.2K.  For the current week of the year, this is the lowest level since 2005, and more than 120K below the average of 414.7K for the current week of the year going back to 2000.

Wednesday
Dec032014

Fewer and Fewer Commodities Rising in Price

In a similar trend to what we saw in Monday's ISM Manufacturing report, companies in the services sector are seeing a smaller number of commodities rising in price.  In this month's commodity survey of the ISM Non Manufacturing report, respondents noted price increases in ten commodities, price declines in seven commodities, and three commodities in short supply. On a side note, Labor was one of the commodities that companies noted as being scarce.

The chart below shows the historical comparison between the net number of commodities rising in price on a monthly basis since 1999 (three month average) and compares it to the y/y change in CPI.  Like the same survey for the ISM Manufacturing report, this series has closely tracked the CPI over time, and while more commodities are still rising in price than falling, the current monthly level is the lowest of the year, and the three month average (5.0) is the lowest since January. 

Wednesday
Dec032014

The Pulse of the Economy

Last Friday we published our November Bespoke Consumer Pulse Report ahead of this Friday's nonfarm payrolls report.  If you're unfamiliar with Bespoke's new Consumer Pulse subscription offering, last week we highlighted some of the key trends we've identified ahead of the street since we launched back in August.  With our new Pulse service, each month we survey between 1,500 and 2,000 US consumers, which represents a statistically significant sampling of the US population.  The survey these consumers take consists of 75 questions related to their personal finances, spending habits, and economic and investor sentiment levels.  From our monthly survey, we're able to get a real-time look at the state of the US economy, and we break it into six key sections -- Economic Sentiment, Consumer Activity, Labor Markets, Housing, Investor Sentiment and Personal Finances.  Click on the image above to see a sample of a past Pulse report.

The Pulse report also tracks spending activity and sentiment levels for dozens of specific stocks.  Our survey provides subscribers with key reads on companies like Apple (AAPL), Google (GOOGL), Amazon (AMZN), Netflix (NFLX), Twitter (TWTR), LinkedIn (LNKD), Facebook (FB), Zillow (Z), Nordstrom (JWN), Wal-Mart (WMT), Kohl's (KSS), Walgreen's (WAG), CVS, RiteAid (RAD), McDonald's (MCD), Panera (PNRA), Chipotle (CMG), Starbuck's (SBUX) and dozens and dozens more.  If you have a position in any of these names, you'll find our survey very beneficial to your investment thesis.

Our November Pulse report has plenty of actionable data points for subscribers to pick through.  Below are two charts from the report worth highlighting.  The first is our tracker for the question asking survey-takers if they are concerned that they will lose their job.  The higher the tracker in the chart below, the more comfortable consumers are with their employment situations.  As shown, after flat-lining from July through September, we've interestingly seen an uptick in recent months.

The second chart below asks survey-takers how likely they are to purchase a house in the next year.  As is clearly evidenced in the chart, we've seen a big bump up over the last two months as well to go along with our jobs tracker.  This tells us that the stronger labor market may be working its way into the housing sector.

Want to give Pulse a try and see our just-published November report ahead of Friday's jobs number?  Why not sign up for a 5-day free trial today?  It's free for the first five days, and you can cancel at any time.  And since this is a relatively new subscription offering (launched in August), we're providing you with a 30% discount to the service for the life of your membership!  Simply enter "pulsecharter" in the coupon code section of the Pulse subscribe page to recieve the 30% discount.  

Head on over to the Pulse website to learn more about the Pulse report.  If you're unhappy with the service at any time, simply give us a call and cancel.  For the first five days, though, the service is on us.

Wednesday
Dec032014

ISM Services Rebounds

Although the pace of growth in the manufacturing sector slowed in November, activity in the non manufacturing sector saw a nice rebound.  In this month's ISM Non Manufacturing report, the headline index rose to 59.3 from last month's reading of 57.1, handily surpassing the consensus forecast of 57.5.  Additionally, this month's report was the second highest reading of the expansion, trailing only the 59.6 reading we saw last August.  On a combined basis, the ISM reading for November hit a level of 59.2, which was up 1.9 points from last month's reading of 57.3.  That was also the second largest reading of the recovery. 

Looking at the internals of November's ISM Non Manufacturing report, breadth was strong this month.  Of the ten individual sub-components, eight increased both on a m/m and y/y basis.  Relative to last month, the only two components that declined were Employment and Import Orders, while both export and import orders declined relative to last year.

Tuesday
Dec022014

Most Heavily Shorted Stocks Still Getting Slaughtered

While a lot of people were likely out of the office and traveling for Thanksgiving, short interest figures for the middle of November were released after the close last Tuesday.  As we do with each update, the table below lists stocks (27) in the S&P 1500 with more than 25% of their free-floating shares sold short.  As has been the trend for several weeks, and continues to be now, the most heavily shorted stocks in the S&P 1500 have been getting slaughtered.  Of the 27 stocks listed below, just eleven are up.  All in all, the average change for these stocks since 11/14 (date the data for short interest is as of) is a decline of 5.11%.  For a period of less than three weeks in practically any market environment, that's a bad return, but in a period of time where the S&P 1500 rose nearly 1% (+0.97%), it is an embarrassment.  Granted, the average is skewed by some big declines in a handful of names, but even using a median return (-1.18%), the collective performance of these stocks is weak to say the least. 

In terms of individual names, six stocks were down more than 10%, while three (PVA, SFY, and PGN) Energy sector names have lost a third of their value.  On the upside, the only two stocks that gained more than 10% were SunEdison (SUNE) and Outerwall (OUTR).  Not surprisingly, the worst performers on the list below were all in the Energy sector.  Perhaps equally as surprising, though, is the fact that those three stocks are the only stocks in the Energy sector on the list.  With more than half of the stocks in the sector hitting 52-week lows yesterday, you would think the shorts would be piling on.  That being said, short interest in the sector as a whole is the second highest of the ten sectors.  As of mid-November, the average short interest as a percentage of float for stocks in the Energy sector is 7.34%.

Tuesday
Dec022014

The Bespoke Global Yield Curve

As part of our Bespoke Fixed Income Weekly, each Wednesday Bespoke produces a snapshot of the state of global bond markets called The Bespoke Global Yield Curve.  The curve is designed to provide a view of the global economy as expressed by local-currency government bond markets for the 15 largest economies around the world.  Our curve is weighted based on Purchasing Power Parity GDP for the most recent year (currently 2013).  Why bother doing this?  It's important to note that the yield curve we construct isn't a tradable instrument; not all of the countries included allow external trading of their local currency government bonds and some of the tradable instruments are illiquid.  Rather, we like to look at the curve as a barometer for the trends in global markets and the economy.

The following countries are included, in order of weighting: US, China, India, Japan, Germany, Russia, Brazil, UK, France, Mexico, Italy, South Korea, Canada, Spain, and Indonesia.  The following tenors (using local currency yields) are included for each country: 1 year, 2 year, 3 year, 5 year, 7 year, 10 year and 30 year.  In some instances (Brazil being the prime culprit) local market issuance can be spotty, so we occasionally need to interpolate yields or estimate them based on other bonds issued by the country.  Below are charts highlighting the current reading of The Bespoke Global Yield Curve, including the levels as-of inception (5/22/14), three months ago, a month ago, and current.  Below we also graph changes between each of those dates and the current level for each point along the curve.

As shown in the graphs above, The Bespoke Global Curve has flattened dramatically over the past six months: shorter-term yields have risen, while longer-term yields have plunged.  Flattening moves are often pointed to as bearish indicators for economic momentum, and rightly so, as illustrated in a chart of US bond market yields dating back 25 years sent to clients in The Closer last week.  Flattening is indicated by all four yields moving together, while steepening is indicated by widening spreads.

While the flattening move this year isn't a bullish sign for economic growth, keep in mind how steep The Bespoke Global Curve still is: 165.41 bps yield spread between the thirty year point and the two year point.  That spread has declined (flattened) 61.15 bps in six months, but would need to do so by another 2.5x to fully invert (short-term rates higher than long-term rates).  Therefore The Bespoke Global Curve's move this year suggests that while the global economy is heading for a slower growth path, there doesn't appear to be an imminent threat of global recession.

For more fixed income, macroeconomic, and cross-asset research from Bespoke, sign up for a free trial of Bespoke Premium today! Our five day free trial lets you see our research for free for a week, which includes this week's Bespoke Fixed Income Weekly, out Wednesday.

Tuesday
Dec022014

Another Decline in Ford Truck Sales

Truck sales are one of the less traditional indicators we like to follow to gauge overall strength in the US economy, and more specifically the small business sector.  With that in mind, today's release of F-Series truck sales in the month of November coupled with a variety of economic indicators showing slower momentum doesn't paint an especially rosy picture.  During the month of November, Ford sold just over 59K F-series trucks which represented a decline of 1.4% from last year's total.  This represents the first time since 2009 that sales of F-series trucks in the month of November declined on a year over year basis.

Similarly, on a year to date basis, sales of F-series trucks totaled 679,496 in the first eleven months of 2014, which was down just over 1% from the same period in 2013.  While these monthly and year to date totals are not encouraging at face value, we would note once again this month that the decline is not unexpected.  In recent months, Ford has cut production at certain plants in order to retool them for production of the revamped version of the F-series pickup truck, which will start hitting dealerships in the coming weeks.  Once production gets back up to normal, analysts expect sales numbers to begin picking back up again.

Monday
Dec012014

ISM Commodities Survey Turns Negative

In the wake of today's Prices Paid Index of the ISM Manufacturing report dropping to its lowest levels since the Summer of 2012, the number of commodities rising in price also predictably fell.  According to ISM, manufacturers noted that three commodities rose in price during the month of November, while ten declined.  With a net reading of negative seven, more commodities are down in price than at any other point since June 2012.

So why is this notable?  The chart below compares the three month average of the monthly net number of commodities rising in price to the year/year change in CPI.  As the chart illustrates, moves and directional shifts in this three month average have tended to track changes in the CPI.  Therefore, with the average declining to negative territory this month, while the y/y CPI will unlikely get down into negative territory, we would expect the pace of inflation to show further declines.

Monday
Dec012014

November's Big Winners, Big Losers Both Down Today

The equity market here in the US is getting off to a rough start to December today.  A lot of the big momentum Tech names that did well in November are getting slammed, and we're also seeing a continuation of declines for November's big losers.

We broke the S&P 1500 into deciles (10 groups of 150 stocks each) based on stock performance in November and then calculated the average one-day percentage change today for the stocks in each decile.  In the chart below, decile 1 contains the 150 stocks in the S&P 1500 that did the best in November, while decile 10 contains the 150 stocks that did the worst in November.  As you can see, the best performing stocks in November (decile 1) are down an average of 1.18% today, so investors are taking profits on recent winners.  But they're also liquidating the stocks that did the worst in November.  In fact, the 150 worst performing stocks in November (decile 10) are down a whopping 3.17% today!  That's a huge negative reading, and many names in this decile are from the Energy sector, where companies continue to get absolutely crushed.  It appears as if the knife is still falling even though the month changed from November to December.

Below is a look at the 25 S&P 1500 stocks that did the worst in November.  Remarkably, every single one is down today, and most by a large amount.  The average change today for these 25 stocks is -6.49%.  That's a bloodbath.

Monday
Dec012014

Stronger Than Expected ISM Manufacturing

Today's release of the ISM Manufacturing report for the month of November confirmed some of the recent weakness that we have been seeing in the regional Fed manufacturing surveys as the headline reading showed a decline of 0.3 points, falling from 59.0 down to 58.7.  Even with the decline, though, today's report came in stronger than the consensus forecast of 57.8.

The table below breaks down the breadth of this month's ISM Manufacturing report by each of the index's subcomponents.  Although the headline reading saw a decline this month, more of the index's components increased (6) than declined (4).  Relative to a year ago, the breadth was even stronger with seven out of ten components showing a year over year increase.

Prices Paid was by far the biggest mover of any component this month.  While economists were forecasting a level of 52.5, the actual reading was much lower at 44.5.  This was the lowest reading for this component since July 2012, the largest monthly decline since June 2012, and the largest miss relative to expectations since June 2012.

Monday
Dec012014

Bullish Sentiment Down But Above 50%

Bullish sentiment dropped 8 percentage points this weekend in our weekly Bespoke Market Poll -- from 61% down to 53%.  This is actually the lowest reading for bullish sentiment seen since the last weekend of September.