Thursday
Oct162014

Netflix (NFLX) -- How Much is Cost Really Impacting New Subscribers?

One of the reasons Netflix (NFLX) cited for its slightly weaker-than-expected subscriber growth was its recent $1 increase in the monthly subscription cost for the service.  Over at Bespoke Market Intelligence, we run a quarterly consumer survey on Netflix (NFLX) and other streaming media companies to track the sector, with extra attention paid to Netflix.  We just ran our most recent survey earlier this month, which is available for purchase if you're interested.  It's a must-read piece of research if you have a big position (either long or short) in Netflix.  Visit our "custom studies" page to learn how to purchase.

One of the many questions we ask consumers in our Netflix/streaming media survey is whether they "believe Netflix streaming would be a great deal at $8.99 per month".  Below are the results from both our June and October surveys.  The $1 price increase from $7.99 to $8.99 took place back in May, so the June survey was the first that ran after the price increase.  

As shown, there was no significant difference in opinion from June to October, and a large majority still either agree or strongly agree that $8.99 is a great deal.  Less than 10% disagree or strongly disagree that $8.99 is a great deal.

When we asked current Netflix subscribers about the value they get for their money, a large majority are either satisfied or very satisfied, with 35.9% answering "very satisfied".  Less than 5% of subscribers are either unsatisfied or very unsatisfied with Netflix's value.

Based on our survey analysis, we don't believe the $1 price increase has impacted subscriber growth to a significant degree.  In general, $8.99 is viewed as a great price for the service.

Last week, we published a "Pulse Point" on Netflix for Bespoke Consumer Pulse subscribers.  We are providing a free look at the report below as a way to show you the type of content that's included with a Pulse membership.  These Pulse Points are released throughout the month, in between our monthly Consumer Pulse Report, which makes up the backbone of the Pulse service.  To learn more about Pulse, please visit our website.  You can sign up for the service now for 30% off the life of your membership!  Simply enter "pulsecharter" in the coupon code section of the Pulse subscribe page to receive the discount.  Our next Consumer Pulse Report is due out at the end of October, one week before the early-November nonfarm payrolls release.  

 

 

Thursday
Oct162014

Philly Fed Exceeds Expectations

After a significantly weaker than expected Empire Manufacturing report on Wednesday, today's regional manufacturing report from the Philadelphia Fed showed a modest decline, but still managed to exceed expectations.  While economists were expecting a level of 19.8, the actual reading came in at 20.7, down from last month's level of 22.5. As shown in the chart, this indicator still remains near its highs of the recovery.

In terms of the breadth of this month's report, the results were mixed, but skewed towards the positive side.  Of the nine subcomponents, five increased and four declined.  Interestingly, while Thursday's jobless claims report showed the lowest weekly reading in 14 years, the two employment related components (Number of Employees and Average Workweek) of the report saw the biggest declines.  In the case of Average Workweek, that indicator actually went negative.  One of the side-effects of ObamaCare was that employers would cut back hours of employees in order to avoid having to offer coverage for their employees, and based on this and many of the other employer related indicators we track, this appears to be happening to a degree. 

Looking for ways to navigate through the surge in market volatility?  Take a free trial of our Bespoke Premium service and stay on top of all the latest movements.  Sign up today for instant access.

Thursday
Oct162014

Homebuilder Confidence Plunges

Sentiment for the home builders took a big dive in October, falling to its lowest level since July.  According to the National Association of Home Builders (NAHB), home builder sentiment dropped from 59 down to 54, compared to expectations of 59.  October's report ended a run of four straight months where the survey came in better than expected.

The table to the right breaks down this month's report by categories and region.  As shown, the internals of the report weren't pretty.  Across all three categories (Present Sales, Future Sales, and Traffic), sentiment declined, with the biggest declines coming in Present Sales and Traffic.  On a regional basis, no area of the country was spared, with declines across the country.  The biggest declines this month came in the Midwest, where sentiment fell from 61 down to 53.  Behind that, sentiment in the West fell by nearly the same amount (61 down to 54).  It's hard to believe that with interest rates this low, sentiment in the home builder industry can drop so low.

 Looking for ways to navigate through the surge in market volatility?  Take a free trial of our Bespoke Premium service and stay on top of all the latest movements.  Sign up today for instant access.

Thursday
Oct162014

Bullish Sentiment Increases

One would think that with all the volatility and weakness we have recently seen in equities, that individual investors would be getting a bit more fearful.  Over the last two weeks, however, the opposite has been the case.  After rising back above its bull market average last week, bullish sentiment as measured by the American Association of Individual Investors (AAII) saw another slight increase this week, rising from 39.88% up to 42.66%, which is the highest weekly reading in six weeks.  Whenever you see the type of market action that we have seen over the last several days, the last thing you want to see is that individual investors are getting more bullish.

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Thursday
Oct162014

Jobless Claims Hit a 14 Year Low

After some poor economic data relative to expectations on Wednesday, Thursday started off on a positive note with jobless claims coming in much lower than expected.  While economists were expecting first time claims to rise slightly to 290K from last week's level of 287K, they actually declined by 23K to 264K.  This represents the lowest weekly reading since April 2000.

With this week's decline, the four-week moving average fell by more than 4K down to 283.5K.  For this indicator, this represents the lowest level of the current recovery.  In fact, to find a lower level you have to go all the way back to June 2000.

On a non-seasonally adjusted basis (NSA) jobless claims rose by 14K up to 271.6K.  That being said, we would note that it is common for claims to rise during this week of the year on a non-seasonally adjusted basis.  In fact, like the seasonally adjusted reading, the NSA reading for the current week of the year hasn't been this low since 2000 and is well below the average of 379.3K for the current week of the year dating back to 2000.

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Wednesday
Oct152014

52-Week Lows in the Energy Sector Exceed 40%

No sector of the market has been harder hit in the last several days than the Energy sector, and with its decline, the list of new 52-week lows has been steadily expanding.  In Wednesday's trading, 42% of the stocks in the S&P 500 Energy sector hit 52-week lows.  As shown in the chart below, the net reading of 52-week highs (percentage of 52-week highs minus percentage of 52-week lows) for the sector is now at its most negative levels in over three years since the aftermath of the US debt downgrade.  We still have a ways to go before getting below those levels, and let's just hope the days when every stock in the sector trades at a 52-week low simultaneously aren't seen again for a very long time.

Looking for ways to navigate through the surge in market volatility?  Take a free trial of our Bespoke Premium service and stay on top of all the latest movements.  Sign up today for instant access.

Wednesday
Oct152014

Weakest Empire Manufacturing Report Since April

Manufacturing activity in the New York area has seen a notable slowdown in the month of October as the NY Fed's Empire Manufacturing survey came in significantly weaker than expected -- falling to its lowest level since April.  While economists were expecting the headline General Business Conditions Index to fall to 20.25 from last month's level of 27.54, the actual decline to 6.17 was much larger than expected.  It was also the largest monthly decline since November 2010 and the biggest miss relative to expectations since June 2011.

The chart below shows the historical levels of the General Business Conditions index as well as the expectations for General Business conditions six months from now.  It is interesting to note that while current conditions saw a large decline, expectations barely budged, so at this point the big drop isn't expected to be long lived.  Also keep in mind that last month the current conditions index was at a multi-year high, and the fact that it is still positive indicates that more companies are seeing conditions improve versus worsen.

The table below breaks down this month's Empire Manufacturing report by each of its components.  In addition to the large drop in General Business conditions, the New Orders component also saw its largest one month decline since November 2010, while the drop in Shipments was the largest since September 2007.  If there was any bright side to this month's report, both Prices components also saw big declines in October, while the Number of Employees component actually increased.

Looking for ways to navigate through the surge in market volatility?  Take a free trial of our Bespoke Premium service and stay on top of all the latest movements.  Sign up today for instant access.

Tuesday
Oct142014

Energy Sector Crashes

The S&P 500 Energy sector makes up about 10% of the entire S&P 500.  The sector rallied 23% from late February through June 23rd, and it was one of the top performing sectors in 2014 at that point.  But things have turned ugly for Energy lately.  Real ugly.

Since it's all-time high on June 23rd, the sector has dropped more than 20%, putting it in bear market territory (along with oil).  Below is a table showing stocks within the Energy sector that pay dividends.  As shown, every single one is well below its 50-day moving average, with most 10-20% below.  A stock that's 10% below its 50-day is pretty oversold, and it's like that across the board in Energy right now.

As prices have declined, dividend yields have gone up for these Energy names.  Transocean (RIG) is now yielding more than 10%!  Granted, when a stock's dividend yield gets into double-digit territory, it is often a sign that a cut in the dividend is on the horizon, but even mega-caps like Chevron (CVX) and Exxon (XOM) have seen their yields spike.  Below are charts showing the dividend yields for XOM and CVX going back to the start of 2012.  As shown, XOM's yield is now above 3%, while the yield for CVX has jumped more than 60 bps in just the last few weeks to put it at 3.86%.

Tuesday
Oct142014

Prices at the Pump Keep Dropping

The national average price of gasoline has been in a practical free fall for nearly four months now and hasn't had a single up day since late September.  According to AAA, the national average price of a gallon of gas currently stands at $3.186, which is the lowest level since 11/11/13.  More importantly, though, if the average price drops another cent, gas prices will fall to levels not seen since February 2011.  Two handle gasoline on the horizon?

Tuesday
Oct142014

S&P 500 Sector Trading Range Charts

The S&P 500 closed yesterday at nearly 3 standard deviations below its 50-day moving average.  The late-day selloff that we saw was extreme to say the least.  As shown below, the index has now clearly broken its uptrend channel, so the bulls certainly have work to do.  That being said, the market hasn't been this oversold in more than two years.  You would expect to see a short-term bounce back soon.  

Consumer Staples and Utilities are the two remaining sectors that are above their 50-day moving averages.  The rest of the market is oversold.  

Energy, Industrials and Materials have experienced complete technical breakdowns.  Technology, Consumer Discretionary, Financials and Health Care are getting close.  

For more in-depth sector analysis, sign up for a 5-day free trial to Bespoke Premium today.

Monday
Oct132014

European Default Risk

European equity markets have gotten absolutely slaughtered recently.  Interestingly, though, sovereign default risk for some of the countries that have seen their stocks fall hardest hasn't ticked higher.

Below are price charts for the major equity indices of France (CAC), Germany (DAX), Italy (FTSE MIB) and Spain (IBEX 35).  Below each price chart for the various indices, we provide a price chart of that country's 5-year credit default swaps (CDS).  CDS measures default risk for sovereign debt, and as you can see, we have yet to see any kind of spike in default risk during the current downturn.  That's a bullish sign so far.

Monday
Oct132014

Highest Percentage of Oversold Stocks in a Year

Below is a look at the percentage of overbought versus oversold stocks in the S&P 500 over the last year.  As shown, 63% of stocks in the index enter today in oversold territory, which is the highest reading we've seen in a year.  Just 10% of S&P 500 stocks are overbought.  It has been a painful few weeks for stocks indeed.  Let's see if we get an oversold bounce soon.

Monday
Oct132014

Bulls Still in the Majority

If you were looking for a spike in bearish sentiment following the brutal action in stocks last week, you didn't get it.  As shown below, bulls remained in the majority in our weekend Bespoke Market Poll, coming in at 54% versus bearish sentiment of 46%: 

Sunday
Oct122014

What A Week It Was

To further summarize the volatile week we just had, below is a look at the recent performance of various asset classes using our key ETF matrix, which covers US equity strategies and sectors, currencies, country ETFs, commodities, and fixed income.  As shown, declines of 3-5% were seen across the board last week for US related equity ETFs.  The losses have left the Dow in negative territory for the year now, and the smallcap Russell 2,000 (IWM) is down nearly 10% YTD.

Energy, Materials, Industrials and Technology were the worst performing sectors last week, while Consumer Staples and Utilities were actually higher -- clearly a defensive rotation.

Globally, we did see strength in Brazil (EWZ) and Hong Kong (EWH) for the week, but everything else was in the red.  Developed Europe led the way lower, and the France (EWQ) and Germany (EWG) ETFs are now down double-digit percentage points in 2014.  Germany (EWG) is down nearly 20% YTD, and it's also down more than 20% from its 2014 highs -- putting it in bear market territory.

While oil and natural gas both fell sharply last week, gold and silver rallied.  Treasuries also saw heavy buying as the "safety trade" reigned supreme.

What's causing the market to struggle so much recently, and how should you position yourself through year end?  Find out our thoughts in our weekly Bespoke Report newsletter, available to all Bespoke clients.  Use "bespokeinvest" in the coupon code section of our Subscribe page to receive a 10% discount on your new Bespoke membership.  As always, there's a 5-day free trial, so if you're unhappy with the product, simply cancel at no charge.

Our Friday edition of The Closer always comes loaded with charts summarizing major asset class changes, equity strategy performance, and the coming week's economic data releases.  There are also all of the other features included in The Closer every night: charts, returns, big movers, Stock Odds, and Bespoke's Market Timing Model.  Subscribe now to get your free five day trial of Bespoke Premium!  From Friday's edition of The Closer: 

The worst week for stocks since May of 2012 is over.  Treasury yields continue to fall, dropping by the most in the ten year since July of 2012; oil showed some life in today’s session but crude has now declined by the most since the Taper Tantrum in June of 2013.  The decline in oil is in spite of a move lower in the US dollar index, its first after 12 weeks of gains.  A pause for moves higher mid-week in equities, credit and emerging market equities thanks to the Fed minutes Wednesday was broken up during the European session as stocks on the east side of the Atlantic plummeted, continuing moves lower that have been underway for weeks.  Economic data in the US was very light but showed no change in momentum as jobless claims continued their run of impressively low prints and the JOLTS report showed strong demand for labor.  But the global economy remains less robust, and there were disappointing releases around the world.  A great start to earnings from Alcoa (AA) was ignored by the market as the name declined 5.71% despite a strong report.  Financials get earnings really rolling next week.

Friday
Oct102014

S&P 500 Higher or Lower from Here?

The market fell hard this week, leaving the S&P 500 just one point above its 200-day moving average.  The Nasdaq and Dow weren't so lucky -- failing to hold above their 200-days into the close today.  So which way will the market head from here?  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!

After a week like this one, our Bespoke Report newsletter is must read.  This week's report is packed with actionable analysis and market statistics covering the big sell-off we've seen recently in stocks.  Use "bespokeinvest" in the coupon code section of the Bespoke Premium subscribe page to get 10% off your new membership today.  As always, there's a 5-day free trial included.

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