Tuesday
Aug192008

Credit Default Risk Chart

Below we highlight a one-year chart of the CDX North American Investment Grade Credit index that measures credit default swap prices for a number of US companies.  During the Bear Stearns collapse in mid-March, the default risk index spiked sharply, as investors were forced to pay more to insure debt since uncertainty abounded.  After the Bear buyout, default risk declined significantly (although it remained elevated) through early June, and then began rising again as equity markets fell to their lows in mid-July.  As the market has rallied off of its July lows, default risk is down, but just slightly.  The failure for default risk to come in like it did after the March market lows has investors worried that credit markets are still showing negative signs that the market has ignored due to oil's recent declines and the dollar's rally.

Cdxrisk

Monday
Aug182008

Second Quarter Sector Beat Rates

We separated the more than 2,300 US stocks that have reported earnings since early July into their respective sectors and calculated the percentage that beat earnings estimates.  As shown below, the Industrials sector takes the title for the second-quarter reporting period with a "beat" rate of 70.1%.  Industrials are trailed by Consumer Staples at 64.7% and Health Care at 63%.  Overall, just under 60% of companies beat earnings estimates, which is inline with the prior two earnings seasons.  Financials and Telecom were the only two sectors that had a "beat" rate of less than 50%.

Epsbeatrates818

Monday
Aug182008

Best and Worst Performing Stocks on Earnings

The average US stock went up 0.34% on the first trading day following their earnings reports during the second quarter reporting period.  That's a pretty good number considering the negative sentiment we saw leading up to earnings season.  Now that Wal-Mart (WMT) has reported, marking the end of the unofficial earnings season, it's time to highlight the big winners and losers. 

Below we highlight the stocks (currently trading above $10/share) that performed the best and worst on the first day in reaction to earnings.  As shown, UAUA reacted the most positively, rallying 68% following its 7/22 report.  UAUA was trailed by BBSI (39.7%), ATRO (38.8%), PDGI (33.7%) and WFC (32.7%).  Overstock.com (OSTK) leads the list of losers at -41%, followed by FCSX, CPHD and MFLX.  Other notables on the losers list include GRMN, SNDK, PACR and WFR.

Besteps

Worsteps

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Bespoke News

Monday
Aug182008

Footnoted.org Turns Five

It was one of the original finance blogs and it still remains one of the best.  Footnoted.org is marking its 5th year anniversary this week, and for the few left who haven't visited the site, it's highly recommended here at Bespoke.  Congrats to Michelle Leder for publishing such insightful work on a daily basis!

Footnoted

Monday
Aug182008

Inflation: CPI vs The Market

Last week's release of the CPI for July showed the highest year/year inflation reading since January 1991.  Ironically, however, in the same month where inflation hit a seventeen-year high, commodities had their worst month in over 28 years (since March 1980).  So on the one hand we have a government report saying inflation is high, and on the other we have the market moving in another direction.  Who do you have your money on?

Crb_index_july_2008_3

 

Monday
Aug182008

Will Your Home Heating Bill Be Higher or Lower This Winter?

"If you think it's bad for the consumer now, wait until Winter and those home heating bills start coming in."

How many times have you heard the above statement or some variation of it in the last six months.  Well, now that commodities have come back down to earth, you'll probably be hearing it a lot less.  In fact, with natural gas now trading with a $7 handle, current prices are only slightly above the average price from last year's Fall/Winter period.

Natural_gas

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Bespoke News

Monday
Aug182008

Performance Since the Dollar's Lows

While the Dollar has had quite a run over the last couple of weeks, it really made its low back in April.  Below we highlight the change in various sectors and asset classes since the currency bottomed on April 22nd.  Since 4/22, the Dollar is up 8.01%, but the Health Care sector is up even more at 8.04%.  Consumer Staples is the only other sector in positive territory at +2.9%.  Oil is down 4.5%, the S&P 500 is down 5.7%, gold is down 14%, the Energy sector is down 15%, and Financials are down nearly 19%.

Dollarlows

Friday
Aug152008

Global P/E Ratios and Dividend Yields

Below we highlight the estimated current year P/E ratios and dividend yields for the major equity indices of 13 countries.  As shown, Europe has the lowest estimated P/E ratios, with Italy, the UK and France all below 10.  The US ranks 3rd to last behind China and Japan.  European equity markets also offer some attractive dividend yields well above 4%.

Peratios

Divyields

 

Friday
Aug152008

Consensus Economist GDP Estimates and Recession Odds

Earlier in the week, Bloomberg released their monthly survey of more than 50 economists.  In this month's survey, the median estimate for the odds of a US recession in the next 12 months was at 51%, about inline with the 50% readings in the prior two months.  Recession odds from economists seem to have peaked in the April survey at 70% for the time being.

Economistrecession

The median economist estimate for GDP growth in each of the next four quarters also remains positive.  Economists are expecting growth of 1% in Q3 '08, 0.4% in Q4 '08, 1.4% in Q1 '09, and 2.1% in Q2 '09.

Economistgdpest 

Friday
Aug152008

Investor Presidential Survey Results: 8/11-8/14

John McCain leads Barack Obama by 3 points in this week's Investor Presidential Survey.  While Obama has a 2-4 point lead in the broad polls, participants in our poll slightly favor Republican candidate John McCain.  Intrade's contracts still have Obama well in the lead, with odds for him winning at 60.4% versus McCain's odds of 36.5%.  Check back with Bespoke on Monday to take part in next week's survey.

Obamamccain811

Obamamccainhistory

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Friday
Aug152008

Buffet's Berkshire Holdings Doing Well in Q3

While T. Boone's holdings aren't doing so well this quarter, Warren Buffett's are.  Based on Berkshire's quarterly 13-F filing yesterday, his positions as they stood at the end of June are collectively up 9.06% -- pretty good compared to the S&P 500's return of just over 1% since then.  Berkshire decreased shares in BUD in the second quarter, added to IR and SNY, and took a new position in NRG Energy.  Unfortunately, the NRG position is the one down the most this quarter at -17.9%.  Below we highlight Berkshire's holdings at the end of the second quarter as reported in its 13-F.  This only includes equities listed on US exchanges and excludes details on a stake in ConocoPhillips (COP).

Berkshireq2

Friday
Aug152008

T. Boone Pickens Holdings Down Nearly 20% This Quarter

The holdings in T. Boone Pickens' hedge fund at the end of Q2 aren't doing so well this quarter.  Based on the 13-F released by BP Capital yesterday, the fund's holdings are collectively down 19.7% since the start of July.  (This doesn't reflect the fund's cash position, short positions, or changes in the holdings since the end of the 2nd quarter.)  As shown, 26 out of 27 positions are down this quarter, with SD, BZP, FWLT and DNR down the most.  The one position that is up this quarter is CLNE, which is also the fund's smallest position.  Interestingly, the fund added to all but two positions from Q1 to Q2, and took new positions in CHK, DVN, TS, EOG and BZP.

Mr. Pickens has been front and center in the news recently for his Pickens Plan to end the United States' dependency on foreign oil by developing alternative fuel sources.  Based on the performance of Pickens' holdings this quarter, BP Capital investors might want him to just be quiet.

Bpcapital

Friday
Aug152008

Market Internals

The S&P 500 is currently trading just above its 50-day moving average right in the middle of its trading range.  While the index has been bouncing off the top and bottom of an upward sloping channel since the July lows, a one-year chart shows a longer-term downtrend still solidly in place (first chart below).  When looking at the ten-day number of daily advancers minus decliners in the S&P 500, it shows the index slightly overbought, but less so than it was a couple of days ago.

Tespx

Spx10day

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Friday
Aug152008

Bear Market Gold

With a decline of over 2% overnight, gold is the latest commodity to hit bear market territory.  The commodity is now down 21.5% from its highs during the collapse of Bear Stearns.  As highlighted below, gold is now at its lowest levels of the year and down over 6% YTD.  Looking back at the prior eleven bear markets in gold, the average decline has been just under 34% over a period of 18 months.

Bear_markets_in_gold

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Thursday
Aug142008

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