Thursday
Feb212008

T. Boone Pickens Q4 Stock Holdings

With T. Boone Pickens dominating the oil news today with his call for short-term declines from current levels, we updated our table of Mr. Pickens' hedge fund (BP Capital) holdings from his Q4 '07 13-F.  As of the end of last year, his biggest holding remained Suncor Energy (SU), and he increased his share amount in the stock by 18,000 from the end of the third quarter.  XOM is his second biggest holding, followed by OXY, DNR and SLB.  From the 13-F, two stocks were liquidated from his fund in Q4 -- RIG and GSF.  SGR was the only stock that remained in his portfolio that he sold shares in.  Mr. Pickens also added two new companies to BP Capital in the fourth quarter of last year.  He added nearly 100,000 shares of Valero Energy (VLO) and 392,500 shares of Clean Energy Fuels (CLNE).

Based on his holdings at the end of last year, these positions are collectively down 7.71% on the year.  ABB, JEC, SLB and KBR are down the most, while DNR, SGR, IOC and GBX are the only stocks that are up. 

Bpickens2

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Thursday
Feb212008

Gold vs. Gold Stocks

Since we've been on somewhat of a commodities kick lately, we decided to take a look at how gold has been trading relative to gold mining stocks.  The chart below highlights the ratio of the Amex Gold Miners Index to gold the commodity (gold stocks/gold).  When the line in rising, gold stocks are outperforming gold.  When the line is falling, gold is outperforming gold stocks. 

Throughout the late 90s, gold outperformed gold stocks, but that reversed in the earlier part of this decade through the start of 2004.  Since 2004, however, the two have been trading relatively inline with each other, with gold stocks lagging for about a year and a half now.  The ratio is currently just slightly above the average since 1993.  But if the trend continues downward like it did in the late 90s, gold will continue to outperform.

Goldgoldstocks1

For those interested, below we provide the stocks that make up the Amex Gold Miners Index along with their performance year to date.

Amexgold_2

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Thursday
Feb212008

Commodities: The Past and The Future

Below we highlight the one-year price change (%) of 18 commodities.  As shown, the gains have been enormous for many of them, with wheat leading the way at 99%.  Lead, platinum and soybeans rank 2nd, 3rd and 4th, all with gains of more than 70%.  Oil is up 65% and gold is up 39% (doesn't it seem like gold is up much more than that?).  Only two commodities are down over the past year -- Zinc and Nickel.

Commoditypricechange

So what are analysts expecting for these same commodities going forward?  Bloomberg tracks the consensus price forecasts of commodity analysts, and below we highlight the difference between current prices and year-end 2008 price expectations.  While only two commodities are down over the past year, only two are expected to be higher than they are now by the end of 2008.  The two commodities that are up the most over the past year are expected to go down the most going forward.  Oil is expected to decline 19% to $80/barrel, and Gold is expected to decline 15% to $807/ounce.       

Commodityexpectations_2 

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Thursday
Feb212008

Corporate Spreads Closing In On All-Time Highs

As a sign that the issues in the US credit markets still have a ways to go before being resolved, yesterday, the spread between US corporate bonds and comparable Treasuries reached its highest levels since October 2002 (240 bps).  While spreads still have a ways to go before matching their all-time highs in the Fall of 2002, at the rate they have been increasing since last Summer, it may not take long.

Corporate_bond_spreads

Wednesday
Feb202008

Bespoke on Bloomberg TV and CNBC

Street_signs_4Bloomberg_4Bespoke's Justin Walters will appear on Bloomberg TV at 8:10 AM ET tomorrow morning.  Later in the day, Paul Hickey will appear on CNBC's Street Signs with Erin Burnett just after 2 PM ET.  We'll be discussing recent B.I.G. Tips reports on commodities, stocks and ETFs.

Wednesday
Feb202008

Today's Market Action

Since an up day in the market is such a rare occurrence, below we highlight which stocks led the market higher today and which ones held the market back.  In the first chart below, we broke the Russell 1,000 into deciles (100 stocks in each decile) based on short interest as a percentage of equity float.  As shown, the stocks that have the least amount of short interest were up the least today, while the deciles of the most heavily shorted stocks were up in the 1.2% range.

We also broke the Russell 1,000 into deciles based on how each stock had performed on the year going into today to see if the winners remained winners or if investors went bargain hunting and bought the losers.  Based on the results, the deciles of the best performing stocks on the year going into today were also up the most today, indicating momentum buyers were out instead of the buy-the-dippers.

Decileshort

Decileperf

Below we provide a list of the best and worst performing stocks today.  As shown, WMG performed the best at +10.19%, followed by DHI (8.12%), HPQ (7.94%) and RIG (7.00%).  On the downside, NTRI was down the most at -30%, followed by CROX (-14.46%). 

Todaysbest

Todayworst

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Wednesday
Feb202008

The Best of the Best; PHM, ACV, CLF

Below we highlight the year to date performance of the ten S&P 500 sectors.  Unfortunately, not one sector is up on the year, however, Materials and Consumer Discretionary are both down less than 3%.  The Consumer Staples sector ranks third at -5.30%.  On the downside, Telecom is down nearly 20%, while Technology ranks second to last at -15.38%.  These two sectors are by far the worst performers, with nearly double the declines of Financials (which is the third worst).

Sectoytd

Below we highlight the top ten performing stocks on the year in the best performing sectors.  Based on price performance, these stocks are the best of the best.  In Consumer Discretionary, many homebuilders make the list, including PHM, DHI, MDC and KBH.  Other names include NYT, CC and OMX.  Just last year, these stocks were on the list of worst performers, but in 2008 they have switched roles (at least for now).  In Consumer Staples, ACV, WMT, NTY and CVS top the list, while in Materials it's CLF, MOS, SEE and NUE.

Bestbest

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Wednesday
Feb202008

International Currencies vs Inflation

Over the last few months, as the US dollar has declined in value, many have feared that the end result would be higher inflation in the US.  With oil hitting $100 per barrel, commodities trading at all-time highs and this morning's CPI coming in higher than expected, these fears now seem to be coming to reality. However, while there is no denying that prices are rising, and a weaker dollar makes imported goods more expensive, the link between a country's currency and its inflation rate is weak. 

In the chart below, we compare the one year change in 28 major currencies versus their country's most recent year/year inflation rate.  In the US, while the dollar is down 9.2% over the last year, the CPI has risen by just 4.3%.  In Brazil, CPI is rising at a faster rate than the US at 4.6% even though its currency is the best performing of the 28 highlighted (20.05%).  And in Russia, inflation is rising at a rate of 12.6% while its currency is up 6.63% over the last year.

Currencies_vs_inflation

Currency_vs_inflation

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Wednesday
Feb202008

Bespoke's International Snapshot

Below we highlight our unique trading range charts for 22 countries that have trackable ETFs.  These charts highlight when prices become overbought or oversold based on the green and red areas.  When a price moves into the red zone, it is between 1 and 2 standard deviations above its 50-day moving average.  When the price moves above the red zone, it is in extreme overbought territory.  Conversely, when the price moves below the green zone, it is in extreme oversold territory. 

Most of the countries below are currently in downtrends and in oversold territory.  However, Brazil, India, Malaysia and Hong Kong recently tested and held the bottom of their upward trend channel.  If you're strictly using technicals, these currently look the best.  Africa is the only country that is currently in overbought territory.

Please click here to view the ETFs that track these countries.

Intl1

Intl2

Intl3

Intl5

Intl6

Intl7

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Tuesday
Feb192008

Earnings Season Comes to An End

Wal-Mart's earnings report this morning marked the end of the unofficial earnings season.  Since Alcoa (AA) kicked off the reporting period on January 9th, 1,555 have released quarterly results.  From our earnings report database, we calculated the average percent change on the first trading day following earnings reports by sector this earnings season. 

The average 1-day change of all 1,555 stocks on earnings report days was 0.68% this season.  As shown in the chart below, Telecom, Consumer Discretionary and Financials have seen the biggest 1-day price gains in reaction to earnings reports.  Telecom stocks have averaged a 1-day gain of 1.41% on their earnings report days, followed by Consumer Discretionary at 1.37% and Financials at 1.36%.  Health Care and Consumer Staples stocks -- two defensive plays -- actually averaged declines on earnings report days. 

Going into this earnings season, Financials and Consumer Discretionary were the most unloved sectors, while Consumer Staples and Health Care were generating positive buzz as defensive sectors in a slowing economy.  The fact that Consumer Staples and Health Care reacted negatively to earnings, while Financial and Discretionary stocks reacted positively indicates that sentiment had moved to extremes leading up to the reporting period.

1daychange

Bespoke released a strategy piece detailing numerous trends from the most recent earnings season to Bespoke Premium members today.  Please click here to learn more about our subscription service.

Tuesday
Feb192008

Oil Above $100 -- Where to Now?

Oil rallied more than $4 per barrel today and is currently trading at $99.97.  As shown in the chart below, the commodity has been trading in a range between $86 and $100 since October.  There have now been three peaks and three troughs in the current range, and each of the prior tests have resulted in a price reversal.  Trading ranges don't last forever, however, and the more the price tests prior resistance or support, the stronger the move will be once it breaks to new highs or new lows. 

This brings us to the current test of $100.  If the price fails to break through these levels in the next couple of days, look for oil to head back to support in the low $90s/high $80s.  If it does break through on the upside, a new uptrend is likely to form, once again sending prices on another leg higher (all before the peak driving season begins).  Will the consumer be able to stomach another run up in prices?

Oilchart

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Tuesday
Feb192008

Mortgage Rates and Housing

Back in January as mortgage rates ticked lower by the day, the outlook for housing began to look better.  Lower rates obviously mean lower monthly payments, giving potential home buyers more of an incentive to actually pull the trigger on a purchase.  Part of the reason the Fed is cutting rates is to get mortgage rates down in order to spur buying activity and more refis in the real estate market. 

Unfortunately, since mid-January, even in the face of large rate cuts by the Fed, mortgage rates have spiked sharply.  As shown in the chart below, the average 30-year fixed mortgage rate has risen from a low of 5.25% on January 23rd to its current rate of 5.82% as of yesterday (they've ticked even higher today). 

Just a couple of weeks ago, we spoke with some real estate and mortgage agents and heard positive news on the market.  Lower rates had in fact had an impact on buyers, and activity had started to pick up again.  That mood has since changed as some buyers are backing off. 

30yrfixed

Mortgagefixed

30yrcurve   

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Tuesday
Feb192008

Global 10-Year Government Bond Yields

We recently gathered the 10-year government bond yields for 29 countries to see where global interest rates currently stand.  As shown below, Indonesia has the highest 10-year yield at 10%, followed by South Africa (8.7%), India (7.6%), Mexico (7.5%) and Hungary (7.4%).  At the bottom of the yield barrel is Japan at 1.5%, followed by Singapore, Taiwan and Switzerland.  The 3.86% yield on the 10-year in the US is the 8th lowest out of the 29 countries analyzed.

10yryield_2

We also gathered consensus economist estimates for where each country's 10-year would stand at the end of 2008 from Bloomberg.  As shown, government bond yields in China are expected to rise the most by the end of 2008 (from 4.2% to 5.2%), followed by Singapore, Hong Kong, Norway and Malaysia.  Hungary, South Africa, Thailand and Indonesia are expected to see their yields fall the most.  The yield on the 10-year in the US is expected to be just slightly higher than current levels at the end of 2008. 

10yryieldchg   

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Tuesday
Feb192008

Retail Sales Review: More Food, Less Sports

Over the weekend, for our Bespoke Premium members, we analyzed the January retail sales report and calculated what percentage of retail sales that each sub-category contributes to the overall retail sales pie.  We then compared the current levels to historical levels to see what shifts in spending were taking place.  One development we found is that over the last ten years, Americans have been spending more of their money on eating out and less of their money on playing sports. 

Bars_and_restaurants

Sporting_goods

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Tuesday
Feb192008

S&P 500 and Sector Earnings Growth Estimates

Back in November, estimates for Q4 '07 year over year S&P 500 earnings growth stood at 1.7%.  Currently, with nearly all companies having reported fourth quarter earnings, EPS growth stands at -18%.  As shown below, the root cause to the negative number for the S&P 500 is Financials, where earnings have declined 105%.  Below we highlight growth estimates for the first three quarters of 2008 as well.  Earnings growth for the S&P 500 is expected to be slightly negative for the first half of the year and then grow by 16% in the third quarter.  It's also worth noting that many sectors are still expected to see strong growth.  Technology, Energy, Industrials and Consumer Staples currently have the best growth expectations for the next few quarters.

Epsgrowth

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