Wednesday
Jun112008

Energy Inventories

For the week ending June 6th, US crude oil inventories showed yet another larger than expected drawdown.  As the chart of current oil inventories versus their historical average indicates, crude oil stockpiles have rapidly declined at a time when they should be peaking.  In fact, the four-week decline of 23.6 million barrels represents the third largest four-week decline since the government began tracking the data in 1984.

Crude_inventories_0606

While crude oil inventories have shown a sharp decline, inventory levels for gasoline and distillates are more inline with their historical averages.  In fact, while gasoline inventories remain slightly below average, the spread between current and average distillate inventories (which had been a major concern earlier in the year) is at its highest levels of the year (lower chart on left).

Gasoline_and_distillatesinventories

Wednesday
Jun112008

Where's The Demand Destruction?

China released its monthly crude oil import figures this morning, and the results show that even with oil hitting record highs, imports during May reached their second highest levels on record.

Chinese_oil_imports

So weren't higher oil prices supposed to hurt demand? While there has been some demand destruction in the US, the figures above suggest that China keeps on chugging.  However, as we know, one explanation for the lack of demand destruction in China is because the government has controls on the price of gasoline.  These price controls have gotten so expensive for Chinese oil companies that PetroChina announced an $8.7 bln bond offering this morning.  The purpose of the offering was to cover losses from its refining operations due to price controls.

Tuesday
Jun102008

Shanghai vs FXI

US investors looking for exposure to Chinese equities generally go to the iShares FTSE/Xinhua China 25 ETF -- FXI.  While it doesn't directly track China's most popular equity index -- the Shanghai Composite -- the two are pretty highly correlated.  Below we highlight the return of the Shanghai Composite and FXI since FXI began trading in October 2004.  As shown, FXI is currently up 161.24% versus the Shanghai Composite's return of 115.92%.  FXI investors have actually done much better holding the ETF than they would have if they invested directly in the Shanghai Composite.

Fxishanghai_2

On another note, we found that the correlation between the one-day percent change of the Shanghai Composite and the open to close percent change of the FXI ETF has been -0.02 throughout FXI's history.  This means that there are no trading opportunities for US investors who want to buy or sell FXI at the open when the Chinese markets are up or down big prior to the open here in the US.

Tuesday
Jun102008

Shrinking U.S.A.

Below we highlight a chart of world market cap since 2004 along with the percentage of world market cap that US stocks make up.  The current value of stocks worldwide is just over $54 trillion according to Bloomberg.  US market cap currently stands at a little more than $16 trillion, which puts it at 29.9% of world market cap.  While 29.9% still puts the US at more than 3 times the market cap of the second biggest country, Japan, it is much lower than it was just a few years ago.  As shown in the chart, US market cap as a percentage of the world has steadily drifted lower over the last four years as global stocks have risen more and the dollar has declined in value.  At the start of '04, the US made up nearly 45% of global market cap.  Only time will tell if the world will continue to get flatter or if the US will widen its market cap lead again.

Worldmarketcap

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Tuesday
Jun102008

Lehman (LEH) Downgraded From Outperform to Neutral at Wachovia and Credit Suisse

Two more analysts have thrown in the towel on Lehman.  Wachovia had an Outperform rating on Lehman (LEH) since upgrading it on March 15th, 2007.  They reiterated the Outperform rating 12 times since then, but today, after declining 61% from the upgrade, Wachovia downgraded the stock to Market Perform.  Credit Suisse upgraded Lehman from Neutral to Outperform on October 8th, 2007.  After a 54% decline since the 10/8 upgrade, Credit Suisse downgraded the stock to Neutral today.  Even after today's 2 downgrades, Lehman still has 7 buy ratings, 10 hold ratings and 2 sell ratings.  Are today's multiple downgrades a sign that a reversal is near, or is it just a case of better late than never?

Wachovialeh

Csleh 

Tuesday
Jun102008

Global vs US Sector Performance

52wkchangeWe recently gathered the 52-week change of MSCI's World sector indices to see how global sector performance compares to domestic sector performance.  The performance numbers are all in US dollars.  As shown in the table at right, Materials have shown the biggest difference between global and domestic performance.  MSCI's World Materials index is up 22.2% over the last 52 weeks, while the S&P 500's Materials sector is up just 10.1%.  Financials in the US are down much more than they are globally over the last year.  The S&P 500 Financials sector is down nearly 39%, while globally Financials are down 27%.  The only US sector that is outperforming its global counterpart is Energy, and it's not by much.  The S&P 500's Energy sector is up 24.7% over the last 52 weeks, while MSCI's World Energy index is up 24.3%.

52weekchange

Tuesday
Jun102008

Bespoke's Commodity Snapshot

Below we highlight our trading range charts for ten major commodities.  The green shading represents 2 standard deviations above and below the commodity's 50-day moving average, and moves above or below this area are considered overbought or oversold.  As shown, oil and natural gas are just below the top of their trading ranges, but corn is actually the most overbought of them all.  Corn's 13% rally over the last 8 trading days has put it 2.68% above the top of its trading range.  Precious metals, wheat, orange juice and coffee remain in neutral territory.

Oilnatg

Goldsilver

Platcopp

Cornwheat

Ojcof_2

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Tuesday
Jun102008

Largest One Day Increases in 2-Year Yield

Yesterday's 14% increase (33 bps) in the yield of the Two-Year US Treasury Note represents the fifth largest one-day increase since 1977.  We looked to see how stocks have historically performed following similar large moves.  As shown in the table, returns have generally been positive as investors continue to move out of bonds and into stocks.  Even more interesting, however, is that five of the ten largest one-day increases in the yield have all come this year.

Largest_increases_in_2_yr_yield_3

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Monday
Jun092008

Oil's Sixth Largest Point Drop!

If someone told you oil had its sixth largest point drop in over 20 years today, you wouldn't expect the chart to look like the one below, but after gains of $5.5 and $10.75 last Thursday and Friday, you have to squint to see today's loss of over four dollars.

Oillast_12_months_2

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Monday
Jun092008

Bespoke's Torture Index

A few months ago, we created the Bespoke Torture Index for our Premium members.  This index combines the recent performance of a number of assets and combines them to show how much pain US individuals are going through.  The index takes into account the one-year performance of stocks, the dollar, oil, gold and commodity prices.  For oil, gold and commodities, we use the inverse of the one-year performance, so when they are going up in price, they are going down in our Torture Index.  We then average all of these one-year performances to get the final Torture Index number.  The lower the number, the more pain we're in.

All five inputs going down is the worst possible scenario, and this has indeed happened over the last year or so.  As of Friday's close, the Torture Index was at -41.37, which is the most extreme it has been since early 1980.  But how low can we go?  The worst the Torture Index has ever been was -64.75 back in early 1974. 

To view the Torture Index on a regular basis, become a Bespoke Premium member today.

Tortureindex

Monday
Jun092008

Oil vs Stocks

First it was $50. Then it was $75. Then it was $100.  Over the last several years, economists have speculated where the economy's breaking point would be with regards to the price of oil.  A look at last week's trading of the S&P 500 versus oil shows that at $130 per barrel things are at least bending.

Oil_vs_sp_500_06020606

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Monday
Jun092008

Biggest Winners and Losers Since the 5/19 Top

The S&P 500 is now down 4.62% since it recently peaked on May 19th.  Below we highlight the best and worst performers in the index since then.  The list of worst performers is dominated by Financials and Consumer Discretionary stocks.  MBIA and AMBAC have been the worst performers, down 43% and 37% respectively.  Year to date, MBI is down 71% and ABK is down 91%.  Homebuilder CTX is down the third most at -30.39%.  Other notables on the losers list include Ford (F), Lehman (LEH), General Motors (GM), and Merrill Lynch (MER).

The list of best performing stocks is topped by two tech companies - Jabil Circuit (JBL) and Compuware (CPWR).  Anheuser-Busch (BUD) ranks third with a gain of 13.31%, and DELL, which reacted positively to its most recent earnings report, ranks fourth at +11.98%.  Other notables on the winners list include Monsanto (MON), SLM, NSM, AET and BIG (which continues to be the best performer in the S&P year to date).

Biggestlosers

Biggestwinners

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Monday
Jun092008

Bespoke's Sector Snapshot

After a downright depressing Friday, the technicals of the S&P 500 and some of its sectors have taken a big hit.  The S&P 500 broke below its 50-day moving average as well as the short-term uptrend it had formed off the March lows.  While the index is close to oversold levels (one standard deviation below its 50-day), it has been no stranger to extreme oversold levels (below the green shading) over the past year.  Friday also saw Financials, both Consumer sectors, Industrials and Health Care all move to oversold levels.  The struggling Financial sector even moved below its March lows.  On the flip side, Technology, Telecom, Energy, Materials and Utilities are all closer to the top of their trading ranges than the bottom.  We'll see if this sector divergence continues this week.

Spxte_3

Finlindu

Inftenrs

Condcons

Hlthmatr

Utiltels_2

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Friday
Jun062008

Learn More About Bespoke Products

For Think B.I.G. readers that are unfamiliar with the many unique reports we issue to Bespoke Premium subscribers, below we provide examples of a number of them.  From in-depth economic indicator analysis, to bi-monthly short interest readings, to earnings estimate revisions, ETF analysis, daily upgrades/downgrades, and concise sector analysis, Bespoke Premium keeps subscribers on top of today's difficult markets.  And don't forget our Daily Morning Lineup that traders and investors use to get their day going each morning.  Click the thumbnails below to view sample reports of the different types of analysis we issue daily at Bespoke Premium - all for just $1 a day.  Click here to subscribe and receive this unparalleled stock market research at a great price.

Economic Indicator Charts and Summary; Short Interest Report

Earnings Estimate Revisions; Market Indicator Charts

Weekly Sector Snapshot; Sector Weight Analysis

Dynamic Upgrades/Downgrades Report; ETF Trends Analysis

Daily Morning Lineup

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Friday
Jun062008

Dow -3% Days

Today's decline of 3.24% for the Dow was the first -3% day since February 27th, 2007, and just the third of the bull market (if it still is one) that started in October of 2002.  Below we highlight all -3% days for the Dow Jones Industrial Average post WWII.  The average change on the day following the 60 prior occurrences has been 0.11%, while the average change over the next week has been 0.28%.  Going back 10 years, the average performance on the next day has been 0.63%.

Dow3