Daily Stock Market Articles

So, I've been thinking to setup this thread for quite a while now. I'm not totally sure if anyone would actually find having such a thread useful on this site, but I know for me, I often come across some interesting news pieces or articles everyday that just doesn't fit in either of the bull or bear threads that I normally update with content daily, and I've for longest time thought having some kind of dedicated market news and articles thread could be kind of useful to have here for those folks looking for actionable market related content each day.

Think I saw something similar at another site where the thread was kind of like an alerts thread with impactful market news for those who don't go looking for the news themselves, they can just simply take a quick peak into this thread for all of it.

I wanted to see if any of you would also be down to contributing to this as well and not just having me always post them haha. Would be awesome!

Anyway, better late than never with this thread's creation. It's finally up now.

 

Just bumping this one back to the top in case anyone might've missed it back at its thread creation last Friday.

In case anyone was wondering what kind of news sources exactly could be posted in here. It can range from really anything market-related. From sources like CNBC, Bloomberg, or even any tweets that you might find off of Twitter.

My idea of this thread was to make it act as something like an all-in-one market news thread. Or like a one-stop shop thread for all your daily market news and headlines. Feel free to use this thread to post any and all past, current, and future news. Can be market impactful too (such as tomorrow's coming FOMC announcement).

Just thought we could have this thread here too, in case anyone might feel a little reluctant to post them to the main weekly market discussion threads

Many thanks for all the great contributions in here from everyone!!!

 

Is This The Most Important Chart in The World?
Posted on March 21, 2023

The latest worry du jour has been about Swiss Banking giant Credit Suisse Group AG (CS). Think about this, it was down 24% last week and then another 53% on Monday. Here’s the catch, it was down more than 90% from the all-time highs at the beginning of last week before all the really bad news started to come out.

Now here’s the big question, should anyone really be surprised that CS was in trouble? When a stock is down this much, honestly, I don’t think the fact that it had some skeletons in the closet should be much of a shock to anyone. Well, the Swiss government gave rival Swiss bank USB a sweetheart of a deal to buy their long-time competitor, so they did it to the tune of $3.2 billion. How this all shakes out is not yet written, but given stocks bounced globally on Monday and UBS added 3% after being down close to double digits pre-market, things appear to be calming down.



One more note about this deal. UBS called it an acquisition, while Credit Suisse called it a merger. Is this a sign that this one might be off to a rough start?



Taking a closer look at yesterday, the majority of banks and regional banks had big gains. Yet, First Republic Bank fell 47% on Monday. Think about that, another bank was cut in half and a major Swiss bank was cut in half, but financial stocks, in general, bounced and some by a wide margin.

Our take here is that the market is starting to sniff out that many of these issues are company-specific and not an industry-wide phenomenon. SVB loaned out primarily to tech and start-ups, while those two areas dried up significantly over the past year, putting them in the crosshairs of trouble. Then two other crypto banks fell, which was not a shock given how cryptocurrencies did last year. The truth is that banks in general, are still in good shape; we just have some bad apples upsetting things. For more of our thoughts on financials, here’s a recent House View Spotlight sharing how we view the group in a positive light.

I’ll leave you with what very well could be the most important chart in the world right now. Financials currently sit above huge support right above their 2007 peak. Turning to the Financial Select Sector SDPR ETF (XLF), the $30 level is quite significant. Should this violate this area and move lower, it could be a warning that more pain is coming. Yet, should we find support near current levels (our expectation), it could be a nice area to consider overweighting the financials sector.



What could be next? It is hard for us to ignore the fact that stocks have been higher in 17 of the past 18 years in the month of April during a pre-election year. Yes, there are many worries and concerns out there, but market sentiment is quite low, and that could set the stage for a surprise springtime rally.

 

A Fed Day Like Most Others
Thu, Mar 23, 2023

Yesterday's Fed decision and comments from Fed Chair Powell gave markets plenty to chew on. As we discussed in last night's Closer and today's Morning Lineup, there have been a number of conflicting statements from officials and confusing reactions in various assets over the past 24 hours. In spite of all that uncertainty, the S&P 500's path yesterday pretty much followed the usual script. In the charts below we show the S&P's average intraday pattern across all Fed days since Powell has been chair (first chart) and the intraday chart of the S&P yesterday (second chart). As shown, the market's pattern yesterday, especially after the 2 PM ET rate decision and the 2:30 PM press conference, closely resembled the average path that the market has followed across all Powell Fed Days since 2018.

The S&P saw a modest bounce after the 2 PM Fed decision and then a further rally right after Powell's presser began at 2:30 PM. That initial post-presser spike proved to be a pump-fake, as markets ultimately sold off hard with a near 2% decline from 2:30 PM to the 4 PM close.



So what typically happens in the week after Fed days? Since 1994 when the Fed began announcing policy decisions on the same day as its meeting, the S&P has averaged a decline of 10 basis points over the next week. During the current tightening cycle that began about a year ago, market performance in the week after Fed days has been even worse with the S&P averaging a decline of 0.99%. However, when the S&P has been down over 1% on Fed days (like yesterday), performance over the next week has been positive with an average gain of 0.64%. As always, past performance is no guarantee of future results.

 

Seasonality Keeps Claims Below 200K?
Thu, Mar 23, 2023

Initial jobless claims remained healthy this week with another sub-200K print. Claims fell modestly to 191K from last week's unrevised reading of 192K. That small decline exceeded expectations of claims rising up to 197K. Given claims continue to impress, the seasonally adjusted number has come in below 200K for 9 of the last 10 weeks. By that measure, it has been the strongest stretch for claims since last April when there were 10 weeks in a row of sub-200K prints. Prior to that, from 2018 through 2020 the late March and early April period similarly saw consistent readings under 200K meaning that some of the strength in the adjusted number could be on account of residual seasonality.



In fact, this point of the year has some of the weeks in which claims have the most consistently historically fallen week over week. Taking a historical median of claims throughout the year, claims tend to round out a short-term bottom in the spring before an early summer bump. In other words, seasonal strength will begin to wane in the coming months.



While initial claims improved, continuing claims worsened rising to 1.694 million from 1.68 million the previous week. Albeit higher, that remains below the 2023 high of 1.715 million set at the end of February.

 

The Fed Expects Banking Stress to Substitute for Rate Hikes
Posted on March 23, 2023

The Federal Reserve raised the federal funds rate by 0.25% at their March meeting, bringing it to the 4.75-5.0% range. This is the ninth-straight rate increase and brings rates to their highest level since 2007. However, the most aggressive tightening cycle since the early 1980s, which saw them lift rates all the way from near zero to almost 5%, is near its end.



Up until early February, Fed officials expected to raise rates to a maximum of about 5.1% and hold it there for a while. However, since that time, we’ve gotten a slew of strong economic data, including elevated inflation numbers. This pushed fed officials to give “guidance” that they expected to raise rates by more than they estimated back in December.

Market expectations for policy also moved in conjunction. Prior to February, markets expected the Fed to raise rates to 5% by June, and subsequently lower them by about 0.5% by the end of the year. But strong incoming data and Fed guidance pushed expectations higher, with the terminal rate moving up to 5.6% and no cuts in 2023.

The Silicon Valley Bank crisis changed everything
The bank crisis that erupted over the last couple of weeks resulted in a significant shift, both in expectations for policy and now the Fed as well. See here for our complete rundown on SVB and the ensuing crisis.

Market expectations for Fed policy rates immediately moved lower. Markets expected the stress in banks to translate to tighter credit conditions, which in turn would lead to slower economic growth and lower inflation.

This was nicely articulated by Professor Jeremey Siegel, one of the foremost commentators on financial markets and fed policy, in our latest episode of the Facts vs Feelings podcast, Prof. Siegel said that tighter credit conditions, as lending standards become more strict, are de facto rate hikes.

Fed Chair Powell more or less said exactly the same thing after the Fed’s March meeting. The 0.25% increase was an attempt to thread the needle between financial stability and fighting inflation. Fed officials also forecast the fed funds rate to hit a maximum of 5.1%, unchanged from their December estimate. This is a marked shift from what was expected just a few weeks ago, with Powell explicitly saying that tighter credit conditions “substitute” for rate hikes.



There’s a lot of uncertainty ahead
While the recent bank stresses are expected to tighten credit conditions and thereby impact economic growth and inflation, there are a couple of open questions:

1. How big will the impact be?
2. How long will the impact last?

These are unknown currently. Which means future policy is also unknown.

Fed officials expect to take rates to 5.1%, i.e., one more rate increase. And then expect to hold it there through the end of the year. In short, they don’t expect rate cuts this year.

Yet investors expect no more rate increases and about 0.6% of rate cuts in the second half of 2023. Markets expect the policy rate in June to be at 4.8%, while expectations for December are at 4.2%.



There’s clearly a huge gulf between what the Fed expects versus what investors expect. This will have to reconcile in one of two ways:

1. Market expectations move higher – if economic/inflation data remain strong and credit conditions don’t look to be tightening significantly.
2. Fed expectations move lower – if the banking sector comes under renewed stress, credit conditions could tighten significantly and eventually lead to weaker data.

Things are obviously not going to go in either direction in a straight line. It’s going to be a bumpy ride as new data points come in, not to mention news/rumors of renewed problems in the banking sector.

 

Sector Performance Experiences a Historical Divergence
Fri, Mar 24, 2023

The first quarter of 2023 is coming to a close next week, and checking in on year to date performance, there has been a big divergence between the winners and losers. Although the S&P 500 is up 2.84% on the year as of yesterday's close, only three of the eleven sectors are higher. Not only are those three sectors up on the year, but they have posted impressive double digit gains only three months into the year. Of those three, Consumer Discretionary has posted the smallest gain of 10% whereas Technology and Communication Services have risen 17.2% and 18.1%, respectively. The fact that these sectors are home to the main mega cap stocks -- like Apple (AAPL), Amazon (AMZN), and Alphabet (GOOGL), which have been on an impressive run of late -- helps to explain how the market cap weighted S&P 500 is up on the year without much in the way of healthy breadth on a sector level.





One thing that is particularly remarkable about this year's sector performance is just how rare it is for a sector to be up 10%+ (let alone 3) while all other sectors are lower. And that is for any point of the year let alone in the first quarter. As we mentioned in yesterday's Sector Snapshot and show in the charts below, going back to 1990, there have only been two other periods in which a sector has risen at least 10% YTD while all other sectors were lower YTD. The first of those was in May 2009. In a similar instance to now, Consumer Discretionary, Tech, and Materials were the three sectors with double digit gains back then. With those sectors up solidly, the S&P 500 was little changed on the year with a less than 1% gain. As you can see below, though, by the end of 2009, every sector had pushed into positive territory as the new bull market coming out of the global financial crisis was well underway.



The next occurrence was much more recent: 2022. Obviously, it was a tough year for equities except for the Energy sector which had a banner year. Throughout most of the year, the sector traded up by well over 20% year to date even while the rest of the equity market was battered.

 

Best and Worst Stocks Since the COVID Crash Low
Fri, Mar 24, 2023

We are now three years out from the COVID Crash low, and even with the past year's weakness, most assets continue to sit on solid gains. For major US index ETFs, the S&P Midcap 400 (IJH) is up the most having slightly more than doubled while the S&P Smallcap 600 (IJR) is not far behind having rallied 95.9%. Value has generally outperformed growth, especially for mid and small-caps although that has shifted somewhat this year. For example, while its gains have been more middling since the COVID crash, the Nasdaq 100 (QQQ) has been the strongest area of the equity market in 2023 thanks to the strength of sectors like Tech (XLK) and Communication Services (XLC). Although those sectors have posted strong gains this year, they have been the weakest over the past three years while Energy (XLE) far and away has been the strongest asset class. Paired with the strength of energy stocks has been solid runs in commodities (DBC)more broadly with the notable exception being Natural Gas (UNG) which has lost over 40%. Bond ETFs are similarly sitting on losses since the COVID Crash lows. As for international markets, Mexico (EWW) and India (PIN) have outpaced the rest of the world although Emerging Markets (EEM) as a whole have not been particularly strong; likely being dragged on by the weaker performance of China (ASHR) which holds a large weight on EEM.



Taking a look at current S&P 500 members, nearly half of the index has more than doubled over the past three years. As for the absolute best performers, Energy stocks dominate the list with four of the top five best-performing S&P 500 stocks coming from that sector. Targa Resources (TRGP) has been the absolute best performer with a nearly 900% total return. Other notables include a couple of heavy weight stocks: Tesla (TSLA) and NVIDIA (NVDA) with gains of 563.9% and 412.9%, respectively.



On the other end of the spectrum, there are currently 25 stocks that have posted a negative return since the COVID Crash low. The worst has been First Republic Bank (FRC) which has been more of a recent development. Whereas today the stock has posted an 83.1% loss, at the start of this month it would have been a 65% gain. Another standout on the list of worst performers has been Amazon (AMZN). Most other mega caps have more than doubled since the March 2020 S&P 500 low, however, the e-commerce giant has hardly offered a positive return.

 

Commercial Bank Deposits Down a Record 3.33% YoY
Mon, Mar 27, 2023

The Federal Reserve's FRED data on commercial bank deposits was just updated through the week of 3/15. From the prior week, deposits fell roughly $100 billion, or about 0.56% from $17.6 trillion down to $17.5 trillion. A week-over-week decline of 0.56% is nothing out of the norm, although it was the biggest decline in percentage terms since last April when deposits fell 0.6% during the week of 4/20.

What is out of the norm is the drop we've seen in bank deposits over the last year. Prior to 2023, the largest year-over-year decline we'd ever seen in bank deposits was a 1.58% drop back in September 1994. That record drop was broken earlier this year when we got a reading of -1.61% during the week of 2/1. Since 2/1, the year-over-year decline has only gotten worse. As of the most recent week (3/15), the year-over-year decline stands at -3.33%.

Below is a chart showing the year-over-year change in commercial bank deposits using data from FRED. What stands out the most is not just that we're now at record YoY lows, but that it's coming after what had been record YoY increases in deposits. Remember, after COVID hit, the government deposited cash into the bank accounts of Americans multiple times.



Below is a look at the absolute level of commercial bank deposits over the years going back to 1974 when FRED's data begins. During the COVID recession from March through May 2020, bank deposits increased roughly $2 trillion. As you can see in the chart, we've never seen a spike anywhere near as large over such a short period of time. Notably, though, deposits kept on running higher for the next two years, rising another $2.8 trillion by the time they peaked at $18.16 trillion in mid-April 2022. That peak came a month after the Fed's first rate hike of the current tightening cycle, and since then we've seen deposits fall about $650 billion from their highs. Given how elevated deposits remain above pre-COVID levels, there's no reason to think they won't fall further unless banks really step up the interest they're paying on deposits given a Fed Funds rate of 5%.

 

Short Interest Update
Mon, Mar 27, 2023

Although equities broadly are starting the new week higher, the most heavily shorted stocks are trading lower today. In the chart below, we show the relative strength of an index of the 100 most heavily shorted stocks versus the Russell 3,000 since January 2021 (the peak of the meme stock mania). Overall, the past couple of years since that period have consistently seen heavily shorted names underperform as seen through the downward trending line below. Although heavily shorted names saw some outperformance in January, they are making new lows.



On Friday, the latest short interest data as of mid-March was released by FINRA. Overall, there has not been too much of a change in short interest levels with the average reading on short interest as a percentage of float of Russell 3,000 stocks rising by 5 bps since the start of the year to 5.8%.

Prior to the changes to industry classifications that went into effect one week ago, the formerly labeled "retailing" industry consistently held the highest levels of short interest. Now, it is the Consumer Discretionary Distribution and Retail industry in the top spot with an average short interest level of 12.7%. That is up from 12.5% coming into the year and is multiple percentage points higher than the two next highest industries: Pharmaceuticals, Biotechnology & Life Sciences (9.36%) and Autos (9.18%). In spite of the recent bank closures, the banking industry actually has the lowest average levels of short interest. That being said, the latest data as of March 15th would have only accounted for a few days following the collapse of SVB. As such, the next release scheduled for April 12th with end-of-month data will provide a better read on the recent banking trouble's impact on short interest levels.



In the table below, we show the individual Russell 3,000 stocks with the highest levels of short interest as of the March 15th data. The sole two stocks with more than half of shares sold short are both Health Care names: Design Therapeutics (DSGN) and Allogene Therapeutics (ALLO). Both have seen short interest levels rise mid-single digits year to date. Other notables with high levels of short interest include some names that were briefly in vogue in recent years like Carvana (CVNA) and Beyond Meat (BYND). While short interest levels remain elevated, those are also two of the stocks listed below that have seen the largest declines in short interest this year which is likely due to solid appreciation in their stock prices. Only Marathon Digital (MARA) has seen a larger drop with its short interest level falling 11.4 percentage points since the end of last year after the stock more than doubled year to date. We would also note another crypto-related name, MicroStrategy (MSTR), is on the list and has been the second-best performer of the Russell 3,000 stocks with the highest short interest.

 

Home Prices Fall Nationwide, Except for Miami
Tue, Mar 28, 2023

Home price figures around the country for January were published by S&P CoreLogic today in the form of the updated Case Shiller indices. Below is a table showing the month-over-month and year-over-year change for the 20 cities tracked along with the three national indices. For each city, we also include how much home prices are still up from their pre-COVID levels in February 2020 and how much home prices are down from their post-COVID peaks.

For the month of January, the national indices showed home prices down about 0.50% month-over-month (m/m) and still up 2-3% on a year-over-year (y/y) basis. There were four cities that saw m/m declines of more than 1%: San Francisco, Seattle, Phoenix, and Las Vegas. Miami was the only city that gained m/m at +0.09%.

Year-over-year, San Francisco is now down 7.60%, while Seattle is down 5.11%. San Diego and Portland are the only other cities in the red y/y, while Tampa and Miami are the only two cities still up 10%+ y/y.







Home prices have been falling hard in recent months (which hasn't made its way into the official inflation data yet). Below is a look at the drop in home prices from their post-COVID highs. As shown, while some cities like New York, Miami, and Atlanta have yet to fall much at all, cities like San Francisco and Seattle are down more than 15%.



Even with the drops, though, prices are still up across the board from the levels they sat at in February 2020 just before COVID hit. As shown below, the two best-performing cities post-COVID in terms of home price appreciation are two Florida cities: Tampa and Miami. Cities that are up the least post-COVID (but still up 20-30%) include Portland, Chicago, DC, Minneapolis, and San Francisco.



Below is a look at the actual levels of the 20 Case Shiller city indices plus the three national indices. We've drawn lines to show when COVID hit so you can see how much prices are up from pre-COVID levels.

 

Richmond Fed Rebounds Without Other Regions
Tue, Mar 28, 2023

This morning the Richmond Fed released the fifth and final regional manufacturing report. Consistent with other regional Fed reports released this month, which we discussed through our Five Fed Manufacturing Composite in last night's Closer and will update with the addition of the Richmond Fed again tonight, manufacturing activity remains in contraction. That being said, the index rose 11 points from a recent low of -16 to -5.



In terms of percentiles, that reading remains in the bottom quartile of its historical range. However, that is a massive improvement from the bottom 5% reading last month. Additionally, the month-over-month increase was significant, just shy of a top decile increase. Breadth in this month's report was solid with only vendor lead times and employment metrics like wages and availability of skills falling further. Most other categories saw higher month-over-month readings with several (like Shipments and New Orders) being historically large.



As mentioned above, demand-related metrics like New Orders, Shipments, and Backlogs of Orders surged in March. However, coming from very weak readings in February, it is still not a positive picture. Shipments was the only one of these indices to move back to an expansionary reading. Shipments expectations were also particularly rosy with the reading of 25 marking the highest level in eleven months. Meanwhile, the Vendor Lead Times index remains around some of the lowest levels on record which indicates firms are reporting rapid declines in the time it takes for products to reach their destination.



Given orders are coming in more slowly and supply chain improvements have made doing business easier, inventories are beginning to build. Indices tracking both Raw Material Inventories and Finished Good Inventories have rapidly risen over the past several months following deeply contractionary readings throughout 2020 through 2022. This month, the index for Finished Good Inventories hit a new post-pandemic high while Raw Material Inventories have flattened out after peaking at the end of last year.



Whereas inventory indices have flown higher, price indices are plummeting. Prices Paid hit a new low of 6.24% with expectations hitting a new low in tow. Prices Received actually saw a very modest increase following sharp declines since November.

 

Would You Believe Me If I Told You?
Posted on March 28, 2023

They call it March Madness for a reason, but this is getting a tad extreme. Besides the fact that no 1, 2, or 3 seeds made the Final Four, the real madness can be found in the financial world.

What we’ve seen so far this March has been unbelievable in so many ways. In fact, at the start of the month, if someone would have told you all the incredible things that would happen, yet stocks would take it in stride, I’m not sure most of us would ever believe it.

Here are some of the things that we’ve seen so far this month:

• One of the worst banking crises in U.S. history, with the second and third-largest bank failures seemingly happening overnight.
• More than 100-year-old banks in Europe going under or on the edge of failure.
• One of the most volatile bond markets ever, with the cherry on top being the 2-year yield falling from 5% to 4% in two days during the worst of the worry.
• A Fed that was all set to hike by 50 basis points (and probably a few more after that) to a 25-basis point hike and potentially only one more. In other words, perhaps the fastest Fed pivot in history.
• As a result, the volatility in the bond market and yields was unlike anything we’ve ever seen before.
• We even had Jerome Powell say for that depositors should assume their deposits are safe, while Janet Yellen said she hadn’t even considered increasing FDIC insurance. These two things happened at the same time last Wednesday afternoon! Talk about confusing messages.
• Bank stocks tanked, with many smaller regional banks getting cut in half or worse.
• Gold found a bid and moved close to $2,000 an ounce as trust in the entire system deteriorated.
• I’m sure there are more, but you get the point here. Not a lot of good news in March.

Now would you believe me if I told you all those things would happen, yet stocks would be up? That’s right, the S&P 500 was up the past two weeks and is flat for the month, while the Nasdaq-100 hit seven-month highs last week.

I’ll be the first to admit that isn’t what I would have expected in the face of those horrible headlines. Yet, here we are. It was the most volatile bond market ever, yet stocks were incredibly calm, all things considered. Madness indeed.

How is this possible? Here are a few ideas:

• A dovish Fed is what the market wants.
• Inflation continues to come back to earth, while supply chains are improving as well.
• The economy remains strong and, to the chagrin of many vocal bears, will still be able to avoid a recession.
• March has been a month of major lows lately, and history could be repeating. 2003, 2009, and 2020 all stand out as months that felt like the end of the world, yet were actually great buying opportunities.
• Lastly, overall market sentiment is over-the-top negative. Once everyone who will sell has sold, that is how bottoms form. The table below from the recent Bank of America Global Fund Manager Survey showed that the most loved asset last month was cash, and the most hated was U.S. stocks.

This doesn’t mean stocks have to bottom, but this is the type of thing you tend to see at major lows and suggests there very well could be plenty of cash to move back into U.S. equities on any good news.



It has been a wild month, and it isn’t over yet, but continue to follow the Carson Investment Research team as we break it all down.