The opinions expressed below are my own and do not necessarily represent those of Visdom Investment Group, LLC.
Humdrum
US equities traded lazily today. The S&P 500 opened up small and rallied into lunch, peaking around +50 points, only to give it all back in the afternoon. We leaked a little bit in the final hour. Both the yield curve and the crude curve helped the stock market today, although it’s hard to see considering the lack of upside. Headlines continue to be a mishmash of the usual topics, although trade-war types of stories are popping out of the White House again. Markets aren’t panicking but they are certainly watching and wondering. Capital flow was light again today, 83%. It looks like US equity investors are determined to enjoy their summer instead of slinging stocks around.
Earnings season continues but without excitement. This is a bit unusual. The results are good but the stock reactions are not. Here are the basics for the season so far.
118 S&P 500 stocks reported
103 beat EPS estimates, 14 missed, 1 met
53 stocks rose, 65 fell
Beta-adjusted:
57 stocks outperformed, 61 underperformed
The number of beats is great but the stock performance post-announcement is essentially beta. This is certainly unusual. I don’t think this can be extrapolated for the rest of the season but it clearly shows that shareholders are not scooping up stock once they see the quarterly results and digest what management says.
Next week the earnings wave will be even bigger, 175 stocks in the S&P report. The doozies will be Meta and Microsoft announcing on 7/29 and then Apple and Amazon announcing on 7/30. That’s four of the Mag 7. That’s a lot of leadership, and market cap, in motion.
The narrative of earnings season so far is good fundies but meh stock performance. I think there’s a chance for some excitement to show up still but it will require some sexy guidance from META, MSFT, AAPL, and AMZN on their calls.
Oh, and don’t forget the FOMC decision Wednesday. The rates market has a 38% probability of a 25 bip hike priced. Of economists and strategists published on Bloomberg, only 1 expects a hike. That’s an interesting discrepancy.
There is a lot happening next week. Will all these events drive action or are we in a lazy summer haze and we don’t want to do much?
I’m torn. I too feel the urge to perpetuate the status quo but if the Fed surprises, or if earnings tell us something significant, I think you have to act quickly with size.
Have a great weekend, see you Monday.
-Mike
Visdom Market Commentary
IMPORTANT INFORMATION
This is general educational information and market commentary and is intended for informational purposes only and is not intended as an offer or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any transaction.
All market and economic data herein is as of the date hereof and sourced from Bloomberg unless otherwise stated. The information is subject to change without notice and we have no obligation to update you.
This general market commentary is intended for informational purposes only and is not intended as an offer or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any transaction. The views and opinions expressed constitute the author(s) judgment based on current market conditions, are subject to change without notice, and may differ from those expressed by other employees of Visdom Investment Group LLC ("Visdom") and Visdom. Past performance and any forward-looking statements are not guarantees of future results. It is not possible to invest directly in an index.
We believe the information contained in this material to be reliable and have sought to take reasonable care in its preparation; however, we do not represent or warrant its accuracy, reliability or completeness, or accept any liability for any loss or damage (whether direct or indirect) arising out of the use of all or any part of this material. Any securities referenced are shown for illustrative purposes only, and are not intended as a recommendation or endorsement by Visdom or by the author(s) in this context. The information presented is not intended to be making value judgments on the preferred outcome of any government decision. This information does not constitute Visdom research, nor should it be considered a recommendation of a particular investment strategy or an offer or solicitation for the purchase or sale of any financial instrument. Investing involves market risk, including the possible loss of principal. You should speak to your financial advisor before making any investment decisions. Visdom and its affiliates do not provide legal, tax or account advice so you should seek professional guidance if you have questions.
