Stock Market Today: September 4th - 8th, 2023

Welcome StonkForums to the trading week of September 4th!

This past week saw the following moves in the S&P:


S&P Sectors End of Week:


Major Indices End of Week:


Major Futures Markets End of Week:


Economic Calendar for the Week Ahead:


What to Watch in the Week Ahead:

(N/A.)

 

Biggest Weekly Short-Squeeze Since Jan Lifts Stocks; Crude Jumps, Crypto Dumps
FRIDAY, SEP 01, 2023 - 04:00 PM

Quite a week... sticky (or rising) inflation, mostly bad picture of the labor market, and sentiment softens - not exactly the goldilocks/soft-landing that The Fed and most of the talking heads keep dreaming of and in fact more stagflationary signals evident.

'Hard' data disappointed this week and fell to 4 month lows while 'soft' survey data surged back near cycle highs on the heels of hope...



Source: Bloomberg

Overall on the week, STIRs pushed dovishly lower...



Source: Bloomberg

That dovish tilt supported stocks all week - even with today's post-payrolls weakness - for big gains in Nasdaq and Small Caps (best week since March)...



The kneejerk reaction to payrolls was higher in stocks but as soon as the cash market opened, The Dow, S&P, and Nasdaq were hit by selling (higher rates, lower stocks) but the last hour saw a 0-DTE covering-driven bounce back into the green for all but Nasdaq...



And all on the back of the biggest weekly short-squeeze since January ('most shorted' stock up almost 7%)...



Source: Bloomberg

For the 3rd day in a row, NVDA was unable to break above its $500 Call-Wall level...



Staples and Utes ended lower on the week while Tech, Materials, and Energy led the gains...



Source: Bloomberg

Treasury yields exploded higher today after the payrolls data to wreck the week's trend and push the long-end higher on the week (30Y +1bps, 2Y -21bps)...



Source: Bloomberg

Which steepened the yield curve (2s30s) dramatically - up near recent highs. The 2s30s curve has risen for 5 straight sessions...



Source: Bloomberg

But, it is worth pointing out today's huge jump in yields (despite the broad weakness in jobs data) after a kneejerk lower (that's a 15bps spike in 10Y yields)...



Source: Bloomberg

Here are 10 possible reasons for the surge in yields (via Bloomberg)...

1. Hollywood strikes and Yellow Corp. bankruptcy cut 54,000 from August jobs. Without that, non-farm payrolls would have been closer to ~240,000
   
   
2. Debunking the decline in August average hourly earnings, noting it might be temporary. Companies still plan to hike wages. A special question in Monday’s Dallas Fed Manufacturing report showed companies expect to raise wages by 5% this year. That’s above the level of inflation and something that can keep the consumer spending — putting a floor under inflation
   
   
3. The slight rise in hours worked in August gives credence to Thursday’s Chicago PMI report whereby there were glimmers that business activity is getting back on track after a soft patch
   
   
4. US August ISM Manufacturing index saw rises in the overall index, production, backlogs, lead times, prices paid and employment
   
   
5. Money managers sold the long end and fast money did steepeners in swaps. Traders are short and letting those winning positions ride
   
   
6. Mortgage origination has picked up. It’s $800 million so far today, that’s up from its typical $500 million pace
   
   
7. Preparations for an onslaught of corporate supply
   
   
8. Breakout in crude oil as OPEC+ supply cuts tighten market. Option bets on $100 oil are also rising as supplies tighten
   
   
9. Saudi Arabia Aramco is considering selling $50 billion in shares. It would be advantageous for the Kingdom to keep oil supplies tighter thus prices higher through the offering
   
   
10. Federal Reserve Bank of Cleveland President Loretta Mester said inflation remains too high despite recent improvements, and the labor market is still strong

The dollar ended the week marginally higher after exploding back to Tuesday's PCE highs and Friday's Jackson Hole highs...



Source: Bloomberg

Crypto had an ugly week, legging lower again today as the dollar spiked, with Bitcoin back below $26,000. After three weeks hugging 26k, we spiked on the SEC losing but then three selling legs wiped all that lipstick off the pig...



Source: Bloomberg

Energy dominated in commodity-land this week (led by NatGas) while silver was flat and Spot Gold improved...



Source: Bloomberg

WTI soared to its biggest week since March, reaching akmosty $86, the highest since Nov 2022...



Source: Bloomberg

Gold (spot) rallied for the second week in a row, topping $1950 back at one-month highs...



Source: Bloomberg

Finally, while many continue to grasp the 'soft-landing' straw narrative, we note that despite the headline payrolls number surprising slightly to the upside, temporary help and weekly hours worked continue to point to a weakening jobs market, consistent with a drop in yields...



Source: Bloomberg

Employers typically cut hours worked and temporary staff before they lay off full-time employees. The data suggests that underlying pressures are building, and job losses should start to rise more rapidly in the coming months.

This is consistent with the message from other leading indicators, such as higher claims and tighter consumer credit conditions.

And at the same time, 'core services' inflation jumped to its second highest since 1985...



Source: Bloomberg

...and Manufacturing ISMs confirmed the stagflationary theme.

 

Tuesday After Labor Day – DJIA and S&P 500 Down Six Straight

In the last 21 years, only Russell 2000 has registered an average gain of 0.001% on the Tuesday after the long Labor Day weekend. DJIA, S&P 500 and NASDAQ have struggled with negative average performance. DJIA, S&P 500 and Russell 2000 all fell for the last six years on Tuesday. On Wednesday the market’s performance has been varied. DJIA has performed the best (based upon frequency of gains), up 71.4% of the time with an average gain of 0.35%. S&P 500 is weakest, up only 52.4% of the time with an average gain of 0.38%. NASDAQ has a slightly better record up 57.1% of the time on Wednesday with an average gain of 0.40%.

Busting 7 Common Myths
Posted on August 31, 2023

We’ve been hearing many of the same myths over and over, yet we don’t think they are the big worry that the media and many make them out to be. These are legitimate concerns and have many investors worried, but we think the chances of them becoming larger issues are smaller than many expect. We are going myth busting today and here are seven of the biggest ones we’re targeting.

Myth 1: Credit Card Debt Is Out of Control
We hear a lot about how credit card debt cracked $1 billion for the first time ever and the only reason the economy is growing is because people are buying everything on credit cards. We discussed this in detail here, but the truth is equity and net wealth have also increased, so it makes sense people have more debt. Also, credit card debt as a percent of overall debt has remained steady over time.


Myth 2: Student Loan Repayments Will Lead to a Recession
After not having to pay student loans for years, those repayments are starting back up in Octobber, with many expecting this to lead to a crash in consumer spending overall.

Americans paid $70 billion toward student loans in 2019 and it isn’t like this will all start right back up.

• First off, many people continued to pay their loans and didn’t use the government’s free pass to stop paying.
• We don’t expect to start right back up at $70 billion though, more likely in the $20-$30 billion range.
• The Biden administration recently cancelled $39 billion in loans on 800,000 borrowers.
• Also, you don’t have to pay all of your student loans at once. It’ll allow consequence free nonpayment for the first 12 months after restart, meaning they won’t be reported to collection agencies credit bureaus, etc.
• Lastly, the administration released a new plan called Saving on a Valuable Education (SAVE) that could benefit up to another 20 million borrowers, with the administration estimating that payments will be cut in half. It will also forgive loan balances after 10 years of payments, versus the prior 20 years.

The bottom line is the loan repayments won’t come in near as much as the media makes it sound, likely not upsetting the strong consumer.

Myth 3: Excess Savings is Gone and Trouble Is Coming
After people stayed in during the pandemic, they didn’t spend nearly as much as they would have. Additionally, the government gave people money, so there was a lot of excess savings, peaking at an estimated $2.3 trillion, which is nearly all gone. Many are claiming this will mean the consumer is tapped.

First off, this is a good thing, as we are getting back to normal. There have been many expansions that didn’t see trillions in excess savings, so it is possible for the economy to grow with little excess savings. Additionally, people hold a historic level of liquid cash (think savings, CDs, money market fund shares). This myth is also a function of how excess savings is calculated and to us, we’d think one should include liquid cash in the whole pie.

Lastly, the savings rate has increased over the past year, from a low of 3.2% last summer, up to 4.5% right now. Again, without getting too into the weeds here, savings have actually been increasing over the past year, something that you’d never know if all you looked at was excess savings.



Myth 4: High Profile Retailers Blowing Up Means the Consumer Is Tapped
Some well-known retailers had horrible reactions to earnings. Footlocker fell 28%, Dick’s 24%, Peloton 23%, and DollarTree 13%, while Macy’s fell as it noted weakness in consumers and worries over credit cards. So, the logical worry is whether this means the consumer is strapped.

We say no, as there were also some big winners, with Abercrombie & Fitch up 23%, Williams Sonoma up 13%, Toll Brothers guided higher, and Guess adding 26%. We didn’t hear as much about the good news, did we?

Then look at what Wal-Mart said. They noted online sales were strong once again. The truth is consumers simply don’t go to brick and mortar stores like they once did. Additionally, many younger people will quickly tell you they’d rather pay for experiences versus stuff. Add it all up and we don’t think the consumer is in trouble at all.

Here’s a nice chart of real retail sales showing very little slowdown in spending.



Myth 5: Bankruptcies Are Surging and This Is the First Domino to Fall
Through July there had been 402 U.S. corporate bankruptcies, compared with only 205 last year. In fact, it was the highest since 2010, which saw 530 in the first seven months.



Here’s what is so surprising, if there really was worry about credit, wouldn’t the credit markets show some stress? High yield corporate bond spreads have been falling since last year, the opposite of what you’d expect if bankruptcies surging meant a bigger issue was coming.

Also, the other side to bankruptcies is entrepreneurship, or creation of new businesses and companies. That’s right, we’ve seen a solid number of monthly business applications the first six months of the year, to the tune of 293,000 business applications with planned wages. This was 21% higher than 2019 for instance and much higher than any other time during the last decade.




Myth 6: Higher Rates Are Bad for the Economy and Stock Market
Rates have soared lately, with mortgages at the highest levels in decades and the 10-year yield recently hitting the highest levels since 2007. This has brought with it many concerns, but once again, we don’t buy it.

Plain and simple, we think rates are going higher because the economy is strengthening, not because of inflation, the Fed, or some other reason. To see rates increasing for the right reasons isn’t a bad thing. In fact, historically a higher trending 10-year yield amid an improving economy has led to strong stock gains.

Don’t forget, the late ‘90s saw mortgage rates above 7% and the 10-year yield consistently above 6%. Stocks and the economy did just fine back then. Let’s be clear, rising rates aren’t good for bonds, but we’ve been (and remain) overweight stocks and underweight bonds all year.

Myth 7: The Government Is Awash in Debt and It’ll Bring the System Down
Our country has more than $32 trillion in debt, but this might not be as worrisome as it sounds. For this, I invite you to listen to our watch our latest Facts vs Feelings where Sonu and I discuss this, along with the other six myths above. Lastly, thanks to Sonu for creating many of the tables and charts in this blog.

Sentiment Stays Down
Thu, Aug 31, 2023

Although the S&P 500 has risen 3.25% in the past week, sentiment has seen little in the way of recovery from the substantial increase in bearish sentiment earlier this month. The AAII's weekly sentiment survey saw bullish sentiment rise just 0.8 percentage points week over week to 33.1%. While that is a few percentage points below the historical average of 37.5%, bullish sentiment is above the consistently weak range of readings observed from early 2022 through this past spring.



Bearish sentiment, on the other hand, was slightly lower falling to 34.5% this week. Like bullish sentiment, that is a few percentage points off the historical average of 31%.



The inverse moves to bullish and bearish sentiment means the bull-bear spread was modestly higher this week. However, that increase was not enough to lift it back into positive territory meaning bears outnumbered bulls in back to back weeks for the first time since the end of May and first week of June.



Factoring other sentiment surveys echo the recent turn toward bearish sentiment. In the chart below, in addition to the AAII survey we have added the Investors Intelligence and NAAIM Exposure Index readings to create a sentiment composite. This index plummeted in August as increasingly bearish readings were observed across all three surveys. Last week, that bearishness hit a low point of -0.45. Although it has bounced back this week, it is still in negative territory (meaning sentiment is more bearish than what has been the historical average). Just like the bull-bear spread for the AAII survey, that is the first back to back negative readings since May/June.



Claims Improve Ahead of Nonfarm Payrolls
Thu, Aug 31, 2023

Ahead of tomorrow's nonfarm payrolls report (which is expected to show a deceleration in jobs growth), initial jobless claims have been reversing lower in the past few weeks and are back down to the low end of the past several months' range. At 228K, the seasonally adjusted number came in well below expectations which were anticipated to rise to 235K. Overall, claims continue to indicate a historically healthy labor market albeit with almost a year in the rearview since the absolute best levels.



On a non-seasonally adjusted basis, claims came in below 200K for a second week in a row. At 192.5K, claims are near similar levels to the comparable weeks of last year and 2017 through 2019. From a seasonal perspective, this week or next is likely to mark the annual low for claims before drifting higher through year end.



Unlike initial claims, continuing claims were higher this week rising to 1.725 million which was a much larger increase than was forecasted. Regardless, claims remain at healthy levels even after rounding out a bottom and beginning to trend higher more recently.



This Is Normal
Posted on August 30, 2023

“Who you gonna believe, me or your own eyes?” Groucho Marx

Nearly right on cue, stocks have had a rough August. We noted at the start of the month that the odds were high for some type of seasonal weakness, coupled with many of the longtime bears suddenly changing their tunes. The good news is we don’t think this is the end of the world, but more a normal time for stocks to simply catch their breath.

I’ve shared this chart a bunch this year, so I might as well do it one more time. It shouldn’t have been a shock that stocks did as well as they did the three quarters ending in June, as those were the three best quarters out of the entire 4-year Presidential cycle. Sure enough, the third quarter of pre-election years has tended to be weak, but the fourth quarter, still ahead of us, has done well. This is how we see things playing out again, with likely new highs happening, but it might take more time and consolidation first.



We had an 8% pullback back in March during the regional bank crisis and just missed a 5% minor pullback recently. Maybe we do go on to break the recent lows and officially tag a 5% minor pullback or a little more, but the good news is there is major support just beneath current levels.

As the chart below shows, the June lows are near 4,328, while the peak from last August is around 4,300. Those two areas should act as strong support and we don’t expect them to be violated. Additionally, at the bottom panel of the chart we show the 10-day moving average of the CBOE Equity Put/Call Ratio moving to its highest level this year. This is a sign that the market is getting worried, exactly what is needed to flush out the weak hands.



There are other signs that with the August swoon, some worry has been entering the picure. The NAAIM Exposure Index represents the average exposure to US equity markets from investent managers. Sure enough, they’ve gone from wildly bullish late last month to quite worried near the end of this month.

To put things in perspective, this was above 100 at the end of July for the first time since late 2021, right before the vicious bear market of 2022. Now four weeks later it has fallen to the lowest level this year, down 67 points in four weeks. The only time in history to see a larger four-week drop? March of 2020 and the COVID crash.



Lastly, credit spreads tell us how much extra interest over Treasury rates investors are demanding from companies that want to borrow money — if investors believe a recession is imminent, they may expect lending to companies to be more risky and hence demand higher interest rates. In other words, if there was a monster under the bed the credit markets would likely show it. Go read that quote from Groucho Marx at the top one more time. I grew up being told that is was wise to listen to the credit markets. You might hear some economist on TV with a bowtie telling you the end is near, but if the credit markets aren’t worried, I’m not worried.

The chart below shows that during past recessions spreads have soared, but they remain quite tight currently. We think credit markets have some of the smartest investors in the room, and if they aren’t worried, the weakness in the market likely won’t get much worse and may offer an opportunity to add to equities.



So there you have it, stocks have pulled back in August and fear has increased. These were things we’ve been talking about and expecting for weeks. We still have the tricky month of September ahead of us, but with credit markets showing very little stress, we don’t expect a major stock meltdown like so many on TV keep predicting. Instead, we remain overweight equities and do expect stocks to make new highs before the year is done, it just might take a little more consolidation first.

Chart of the Day - No Reason to Move
Wed, Aug 30, 2023

COTD Bullet Points:

• The national average of a 30-year fixed rate mortgage is at the highest level in over 20 years.
  
• Rates for new mortgages are especially elevated relative to rates on already outstanding mortgages, and that creates no incentive for existing homeowners to enter the housing market or put their home up for sale.

Chart of the Day:

Last week's update on the national average of a 30-year fixed rate mortgage continued to rise, coming in at 7.23% which is a level not seen since June 2001.



Earlier this morning, the Bureau of Economic Analysis revised data on the effective mortgage rate on outstanding mortgage debt through the second quarter. Whereas the aforementioned 7.23% mortgage rate is for anyone looking to enter into a new 30-year mortgage today, this effective rate can be thought of as the average rate being paid by existing borrowers.

While current mortgage rates are higher than any point of the past two decades, they are even more elevated relative to the effective rate on outstanding mortgages. As shown below, the spread between the current national average and this effective rate on outstanding mortgage debt is slightly off the highs from late last year, however, that spread remains at some of the widest levels since the late 1970s/early 1980s. Admittedly, the two rates are not perfect comparisons given that outstanding debt likely looks very different (with regards to borrower profiles, terms, etc.) from that of a new 30-year fixed rate mortgage, but the general point is the same: for the bulk of those who already have a mortgage, a new mortgage at current rates would incur significantly higher costs. That gives them little reason to enter the housing market, and thus, is part of the reason for the dearth in housing inventories.



To show another way, below we show the difference in the monthly payment of a median priced existing home assuming a 20% down payment using the current average 30-year mortgage rate versus the effective rate on all outstanding mortgage debt. Again, this is an oversimplified analysis given the varying nature, structure, and terms of outstanding debt. Additionally, the payment using the effective rate is not to be confused for the actual observed amount existing borrowers are paying per month (which is lower due to less principal remaining on existing mortgages). Rather it is simply the monthly payment calculated by using the effective rate on all outstanding mortgages and applying it to a new mortgage based on the current median price of an existing home.

Based on this approach, the spread is even more blown out and has far surpassed readings from the late 1970s/early 1980s, and the incentive for an existing home/mortgage owner to move looks even worse. Based on the current median price of an existing home and the current average 30 year fixed mortgage rate, the typical payment comes up to a little over $2,000 per month. Substituting that current 30 year rate with the effective rate on outstanding mortgage debt, the payment would be much lower at just $1,421 per month!



Since homeowners have little reason to drop would be low payments and re-enter the market, there is not much reason to believe that existing homes will hit the market in any meaningful way soon without a drop in mortgage rates. That makes new homes an increasingly important share of supply; a good environment for homebuilders. Homebuilder stocks—proxied by the iShares US Home Construction ETF (ITB)— in response continues to sit in an undisturbed uptrend. This month did see iShares Home Construction ETF (ITB) fall sharply and test that uptrend as it dropped back below its 50-DMA which formerly was offering a consistent level of support. But, that was short lived as ITB is fighting to push back above its 50-DMA today.



Thinking About Risks to The Outlook
Posted on August 29, 2023

We started the year believing the economy would avoid a recession and that markets would rebound, and everything that’s happened since has mostly reinforced that view, which we outlined in our Mid-Year Outlook. At the same time, investing is about dealing with probabilities as opposed to thinking in terms of binary outcomes.

Ryan and I were recently honored to join Investment Masterminds with Jeff Thomas from Swan Global Investments, and one of the questions we got were what risks we were worried about (you can watch the full interview here). It seems like this is in the air quite a bit – I’ve been invited to speak at a wealth management retreat on a panel titled “All the things that could go wrong.”

So, I thought I’d write about it. I could name any number of things that could potentially go wrong – a bank crisis (a la SVB), commercial real estate, etc. – but I’m not too worried about those things.

What I do worry about is an energy price shock.

Falling energy prices have been the big reason why inflation’s fallen from a peak of 9.1% to 3.2% as of July. Of that 5.9 percentage point drop, 4.0 percentage points were due to falling energy prices.

Gas Prices Have Been Moving Higher Recently
The nationwide average gas price hit a peak of $5.0/gal in June 2022 (the month inflation peaked). It subsequently collapsed 38% to hit $3.10 at the end of last year. Since then, it’s been rising fairly steadily up until June, and over the past 6-7 weeks, we saw bit of a spike to $3.80. Note that energy prices in the official inflation data have remained flat (through July) because of falling gas utility prices, which have come on the back of collapsing natural gas prices. Of course, the question is what happens next.



Gas prices are mostly driven by oil prices, and oil’s rebounded over the past two months as well. WTI crude prices have risen from about $69 a barrel to $83. There was a pullback last week to $80, bringing it back into the fairly tight range we’ve seen since last November.



However, oil prices are not the only thing that determine gas prices, or even diesel prices. Another major factor (and a volatile one) is refining spreads. Refining or “crack” spreads are the price difference between crude oil and refined product. Here’s a schematic from the Energy Information Administration (EIA) showing what makes up prices at the pump. Oil prices account for just about 50% , while refining spreads make up 20-25% of the rest. High refining spreads are why gas prices at the pump didn’t fall significantly even when crude oil prices fell below $70 a barrel back in June – average gas prices remained around $3.60.



The chart below shows crack spreads for gasoline and diesel, and a few things stand out. Spreads spiked last summer, contributing to high inflation. They’ve pulled back since then but remain well above pre-pandemic levels (when they averaged below $20 a barrel). Spreads are rising once again, especially diesel crack spreads. That worries me.



Low Inventory Leaves Us Vulnerable to a Supply Shock
Crack spreads usually rise when there’s not much inventory of refined product, i.e. low stocks of gasoline, diesel, and even jet fuel. This is due to various reasons, including refinery closures and lack of investment in capacity.

Also, US oil production is climbing on the back of improved productivity, and is on track to a hit a record high of 12.8 million barrels per day in 2023, and 13.1 million in 2024. Despite that petroleum inventories are running below 2015-2019 averages.



The problem with low inventories is that it leaves prices vulnerable to supply shock. This is what happened when Russia invaded Ukraine. We got another reminder of this last week, when a storage tank caught fire at an oil refinery in Louisiana, the third largest in the US. As a result, some fuel processing operations shut down, and that sent diesel and jet fuel prices up 5% last Friday. Prices pulled back more than 3% on Monday, but both jet fuel and diesel prices have been on an upward trajectory recently.

An Energy Spike Can Be Negative for the Economy
The immediate impact is on pump prices, which is most salient with consumers. That’s going to hit consumer confidence, which tends to be correlated with gas prices.

Then we also must think about how the Federal Reserve reacts. They focus on core inflation, which excludes energy. However, last year, they accelerated the pace of rate hikes in June from 0.5% to 0.75% on the back of an energy price shock.

At the same time, higher energy prices can also show up in core inflation, via higher diesel and jet fuel prices. As the economists at Employ America have noted, airfares are particularly sensitive to jet fuel prices. Food costs are also very vulnerable to diesel prices. And higher food costs can feed into restaurant prices, which is part of core inflation. It can also increase transportation costs, including freight.

This immediately becomes a problem for two reasons in particular:

• It may force the Fed to react and raise rates again, and quickly.
• It reduces households’ real income, i.e. incomes adjusted for inflation, which would hit consumption.

We saw both play out last year. The economy was resilient enough to get through it, but I’d rather not see the economy battle through that again.
Again, as I noted at the top, this is not our base case. We do think a lot more things are going right than wrong. However, we account for potential risk when creating portfolios. In our house view models, we remain overweight equities, underweight long-duration bonds, and overweight commodities, to account for all of this.

September No Relief in Pre-Election Years for Worst Month

Start of the business year, end of summer vacations, and back to school made September a leading barometer month in first 60 years of 20th century, now portfolio managers back after Labor Day tend to clean house. Since 1950, September has been the worst performing month of the year for DJIA, S&P 500, NASDAQ (since 1971), Russell 1000 and Russell 2000 (since 1979).

September was creamed four years straight from 1999-2002 after four solid years from 1995-1998 during the dot.com bubble madness. More recently, S&P 500 has been down in six of the last nine Septembers. September gets no respite from positive pre-election year forces.

Although the month used to open strong, S&P 500 has declined nine times in the last fifteen years on the first trading day. With fund managers tending to sell underperforming positions ahead of the end of the third quarter there have been some nasty selloffs near month-end over the years.

Recent substantial declines occurred following the terrorist attacks in 2001 (DJIA: –11.1%), 2002 (DJIA –12.4%), the collapse of Lehman Brothers in 2008 (DJIA: –6.0%), U.S. debt ceiling debacle in 2011 (DJIA –6.0%) and in 2022 (DJIA –8.8%).

Major Hurricanes Making US Landfall Since 1990
Tue, Aug 29, 2023

Hurricane Idalia currently has maximum sustained winds of just 75 miles per hour (MPH), but the storm is forecast to intensify as it barrels closer towards land, and by the time of the expected landfall on Wednesday morning, it is expected to have maximum sustained winds of 125 MPH making it a category-3 'major' hurricane. Idalia is the 9th named storm of the 2023 hurricane season which still doesn't reach its peak for another two weeks.

If Idalia does strengthen to a category-3 storm before making landfall, it will be the 19th major Atlantic hurricane to make a US landfall. The table below was created using information from Wikipedia and lists each of those prior storms with the most recent being Ian last September. Major hurricanes making landfall in the US have tended be sporadic over the last 30+ year. While there have been seven in the last six years, from late 2005 through August 2017, there was a nearly 12-year stretch without a single major hurricane making landfall.



Most hurricanes, even major ones, have an insignificant impact on the broader US economy. While Katrina, Harvey, and Ian had major impacts, a third of the 18 storms listed above didn't even cause $10 billion in damages. We'd also note that for this analysis, we only looked at major hurricanes, so Super Storm Sandy didn't make the cut even though it caused nearly $70 billion in damage. Even if they don't ultimately have much of a lasting impact on the economy, we were curious to see if there were any trends related to market performance, so in the charts below we show the performance of the S&P 500 in the day and week after each of the prior hurricanes made landfall.

It may sound hard to believe, but the S&P 500 has tended to rally in the short-term following prior landfalls of major hurricanes on the US coast. In the day after the 18 prior landfalls, the S&P 500's median gain was 0.32% with positive returns 72% of the time. One week later, performance was even stronger at 1.22% with gains 83% of the time. This could all be coincidence more than anything else, but given the preparations that go into storms like these, the costs involved can have a short-term stimulatory impact.





Gassy Summer
Mon, Aug 28, 2023

With Labor Day weekend on the horizon, Americans who were on the road this summer experienced a bit of sticker shock as prices surged in late July and into early August. Through Sunday, the national average price of a gallon of gas, according to AAA, stood at $3.82 which is the second highest price for this time of year since at least 2004. The only year that the national average price was higher as of 8/27 was last year ($3.85), and the average price for this time of year has historically been $2.91. Looking at the summer driving season (Memorial Day through Labor Day), the national price has increased by 6.7% this year. While 6.7% may not sound particularly large, we would note that the median change during the summer driving season since 2004 has been a decline of 3.7%, and prices have only increased 35% of the time. In addition, this year's increase ranks as the fourth largest trailing only 2017 (+11.8%), 2020 (+13.0%), and the 46.1% surge in 2005 due to the landfall of Hurricane Katrina in the Gulf of Mexico.



While prices this summer increased much more than normal, on a YTD basis, the increase has been right in line with the historical norm. As shown in the chart below, while the average YTD change through 8/27 has been a gain of 17.5% since 2005, this year's increase of 19.0% is less than two percentage points more than normal. For the last four months of the year, can we expect to see the typical seasonal decline? Since 2004, the AAA national price's median change from Labor Day through year end has been a decline of 7.5% with increases just 36% of the time. Investors looking for inflation to continue to trend lower so that interest rates might come down will certainly be hoping gas prices follow the historical script over the final four months of 2023.

 

Here are the percentage changes for the major indices for WTD, MTD, QTD & YTD in 2023-



S&P sectors for the past week-

 

Here are the current major indices pullback/correction levels from 52WK highs as of week ending 9.1.23-


Here is also the pullback/correction levels from current prices-


Here are the current major indices rally levels from 52WK lows as of week ending 9.1.23-

 

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Here are the upcoming IPO's for this week-

 

Stock Market Analysis Video for September 1st, 2023
Video from AlphaTrends Brian Shannon
(VIDEO NOT YET POSTED!)

ShadowTrader Video Weekly 9/3/23
Video from ShadowTrader Peter Reznicek
(VIDEO NOT YET POSTED!)

 

StonkForumers! Come join us on our stock market competitions for this upcoming trading week ahead!-

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StonkForums Weekly Stock Picking Contest & SPX Sentiment Poll (9/4-9/8) <-- click there to cast your weekly market direction vote and stock picks for this coming week ahead!

Daily SPX Sentiment Poll for Tuesday (9/5) <-- click there to cast your daily market direction vote for this coming Tuesday ahead!

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It would be pretty sweet to see some of you join us and participate on these!

I hope you all have a fantastic weekend ahead!

 

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Here are the most anticipated Earnings Releases for this upcoming trading week ahead.

***Check mark next to the stock symbols denotes confirmed earnings release date & time***

Monday 9.4.23 Before Market Open:

Spoiler: CLICK HERE TO VIEW MONDAY'S AM EARNINGS TIMES & ESTIMATES!

(NONE. U.S. MARKETS CLOSED IN OBSERVANCE OF LABOR DAY.)

Monday 9.4.23 After Market Close:

Spoiler: CLICK HERE TO VIEW MONDAY'S PM EARNINGS TIMES & ESTIMATES!

(NONE. U.S. MARKETS CLOSED IN OBSERVANCE OF LABOR DAY.)

Tuesday 9.5.23 Before Market Open:

Spoiler: CLICK HERE TO VIEW TUESDAY'S AM EARNINGS TIMES & ESTIMATES!

Tuesday 9.5.23 After Market Close:

Spoiler: CLICK HERE TO VIEW TUESDAY'S PM EARNINGS TIMES & ESTIMATES!

(T.B.A.)

Wednesday 9.6.23 Before Market Open:

Spoiler: CLICK HERE TO VIEW WEDNESDAY'S AM EARNINGS TIMES & ESTIMATES!

(T.B.A.)

Wednesday 9.6.23 After Market Close:

Spoiler: CLICK HERE TO VIEW WEDNESDAY'S PM EARNINGS TIMES & ESTIMATES!

(T.B.A.)

Thursday 9.7.23 Before Market Open:

Spoiler: CLICK HERE TO VIEW THURSDAY'S AM EARNINGS TIMES & ESTIMATES!

(T.B.A.)

Thursday 9.7.23 After Market Close:

Spoiler: CLICK HERE TO VIEW THURSDAY'S PM EARNINGS TIMES & ESTIMATES!

(T.B.A.)

Friday 9.8.23 Before Market Open:

Spoiler: CLICK HERE TO VIEW FRIDAY'S AM EARNINGS TIMES & ESTIMATES!

(T.B.A.)

Friday 9.8.23 After Market Close:

Spoiler: CLICK HERE TO VIEW FRIDAY'S PM EARNINGS TIMES & ESTIMATES!

(NONE.)

 

And finally here is the most anticipated earnings calendar for this upcoming trading week ahead-
($AI $PATH $ZS $GME $CHPT $DOCU $GTLB $TCOM $PLAY $PL $KR $EXPR $ASAN $RH $HQY $CRMT $AEO $PLAB $AVAV $SAIC $CXM $RENT $YEXT $SMAR $BASE $TNP $DOOO $VRNT $ZFOX $BRZE $SPWH $CTLP $KFY $TTC $INTA $DSGX $CDMO $SMTC $DBI $LAKE $CVGW $CNM $ZUMZ $LTRX $ABM $AKTS $WDH $BRC)


If you guys want to view the full earnings post please see this thread here-

• Most Anticipated Earnings Releases for the week beginning September 4th, 2023 <-- click there to view!

 

Hey guys, sorry again but just throwing up next week's thread a little earlier than usual due to being crazy pressed for time nowadays. Will need to continue doing it like this for the foreseeable future unfortunately. Hope you guys all have a great extended 3-day weekend and trading week ahead!!

 

REMINDER: U.S. MARKETS ARE CLOSED ON MONDAY, SEPTEMBER 4TH, 2023 IN OBSERVANCE OF LABOR DAY.

 

Top of the morning StonkForumers! Happy Tuesday to all of you and welcome to the new trading week and a frrrrrrrrrrrresh start. Here is a quick check on those futures as we are a little under an hour into the US cash market open.

GLTA on this Tuesday, September the 5th, 2023!

 

Morning Lineup - 9/5/23 - Sluggish
Tue, Sep 5, 2023

It may be Tuesday, but equity markets have a case of the Mondays today as equity futures are lower across the board with the Nasdaq leading the way lower. The catalyst for the weakness this morning appears to be weaker economic data out of China and Europe, but the reason for saying ‘appears’ is that sluggish growth would suggest a rally in bonds, but that hasn’t been the case as Treasury yields are higher across the curve. There’s not a lot of economic or earnings data to deal with today, but conference season is kicking off on Wall Street, and that can often be a time where companies lower forecasts, so be on the lookout for that throughout the day.

The quote above came just over two months into what was the second half of the year that then San Francisco Fed President Janet Yellen was referring to when she forecasted ‘sluggish’ growth. Sluggish would never be considered an adjective with a positive connotation, but it still doesn’t imply contraction. During the third quarter of 2008, though, the US economy contracted 2.1%, which was the largest decline in US economic activity since Q4 1990. Keep in mind that when Yellen made that comment, the third quarter was already more than two-thirds into what was a 2.1% quarterly decline in GDP, and yet Fed officials along with their counterparts in the White House, as well as most Wall Street economists were still forecasting growth! If you think that was bad, Q4 was even worse as the economy fell off a cliff. In the wake of the Lehman bankruptcy, GDP declined 8.5% for its largest decline since 1958! By the end of 2008 ‘sluggish’ growth wouldn’t have just been good, it had become a pipe dream!

This brings us to one of the morning’s lead headlines across just about every financial media outlet we have scanned, and that is the fact that Goldman Sachs has lowered its odds of a recession in the next 12 months down from 20% to 15%. Giving odds for a recession in such a precise manner certainly makes for great headlines and it’s always good to have baseline forecasts but to think that something as complicated as the US economy can be forecasted with such precision is at best naïve.

 

Here is a final look at today's market and futures maps, as well as how each sector performed individually at the close on Tuesday, September 5th, 2023.

 

Top of the morning StonkForumers! Happy Hump Day to all of you and welcome to the new trading day and a frrrrrrrrrrrresh start. Here is a quick check on those futures as we are a little under an hour into the US cash market open.

GLTA on this Wednesday, September the 6th, 2023!

 

Morning Lineup - 9/6/23 - Living at the Woodshed
Wed, Sep 6, 2023

It's another weak morning for US equity futures as the backdrop of higher rates and oil prices weigh on sentiment. Futures are lower across the board, but not by a large amount. The key report of the day will be ISM Services at 10 AM. Plus, there are a number of conferences today, so be on the look out for individual company news throughout the day.

176 years ago today, Henry David Thoreau moved in with Ralph Waldo Emerson and his family after living in a woodshed on Walden Pond for two years. Two years in a shack is a long time, but bonds have been out behind, or maybe more accurately, in front of the woodshed for even longer. As measured by the Bank of America 10+ Year US Treasury Index, August was the 31st straight month that the year/year total return for US Treasuries was negative, easily surpassing the 15th month streak than ended in December 1980. Not only has the y/y change in long-term Treasuries been negative for more than two and a half years, but the y/y change has also lagged the y/y total return of the S&P 500 for 34 straight months.

Since 1979, there have only been two other periods where the 10-year underperformed the S&P 500 on a y/y basis for more months. The most recent ended in July 1998 at 33 months while there was a 35-month streak ending in October 1981. Given the way the numbers work out, unless treasuries stage a monster rally and/or stocks take a sharp leg lower this month, it’s almost a guarantee that the current streak will at least tie, if not exceed, the 35-month streak from 1981. In at least the last forty years, there hasn’t been a worse time to be creditor of Uncle Sam.