October just mid-pack in post-election years Post-election year October’s are neither great nor bad since 1953, ranking mid-pack across DJIA, S&P 500, NASDAQ and Russell 1000 with gains averaging from 0.7% (DJIA) to 1.2% (NASDAQ). DJIA has the best historical odds for gains having advanced in 11 of the last 16 post-election year Octobers. Despite the best average gain, NASDAQ actually has the worst record, declining in 6 of the last 11 post-election year Octobers. A 12.8% gain in 2001 boosts its average. Should a meaningful decline materialize in October it is likely to be an excellent buying opportunity, especially for any depressed technology and small-cap shares.
A Closer Look at the Dow’s Recent Nine-Day Win Streak It’s been a record breaking year for 2017, but there’s still a whole quarter to go. Major U.S. indexes have marched steadily higher, but what makes this year different is that volatility has been nearly non-existent. The recent Dow win streak best sums this up. It was the third win streak of the year that stretched at least nine days, which is the most since 1955, yet it gained only 2.9%, making it one of the weakest returns during a nine-day win streak ever. Looking more closely, during the last seven days of the Dow’s most recent nine-day winning streak, it gained less than 0.3% each day. The only other year since the Dow’s inception in 1896 to see a streak like that was in 1965. Not surprisingly, that was one of the least volatile years ever, and has many other similarities with 2017 so far. Per Ryan Detrick, Senior Market Strategist, “2017 is going down as one of the least volatile years ever for equities. Only 1964, 1965, and 1995 match what we’ve seen so far this year. But remember, we still have three months left, and we wouldn’t be surprised to see volatility pick up in the fourth quarter.” Take a look at our latest Weekly Market Commentary for more of our thoughts. Last, you might think nine-day win streaks suggest near-term weakness, but that isn’t always the case. In fact, going back to 1950, a month after a nine-day win streak, returns have been somewhat muted, but positive; but going out three and six months, the Dow was notably higher, on average.
S&P 500 Performance Following August & September Gains As of today’s close, S&P 500 is up 1% this September. Should this gain hold through the end of the month it will be just the 15th time since 1950 that S&P 500 advanced in August and advanced in September in 68 years. The relatively few occurrences of back-to-back gains in August and September are due to the historical tendency for losses during these two months. September is the only month to have more declines than advances (since 1950). In past years when August and September were both positive, subsequent October and November performance improved, but December performance slipped. S&P 500 historical averages in all yeas since 1950 for October, November and December stand at 0.9%, 1.5% and 1.6% respectively. Following full-year performance was also weaker on average, 4.4% versus 8.9% (since 1950).
Could This Be the Least Volatile September Ever? Posted by lplresearch September has been dull, but would you believe it is on pace to be the least volatile September ever? We feel like a broken record here, but 2017 continues to look more and more like the mid-‘60s and mid-‘90s— the two periods that rank as the least volatile in history. For example, as of last week, the S&P 500 Index went 41 consecutive weeks without a weekly move greater than 2% in either direction. Only the mid-‘60s and mid-‘90s have seen longer streaks. But here’s where things get interesting; the average daily range so far this month has been only 0.39%, which is by far the smallest daily range during September ever (according to reliable single-day data going back to 1970). Of course, there is still time left in the month, but it appears that September will close as one of (if not the) least volatile Septembers ever. But what does it all mean? As we laid out in our latest Weekly Market Commentary, we fully expect to see volatility turn higher in the fourth quarter. Per Ryan Detrick, Senior Market Strategist, “One reason to expect a good dose of volatility is because, in addition to its shorter days, changing leaves, hayrides, and of course Halloween, October is known for being the most volatile month of the year.” In fact, since 1970, no month has had more 1% changes (higher or lower), as nearly 30% of all days closed up or down at least 1%.
Positive Worst Six Months Good Omen A big upside move of over a 5% gain on the S&P 500 during the Worst Six Months (or the “Sell in May” period) from May through October has been followed by great gains for both frequency and magnitude. There is just one month left in the Worst Six Months. So if the market can log further gains in October and not succumb to often self-fulfilling prophecy of Octoberphobia and the curse of the 7th year that would be a solid indication for stronger gains over the next Best Six Months (November to April) and 2018. We currently sit at +5.3% for the S&P 500 since the close of April 2017. Not bad, but not great, and right on the cusp of the level of Worst-Six-Months gains the have been more often followed by big upside moves. Look at the two tables below of “Not Bad” and “Great” Worst Six Months. Great was both followed by better Best Six Months returns than the Not Bad years.
Best Performing Stocks YTD Through Q3 2017 Oct 2, 2017 Below is a list of the 40 best performing Russell 3,000 stocks on a year-to-date basis through the third quarter of 2017. You’ll notice that a bulk of the names on the list of biggest winners are from the Biotech space. Dynavax Tech (DVAX) ranks first with a YTD gain of 444%. Straight Path (STRP) ranks second at +432.79% but it’s in the process of getting acquired after a bidding war for the company’s valuable sprectrum. Sangamo Therapeutics (SGMO), Calithera Biosciences (CALA), and Pieris Pharma (PIRS) round out the top five. Eight of the top nine are Biotech stocks, and then Weight Watchers (WTW) ranks tenth with a gain of 280%. Because so many Biotech companies top the list of winners this year, below is a list of the 40 best performing non-Biotech names in the Russell 3,000. There are 8 companies listed that are up more than 200% year-to-date, including Everi (EVRI), CAI Intl (CAI), Scientific Games (SGMS), and Ultra Clean (UCTT). Other notables on the list include Control4 (CTRL), Lumber Liquidators (LL), Cutera (CUTR), LendingTree (TREE), National Beverage (FIZZ), and Square (SQ). If you have some time this week, browse through these names to see what the back-story is behind the big outperformance this year. 2017 YTD Performance of the 40 Largest Stocks Oct 2, 2017 Below is a look at the year-to-date performance of the 40 largest stocks in the US through the end of the third quarter. As shown, the five biggest companies are all Tech related (even though AMZN is categorized as Consumer Discretionary), and they’re all up 19% or more year-to-date. Of the five largest stocks, Facebook (FB) is up the most this year with a gain of 48.52%. While Facebook is up the most of the five largest stocks, Boeing (BA) is up the most of the stocks listed with a YTD gain of 63%. General Electric (GE) is the worst performer with a YTD decline of 23.48%.
Market Rips Past Historical Patterns—Will Q4 Expectations Be Satisfied? With the first three quarters of 2017 officially in the record books we have updated our 1-Year Seasonal Pattern Charts of Seventh Years of Decades, Post-Election Years, Newly Elected Republican Administrations, All New Elected Administrations and 2017 year-to-date. At today’s close, DJIA, S&P 500 and NASDAQ all were at new all-time highs. All three indices are also well above typical Post-Election year performance, the performance of past Newly Elected Republican Administrations, the 7th Year of decades and All First Elected new administrations performance. Will the market have enough gas left to meet lofty Q4 expectations after solid third quarter gains?
Major Bullish Development for Small Caps? Posted by lplresearch Few investments have been more frustrating than small caps in 2017. After a huge rally immediately following the U.S. election last November, the group weighed on the broad market this year-that is until September rolled around. Per Ryan Detrick, Senior Market Strategist, “Small caps were down for the year as of August 21; now they are up more than 11% —just behind the 13% gain for the S&P 500 Index. Although this was a popular trade this year, it also will go down as one of the more frustrating, as it took so long to get moving.” To put things in perspective, on August 21, the Russell 2000 Index closed down 0.02% for the year versus the S&P 500 that closed up 8.47%. Small caps then closed higher 24 out of the next 32 days and made 13 new highs during a 19-day stretch, including eight in a row. So what happened? Many of the so-called “Trump trades” started to work in September, as hopes over tax reform started to heat up, as we discussed in our Weekly Market Commentary: “Markets Buying Into Tax Reform.” Remember, small caps pay a higher tax rate than large caps, so any potential tax reform would benefit this group significantly. As we discussed in our Midyear Outlook: A Shift in Market Control, although small caps had lagged by a wide margin in the first part of this year, we expected an eventual move higher from the group and that has now happened. This leads to the next question: Can the strength continue? We think so. The Russell 2000 has been trading in an upward sloping channel since to the early 1990s, as you can see below. The top trendline slowed all rallies and capped small caps earlier this year. The good news is small caps have officially broken above this trendline, suggesting that continued strength and a continuation of the bull market is likely. Last, small caps relative to large caps had a sharp breakout as well. As the next chart shows, small caps had been underperforming large caps all year, until the recent surge higher. This momentum is yet another technical indicator that small caps could continue to provide alpha as we move into 2018.
Jobless Claims back to Pre-Hurricane Levels Oct 12, 2017 Weekly jobless claims came in lower than expected this week falling from 258K down to 243K. This week’s print was the lowest since 8/25, which was right before the triple whammy of hurricanes Harvey, Irma, and Maria struck the US and its territories. While the Department of Labor did note that claims from Florida, Puerto Rico, Texas, and the Virgin Islands were impacted, as the chart below illustrates, the impact of this Summer’s hurricanes was not nearly as impactful as Katrina in 2005 and Sandy in 2012 implying a much stronger foundation for US employment. It has now been 136 straight weeks since weekly claims last topped 300K – a level that used to be considered as good as it gets. Looking ahead, we’ll have to watch out west to see if the California fires have any impact on claims in California. On a four-week moving average basis, claims are also starting to tick lower as this week’s reading fell by 9.5K down to 257.5K. Again, to think that the US has been swamped with three major hurricanes and the four-week moving average of claims never went more than 35K above the multi-decade low of 235.5K from mid-May is incredible. On a non-seasonally adjusted basis, weekly claims rose to 228K from 204.7K last week. For the current week of the year, this was the lowest print since 1973 and nearly 115K below the average of 343K for the current week dating back to 2000. Continuing Claims Lowest Since 1973 Oct 12, 2017 December 1973. That’s the last time continuing jobless claims have been below this week’s print of 1.889 mln. Think about that for a minute. The median American age is currently 37.8 years old, so the majority of Americans weren’t even alive the last time claims were this low. Every week it seems like the weekly jobless claims report can’t top the recent reports of the past, but then we get another reading like this. Eventually the tide will turn, but for now, it keeps moving in the right direction.
Explaining the New Highs in Three Charts Posted by lplresearch Friday saw the Nasdaq close at a new high, while the Dow, and S&P 500 Index made new intraday highs but sold off late to just miss new closing highs. Of course, we’ve been seeing a lot of new highs this year (not that we’re complaining) as equity markets continue to climb higher with the number of new highs posted by the three major indexes in 2017 being among the most ever. Per Ryan Detrick, Senior Market Strategist, “It is important to remember that new highs tend to happen in clusters that can last decades, but in between you can have years without new highs. Recalling this can be one clue that this bull market may not be as old as many think.” First up, let’s take a look at the S&P 500: The Dow has been around since 1896, and the 48 new highs it notched this year has only been surpassed 7 times; though 22 more new highs are needed to break the all-time record set in 1995. Last, the Nasdaq 100 has made 60 new highs so far this year, meaning the all-time record of 62 new highs seen in 1999 may very likely fall.
Homebuilder Sentiment Back on the Upswing Oct 17, 2017 Homebuilder sentiment took a sharp turn higher this month, rising from 64 up to 68 and well ahead of consensus expectations for a reading of 64. While the magnitude of the beat seems large, there have been three other reports in the last year where sentiment saw as big or a bigger improvement relative to expectations. As shown in the table below, Present and Future Sales as well as Traffic all increased this month. Future Sales was a big standout to the upside, as it rebounded back to its highest level since 1999 (chart below). On a regional basis, the only region of the country where sentiment declined was out West. Sentiment in the Northeast was unchanged, while sentiment in the Midwest and South saw big improvements. While overall sentiment was stronger this month, no single area or aspect of the report hit a new high for the cycle.
Long-Term Technical Patterns for Copper Remain Bullish Posted by lplresearch The London Metal Exchange (LME) is one of the primary trading venues for copper. And as it stands, the LME Copper spot price index continues to show signs of a break out of a multi-year base in the form of a bullish cup-and-handle chart pattern. A bullish cup-and-handle is described by technical analysts as a continuation-type pattern in which the price consolidates into what resembles a tea cup, followed by a breakout in the form of the cup’s handle. If this type of chart pattern executes, then based on historical data, the commodity spot price is likely to climb higher over the long term. To determine how much higher the price is likely to move following a breakout, you simply measure the price change from the bottom of the cup to the beginning of the handle, and add that value to the top of the handle. The final number is your bullish price objective. The current pattern for the LME Copper spot price index, which began in January 2015, took approximately two years to form its base, or cup. As seen in the chart below, between February and July 2017, the handle became more visible. And in August 2017, the index price remained above the 6,100 level for more than three trading days, which increased the likelihood that the pattern would execute to the upside, and the price would continue higher over the long-term time horizon. With the long-term trends in copper continuing to look more bullish, countries that manufacture copper, such as Chile, are showing signs of upward momentum. The MSCI Chile Index, much like that of copper, began exhibiting characteristics of a long-term bullish cup-and-handle pattern in August 2014 and has been forming its cup over an approximately 2.5-year time horizon. The chart below shows that between April and July 2017, the handle became more visible. This past August, on and around the same time as copper, the MSCI Chile Index price executed a bullish catalyst by remaining above the 1750 level for more than three trading days, which increased the likelihood that the pattern would execute to the upside, and the price would continue higher over the next 3–12 months. Looking at historical data going back to 1988 in the table below, there were 9 instances when the MSCI Chile Index executed a long-term bullish cup-and-handle chart pattern (on average lasting over 320 days), and both average and median returns over the subsequent 3- to 12-month periods were impressive. The recent cup-and-handle pattern breakout on both the LME Copper spot price and MSCI Chile indexes are providing initial signals that the longer-term trend may be changing, increasing the likelihood that both index prices may move higher. This may provide investors with an opportunity to diversify their portfolios with either a commodity or emerging market country asset class. But as always, we believe it is prudent to wait for further confirmation of these types of long-term trend reversals prior to investing, in order to help mitigate the risk of a false signal. Stay tuned to the LPL Research blog for future analysis of commodity-related asset classes.
Slightly More Confident Tue, Jan 26, 2021 While a number of economic indicators have seen tremendous rebounds off their COVID lows, one that sticks out as a major outlier has been Consumer Confidence; that remained the case in January as well. In this month's report, overall confidence rose from 87.1 up to 89.3 compared to expectations for an increase to 89.0. As illustrated in the chart below, after the initial plunge last Spring, Consumer Confidence has been bouncing up and down for the last ten months at levels well below the pre-Covid peak. Whether you look at consumer sentiment towards present conditions or the future, it's a similar picture. Expectations were already much lower heading into COVID, so they didn't fall nearly as much, but after the plunge in the Present Situation Index, consumers feel roughly the same about the present as they do about the future. With all the positive news about the vaccine rollout and the market at record highs, why aren't consumers more confident? Chalk it up as a case of "It's a recession when your neighbor loses his job; it's a depression when you lose yours." As shown in the chart below, the gauge of "Jobs Plentiful" embedded in the Consumer Confidence report remains extremely weak, and if you look closely, it's also showing some signs of rolling over. When consumers are worried about hanging on to their jobs, it's going to be hard for them to be confident. There have been some crazy moves in the stock market, so we were surprised to see that consumer optimism towards the stock market actually fell this month. In this month's survey, just 34.8% of consumers said they expect stock prices to increase, while nearly an equal number expect stock prices to decline. In this survey, at least, it doesn't appear as though consumers are anywhere close to irrationally exuberant. Lastly, we wanted to highlight where consumers expect interest rates to go. Back in April at the height of the pandemic, the percentage of consumers expecting interest rates to rise was nearly equal to the percentage that expected rates to fall. Since then, though, we've seen a steady increase in the percentage of those expecting rates to rise. Granted, when rates are at or near zero, it's hard to expect rates to go any lower, but with little improvement in both overall confidence and the percentage of consumers viewing the job market as getting better, you wouldn't expect to see half of all consumers anticipating a higher rate environment.
How Stocks Perform in a President’s First Year 1/27/21 2021 kicks off the first year of a new four-year presidential cycle. One of the most popular questions we’ve received lately is how have stocks performed historically during this political year. For starters, the S&P 500 Index historically has gained 6.8% per year during the first year of the four-year presidential cycle, but stocks have done better when the president was re-elected than when someone new occupied the White House. This makes sense, as a new president could bring new policies and potential uncertainty. Additionally, stocks do better during years three and four under a new president, while they are much weaker early in the cycle. As shown in the LPL Chart of the Day, breaking down all the quarters of the four-year presidential cycle shows that the first quarter of the first year in the cycle is one of only two quarters with a negative average return. Bigger picture, historically the fourth quarter of the year has been the strongest of the year, with the first quarter the second best on average. Don’t forget, the third quarter is usually a weak one. Please note, below is for all years, not just the first year of the cycle. We will take a closer look at February returns next week on the blog, but it is worth noting that when a new party is in power in the White House, historically stocks have struggled from late January until early March. “It is interesting, but from around the time of the inauguration to several weeks out, stocks tend to be pretty weak,” according to LPL Financial Chief Market Strategist Ryan Detrick. “It may be as simple as new leadership could bring with it new policies and added uncertainty”.
January Indicator Trifecta Update While the futures look grim this morning our January Indicator Trifecta remains positive. If the market can exhibit some resilience in the face of all the transition and upheaval being thrown at it and hang on to the gains in January, it will be a good sign for the year. Covid-19 continues to grip the planet and the market while the vaccine rollout has hit some roadblocks. Wall Street is also recalibrating to a completely different President and administration with a newly democratically controlled Congress and another impeachment. Throw in some disappointing earnings and lingering economic concerns and stocks are on the ropes this morning. Our Santa Claus Rally (SCR) kicked off the month with a bang then our January Trifecta went two for two when the First Five Day (FFD) early warning system came in positive. The January Trifecta would be satisfied with a positive reading from our January Barometer (JB) at month’s end. The best case, most bullish scenario is when all three indicators, SCR, FFD and JB, are positive (in table above). In 31 previous Trifecta occurrences since 1950, S&P 500 advanced 87.1% of the time during the subsequent eleven months and 90.3% of the time for the full year. However, a January Indicator Trifecta does not guarantee the year will be bear or correction free. Of the four losing “Last 11 Mon” years, shaded in grey in the above table, 1966, 1987 and 2011 experienced short duration bear markets (2011, S&P 500 –19.4% peak to trough). In 2018, S&P 500 retreated 19.8% from its September high close to its December low close. Even if S&P 500 was to finish the full month in the red, the prospects for the next eleven months and the full year remain decent. Of the last 11 times since 1950 (last year, 2020 is the most recent) that the SCR and FFD were both positive (and the full-month January was negative), the next eleven months advanced 81.8% of the time and full year advanced 72.7% of the time with gains of 8.2% and 4.1% respectively. Positive SCR and FFD are encouraging, and further clarity will be gained when the January Barometer (page 16, Stock Trader’s Almanac 2021) reports at month’s end. A positive January Barometer would certainly boost prospects for full-year 2021. The December Low Indicator (2021 STA, page 34) should also be watched with the line in the sand at the Dow’s December Closing Low of 29823.92 on 12/1/20.
Improvements Resume for Jobless Claims Thu, Jan 28, 2021 For the second week in a row, initial jobless claims showed an improvement. Rather than the decline to 875K that had been penciled in by economists, first-time claims fell to 847K from 914K last week. Claims have now fallen 80K since the multi-month peak two weeks ago but are still 136K above the pandemic low of 711K from the first week of November. On a non-seasonally adjusted basis, claims likewise were lower falling by 101.5K to 874K. Similar to the seasonally adjusted number, while off the peak, that is still well above the pandemic lows from the fall. Additionally, we would note that like last week (the third week of the year), the current week of the year (fourth) has rarely seen non-seasonally adjusted claims move higher. In the history of the data going back to 1967, only 9% of years have seen claims rise week over week in the fourth week of the year. Last week, we noted how the decline in regular state claims was not necessarily shared by claims for Pandemic Unemployment Assistance (PUA). This week, the two moved more in sync as more than 100K decline in regular state claims was accompanied by a 20.5K decline in PUA claims. Combined, that makes for 1.3 million new claims this week; an improvement from the prior week but not as strong of a number as the start of the year/final weeks of 2020. As for continuing claims, there have continued to be improvements as seasonally adjusted claims fell to 4.771 million rather than the 5.088 million reading that was expected. Last week's reading was also revised lower from 5.054 million to 4.974 million. That means that total continuing claims fell below 5 million last week for the first time since March and stayed below 5 million in the most recent week. Including all other programs to garner a more complete picture of continuing claims adds a couple of weeks of lag to initial jobless claims data meaning the most recent week is for the week of January 8th. The surge in initial jobless claims for that week showed up as total continuing claims across all programs rose from 16.022 million in the first week of the year to 18.319 million. That was the first uptick of any kind since the week of November 27th when they rose by 1.6 million, and it was also the largest week over week increase since the week of May 8th when they rose by 3.793 million. The bulk of that uptick came from PUA claims which rose 1.627 million, but PEUC claims and the extended benefits program also saw increases of 836.6K and 96.04K, respectively. As we have noted in the past few weeks, those upticks were likely the result of catch up from the end of 2020 as expirations of some of these programs were narrowly avoided with the signing of the spending bill. Click here to view Bespoke's premium membership options for our best research available.
Federal Reserve Rebukes Hawkish Rumors; Reaffirms Support 1/28/21 It has been a busy past 12 months for the Federal Reserve (Fed), after the onset of the global pandemic prompted historic stimulus from monetary policymakers. With the economy showing signs of being in the early stages of expansion, some have speculated that the Fed may begin to slow the pace of its asset purchases. Recent comments from some Federal Open Market Committee (FOMC) members that have hinted that the Fed’s bond buying program could be reduced by the end of the year, has signaled that other policymakers may be thinking that way, too. Adding fuel to the speculation, the 10-year Treasury yield has been climbing, breaking above 1% for the first time since March 2020 as the economy has expanded. Meanwhile, as shown in the LPL Chart of the Day, breakeven inflation rates—the yield difference between Treasury Inflation-Protected Securities (TIPS) and nominal Treasuries—have risen to levels not seen since 2018, suggesting that inflation expectations are heating up, although levels still remain largely benign. In his press conference following this week’s FOMC meeting, Fed Chair Jerome Powell quickly laid those concerns to rest, hammering home the idea that it is far too early for the Fed to consider tapering its asset purchases until “substantial further progress” is made toward its dual mandate of maximum employment and price stability—with emphasis on maximum employment. “The Fed has made it clear to market participants that its prior statement of ‘not even thinking about thinking about raising rates’ wasn’t just a quip—they really meant it,” added LPL Chief Market Strategist Ryan Detrick. “There’s still a great deal of uncertainty about the economy going forward, and the Fed has reiterated their support until the last drop of uncertainty has dried up.” Further, the Fed stated that it is aiming to achieve inflation that remains moderately above 2% for some time, as inflation has been persistently below their target. This view reflects the Fed’s shift to average-inflation targeting as part of their policy framework update introduced at their August meeting. With this updated approach to inflation in place, the Fed looks poised to stomach any near-term inflation scares in an almost “prove it” mentality for steady inflation at or above their 2% target. The meeting was largely what we expected from the Fed, but their stern dovishness is notable. With monetary policy staying put going forward, fiscal stimulus is back in the driver seat of providing an additional boost to the economy, and we will continue to monitor the progress of President Biden’s recent stimulus proposal.
Should Investors Root For Tom Brady Or Patrick Mahomes? The Super Bowl Indicator suggests stocks rise for the full year when the Super Bowl winner has come from the original National Football League (now the NFC), but when an original American Football League (now the AFC) team has won, stocks fall. We would be the first to admit that this indicator has no connection to the stock market, but “data don’t lie”: The S&P 500 Index has performed better, and posted positive gains with greater frequency, over the past 54 Super Bowl games when NFC teams have won. Of course, it doesn’t always work, as stocks did quite well the past two years even though AFC teams won. It was originally discovered in 1978 by Leonard Kopett, a sportswriter for the New York Times. Up until that point, the indicator had never been wrong. A simpler way to look at the Super Bowl Indicator is to look at the average gain for the S&P 500 when the NFC has won versus the AFC—and ignore the history of the franchises. As shown in the LPL Chart of the Day, this similar set of criteria has produced an average price return of 10.2% when an NFC team has won, compared with a return of 7.1% with an AFC winner. An NFC winner has produced a positive year 79% of the time, while the S&P 500 has been up only 65% of the time when the winner came from the AFC. Here’s the catch. Stocks have actually done just fine lately when the AFC has won. In fact, the S&P 500 Index gained 10 of the past 11 years after an AFC Super Bowl champ. “There have been 54 Super Bowl winners, yet only 20 teams account for those wins,” said LPL Financial Chief Market Strategist Ryan Detrick. “And wouldn’t you know it, the best stock market performance happens after the Bucs win the big game? But I don’t care, I’m still not rooting for Tom Brady.” Here’s a breakdown of the 20 Super Bowl winners and how the S&P 500 has done following their victories. For some reason, the author’s favorite team, The Cincinnati Bengals, isn’t on this list. We double checked the data, but they still aren’t on there. Lastly, this is Tom Brady’s record 10th Super Bowl. It turns out; stocks don’t do well when he is in the game, up only 0.5% for the year. Meanwhile, should he lose (again, what the author is hoping for here), stocks actually do quite poorly, down 10.4% on average.
More Jobless Claims Improvements Thu, Feb 4, 2021 There was a lot to like in this morning's jobless claims release. For starters, claims beat expectations falling to 779K rather than the forecasted decline to only 830K. Additionally, last week's number was revised down by 35K to 812K compared to the original 847K number. This week, claims fell for a third week in a row with the 33K decline bringing the total drop to 148K over the past three weeks since the high of 927K. While there is still plenty of room for further improvement given claims remain well above the pre-pandemic record high of 695K, at 779K claims are now at the lowest level since the last week of November's level of 716K which was also the second-lowest reading of the pandemic behind November 6th's 711K print. On a non-seasonally adjusted basis, claims have also dropped sequentially for three weeks in a row. Unadjusted claims have now fallen by nearly 300K since the high of 1.113 million in the second week of the year. Now at 816.2K, non-adjusted claims are at the lowest level since the last week of November. As we have noted the past couple of weeks, falling claims are normal for this time of year with last week (the fourth week of the year) and the previous week (the third of the year) historically having seen claims lower week over week 90.74% and 100%, respectively, of the time all years since 1967. Turning to the current week of the year, there is not as consistent of a trend as the past couple of weeks, but historically claims have moved lower more often than not. Even including PUA claims, total initial jobless claims dropped this week. Alongside the 23.535K decline in regular state claims, PUA claims fell by 54.68K. In total, this week saw 1.165 million claims between the two programs, down from 1.243 last week marking a continued return towards the low of just above 1 million at the end of October. As for continuing claims which are lagged an additional week to initial claims, the declines keep coming. Continuing claims totaled 4.592 million this week, down 193K from the prior week's upwardly revised reading. Like initial jobless claims, that was better than the expected reading of 4.7 million and also set a new low for the pandemic. Including all programs adds another week's lag but for the week of January 15th, total claims across all programs declined to 17.87 million from the prior week's spike higher to 18.359. Most programs contributed to that decline with the biggest contribution coming from the Pandemic Emergency Unemployment Compensation (PEUC) program which saw claims fall by 289.91K. Outside of the first week of the year when this program fell by over 1 million (likely due to benefits expiration at the end of 2020 and other discrepancies as a result of the timing of the spending bill) that 289.91K decline was the largest week over week drop on record. Despite that decline, a 197K uptick in the Extended Benefits program made for a new high in the extension programs' share of total claims.
Super Bowl LV: Time to Break the Tie - Go Bucs! Fri, Feb 5, 2021 This year's Super Bowl will be a first for many different reasons. It will be the first-ever game played in the home stadium of one of the teams playing. It will be the first-ever game with a 43 year old starting QB. The age difference between the starting QBs will be the widest ever (18+ years). The game will not be played to a full stadium (atendance capped at 25K). We could go on. Another interesting aspect of this year's game is that it will break the tie between the AFC and NFC for number of championships won (27). The last time the two conferences had an equal number of Super Bowl titles was back in 1990 after Super Bowl XXIV when each conference had 12. The New York Giants broke that tie in 1991 when Scott Norwood went 'wide ride' to give the NFC its 7th straight and 13th total Super Bowl victory. From there, the NFC continued its domination of the AFC (and the Bills) winning the next six championship games, including three against the Bills. We've all heard of the Super Bowl market indicator which says that a win for the NFC bodes well for the equity market while an AFC victory is a bearish signal. For years, there actually was a wide gap in performance for the market following wins by either conference in the past, but in recent years the disparity has narrowed. In the 27 years where the AFC has won the Super Bowl, the S&P 500 averaged a rest of year gain of 6.9% with positive returns 70% of the time. When the NFC wins, though, the S&P 500's average rest of year performance has been a gain of 10.5% with positive returns more than 77% of the time. When it comes to individual teams, 13 have won the Super Bowl more than once. The two teams with the most victories are the Steelers and Patriots each of which has won the game six times. The Dallas Cowboys otfen refer to themselves as 'America's Team' but Pittsburgh is the "Stock Market's Team". In the six years where the Steelers won the Super Bowl, the S&P 500 experienced positive returns for the remainder of the year every time for an average gain of 18.8%! Market returns for the Patriots following their six victories has been a much more muted 4.6%, including a decline more than 21% from the end of the team's first victory in 2002. The 49ers and the Broncos have 'only' won five and three Super Bowls, respectively, but following their victories, the S&P 500 has been up for the remainder of the year every time for an average gain of more then 20%! So, what about this year's teams? The Chiefs have won the Super Bowl twice in their history, and the S&P 500 has averaged a rest of year gain of 8.1% following their victories. While the S&P 500 was down for the remainder of the year after they won in 1970, the decline was less than 1%. The one year the Chiefs made it to the championship but lost, the S&P 500 was up over 14% for the remainder of the year. For the NFC, Tampa Bay's one and only appearance in the Super Bowl was in 2003 (XXXVII). They won that game, and the S&P 500's rest of year gain was over 29%. Additionally, while they're on a new team now, in the three Patriots vicotries where Tom Brady and Rob Gronkowski were both on the team, the S&P 500 was higher for the remainder of the year all three times for an average gain of 12.7%. Go Bucs!
