I wrote about AI boom not being a 1999 moment in my quarterly letter, Bespoke comments below.
Bespoke Investment Group In our premium research over the last few months, we’ve done a lot of analysis comparing the launch of ChatGPT and the AI Boom that has ensued with other major technological advances over the last few decades. One of the most correlated periods to now in terms of the Nasdaq 100’s performance was the launch of the modern web browser (Netscape) back in late 1994. Just as ChatGPT brought AI to the masses, the Netscape browser made the internet easily accessible.As shown in the chart below that was included in our latest Bespoke Report newsletter, if we tie the release of ChatGPT in November 2022 to the release of the Netscape web browser in December 1994, the Nasdaq 100 is up about the same amount, and we would currently be around August 1996 on a time scale. What’s interesting about August 1996 is that we’d be about four months away from Fed Chair Alan Greenspan’s famous “Irrational Exuberance” comments that were meant to highlight some of the frothiness that he was seeing in markets at the time.
Those comments by Alan Greenspan turned out to be correct (eventually), but if we expand the chart above out ten years, they were about three years early! As shown below, the Nasdaq would go on to experience a massive bubble for years after Greenspan’s first mention of “irrational exuberance” in late 1996.There are plenty of investors saying the same thing and worse about Tech/AI stocks right now, but keep in mind that we’ve yet to see a pick-up on the M&A and IPO fronts that usually accompany bubbles. Some of that can be tied back to the fact that companies that may have gone public 25 years ago are often getting acquired before they go public, but overall, the AI Boom, while certainly hot, still seems far more subdued than what we saw during peak Internet boom back in the late 1990s.
Of course, every boom/bust cycle is different, and the chart below is not to suggest that the Nasdaq will continue following the path it took back in the 1990s. We just thought it was helpful to see the two periods side by side when comparing the launch of ChatGPT to the launch of the Netscape web browser.As always, past performance is no guarantee of future results!We have a lot more interesting analysis like this in our newest Bespoke Report. If you’d like to read it, simply start a trial to one of our three membership levels.
Fundstrat Head of Research Tom Lee and his team saw an important quantitative signal last week that historically has been followed by strong win ratios for small-caps: The Russell 2000 has been volatile, trading at +/- 1% in 11 out of the last 12 trading sessions. This has happened only 10 times in non-bear markets since 1979 – in 1987, 1998, 2009 (4x), 2011, 2020 (2x). “These were all clear ‘risk-on’ years and more importantly, ‘early cycle’ years,” Lee pointed out. In those historic precedents we found high win ratios for small-caps one-month forward, as well as three, six, and 12 months afterwards. In fact, the historical win ratio was 100% in the three-, six-, and 12-month forward-looking periods. We see this in our Chart of the Week
2. Over the Last 12 Trading Days…13% Spread Between Small Caps and S&P
@Charlie Bilello US Small Caps are up 10% over the last 12 trading days while US Large Caps are down 3%. The 13% spread is the largest 12-day Small Cap outperformance ever.
3. What Will It Take for Equal Weight S&P to Outperform Cap Weight?
Barrons Ben Levisohn Bank of America’s Ohsung Kwon looked at when the equal-weight S&P 500—another proxy for the rotation trade—outperformed the market-cap-weighted version of the index. He found that it did so 90% of the time when the yield on the 10-year Treasury fell a full point from its 12-month high and when the Institute for Supply Management’s manufacturing purchasing managers index rose over four points from its lows. For those two things to happen now, the 10-year yield would have to drop to 3.99% from a recent 4.21%, and the PMI would have to hit 50.5, from June’s 48.5. That seems like a big ask.
Corporate insiders are dumping stock at the fastest rate in more than a decade Marketwatch By Mark Hulbert Corporate insiders have taken a sharply pessimistic turn — selling their companies’ shares at the fastest rate in at least a decade. That’s according to InsiderSentiment.com, a website maintained by Nejat and Jon Seyhun. The former is a finance professor at the University of Michigan and one of academia’s leading experts on interpreting the behavior of insiders. In calculating their insider-sentiment indicators, the Seyhuns focus only on two of the three categories that the law defines as insiders (corporate officers and directors) and ignore the third (a company’s largest shareholders). That’s because Professor Seyhun has found from his research that these large shareholders on balance have no privileged insight into their companies’ prospects. Because their transactions are typically several orders of magnitude larger than those of officers and directors, including them skews the much more valuable signals coming from officers and directors.
The insider indicator that the Seyhuns calculate is the percentage of all companies with any officer or director transactions for which there has been net buying. The past decade’s average is 26%, and up until July this ratio had been slightly to moderately below this average. In the first three weeks of July, however, the insider buy ratio turned “deeply negative” — to 13.6%, its lowest in at least a decade, as you can see from the accompanying chart.
1. FANG+ ETF Closes Below 50Day Moving Average….-11% from Highs
2. NVIDIA Closes Below 50-Day…-18% from Highs
3. AI Stock …SMCI -40% from Highs…
4. Tesla -20% from July Run Up
50day never made it thru 200day to upside on chart.
5. EV Inventory 125 Days
6. Chipotle Closes Below 200-Day
Not sure if CMG, UPS, MCD telling us consumers slowing down spending.
7. Shares Of Major French-Fry Supplier Crash As Restaurant Traffic Slowdown Worsens
ZEROHEDGE BY TYLER DURDEN
One of the world’s largest producers and processors of frozen french fries, waffle fries, and other frozen potato products reported fourth-quarter profit and sales that missed estimates. The company also issued a below-consensus full-year adjusted EBITDA outlook due to sliding global restaurant traffic. This is an ominous sign, as elevated inflation and high interest rates are squeezing consumers. Lamb Weston reported adjusted earnings per share of 78 cents for the fourth quarter ending May 26, which was well below analysts’ expectations tracked by Bloomberg of $1.25. Revenue also missed, coming in at $1.61, versus the average estimated $1.7 billion. Here’s a snapshot of fourth-quarter earnings (courtesy of Bloomberg):
Momentum activities like public speaking, board sports and leadership all share an attribute with riding a bicycle: It gets easier when you get good at it.
The first error we often make is believing that someone (even us) will never be good at riding a bike, because riding a bike is so difficult. When we’re not good at it, it’s obvious to everyone.
The second error is coming to the conclusion that people who are good at it are talented, born with the ability to do it. They’re not, they have simply earned a skill that translates into momentum.
There’s a difference between, “This person is a terrible public speaker,” and “this person will never be good at public speaking.”
And there’s a difference between, “They are a great leader,” and “they were born to lead.”
The thing about momentum activities is that we notice them only twice: when people are terrible at them, and when they’re good at it. That includes the person you see in the mirror.
Three Lower Highs in a Row for 2 year treasury yields…trend is down pulled back to early Feb 2024 levels.
3. Q2 2024 First Year Over Year Increase in IPOs Since 2021
From Zachary Goldberg Jefferies –Wall Street Horizon noted, the second quarter of 2024 marked the first year-on-year increase in new global #IPOs since Q3 2021 and the single most active quarter since Q3 2022.
4. UPS Stock Breaks Below 2023 Lows
5. AT&T Chart…Can T Break Out of 10-Year Range?
6. De-Globalization Will Not Be Easy
Bernstein Advisors Trade Deficit is at record levels.
8. The US housing-market logjam keeps getting worse
Business Insider
Existing home sales fell in June to nearly to their slowest pace since 2010.
The decline comes as home prices notched a record high in the same month.
Buyers are likely waiting for interest-rate cuts that would loosen financial conditions.
The pace of existing home sales fell close to a record low in June as record-high prices and persistently high mortgage rates turned buyers away. Data from the National Association of Realtors shows that sales slumped 5.4% from May to June, hitting an annualized rate of 3.89 million. That marks the one of the slowest paces since 2010. Adding to the reluctance of buyers was a second straight monthly record for home prices. The median existing-home price surging 4.1% year-to-year to $426,900. The two dynamics are combining to worsen a long-standing logjam in the housing market. While the issue was once a lack of inventory, home sales have stayed stagnant even as more units have come available. It’s likely buyers are waiting for interest rates to start declining.
9. American Mortgage Holders Loan to Value at Super Strong Levels
10. Most Followed Accounts On Instagram…Ronaldo and Messi
Aside from Instagram’s own account, Cristiano Ronaldo has the most followers on Instagram with over 600 million. Another soccer star Leo Messi currently ranks third for most Instagram followers, just over 100 million behind rival Ronaldo. With the exception of YouTube’s MrBeast and T-Series (over 260 million subscribers), each of Instagram’s top 20 accounts has more followers than all other social media accounts. 17 of the top 20 Instagram accounts are focused on a single person.
1. Trading on Polymarket Hits $112m…Bets on Politics, Sports, Pop Culture
WSJ Alexander Osipovich Welcome to the world of Polymarket, a four-year-old startup that offers bets on politics, sports, pop culture and pretty much anything else. Trading volumes on Polymarket hit a record $112 million in June and have already exceeded that level so far this month. Activity rose sharply after the June 27 presidential debate, in which President Biden’s disastrous performance unleashed speculation that he would drop out of the race.
Mega-Cap Tech drove 2023-2024 rally…small cap tech still below 2021 highs.
4. Manhattan Real Estate Manager SL Green +205% from Lows
Yahoo Finance Description-SL Green Realty Corp., Manhattan’s largest office landlord, is a fully integrated real estate investment trust, or REIT, that is focused primarily on acquiring, managing and maximizing value of Manhattan commercial properties. As of September 30, 2023, SL Green held interests in 59 buildings totaling 32.5 million square feet. This included ownership interests in 28.8 million square feet of Manhattan buildings and 2.8 million square feet securing debt and preferred equity investments.
50- week about to go thru 200week to upside.
5. CRWD -30% Correction but Still in Green for 2024
CRWD close to next support
6. Mag 7 Lost $1.32 Trillion from Highs…A Blip on Long-Term Chart
Business Insider Tom Lee Fundstrat Lee put the chart above together several years ago, but his thesis remains the same. The average age of millennials is now around 31 years old, and the global cohort of 2.5 billion people is starting to enter its prime age years of 30-50 years old. “This would be the third time that stocks entered a cycle where annual returns compound at high teens. You had the roaring 20’s, and then you had the 50’s through the late 60’s, and this is a third cycle,” Lee told CNBC last month. “They all coincided with a surge in the number of people aged 30-50, so in other words the number of prime age adults, and this time it’s powered by millennials and Gen Z.”
10. Why you are probably sitting down for too long -BBC
Annabel Bourne Sitting down for prolonged periods can have a profound effect on our health In the office, on transport, at home…Sitting down is ingrained in most peoples’ days. But, due in part to vascular dysfunction, staying sedentary for too long can increase the risk of serious health conditions like cardiovascular disease and type 2 diabetes. In 1953, epidemiologist Jeremy Morris found that London bus drivers were more than twice as likely as bus conductors to develop coronary heart disease. Demographically (in age, sex and income range) the two groups of workers were the same, so why was there such a significant difference? Morris’ answer: bus conductors were required to be on their feet and regularly climb the steps of London’s iconic double-decker buses as they sold tickets to passengers, whereas the drivers remained seated for long stretches of time. His landmark study laid the groundwork for research on the links between physical activity and coronary health. Whilst London bus conductors may now be a thing of the past, Morris’ results are more relevant than ever. Since the Covid-19 pandemic, there has been a huge shift towards working from home, which is likely to increase our collective sitting time.
Why does sedentary behaviour increase risk of cardiovascular disease? The primary hypothesis is increased vascular dysfunction, particularly in the legs. The vascular system is responsible for keeping blood and lymph fluid – which forms part of the immune system – moving through the blood vessels. David Dunstan, a physiologist at Deakin University’s Institute for Physical Activity and Nutrition, in Melbourne, Australia, has extensively researched the effects of prolonged sitting and possible interventions. “What characterises sitting is a reduction in muscular activity,” says Dunstan. “If I’m on a chair, the chair is taking all the responsibility there.” The combined effect of reduced muscular activity, lower metabolic demand and gravitational forces decreases peripheral blood flow to the leg muscles, which can lead to blood pooling in the calves. The biomechanics of sitting, with the legs usually bent, can also reduce blood flow. Researchers suggest that 120-180 minutes of prolonged sitting is the threshold of too long spent seated Reduced muscular activity of the leg muscles reduces their metabolic demand. Metabolic demand is the primary determinant of blood flow, so blood flow in the legs is also reduced. The biomechanics of sitting, with the legs usually bent can cause to blood pool in the calves – one study of 21 young healthy volunteers saw their calves increase in circumference by nearly 1cm (0.4in) over the course of two hours. This can also reduce blood flow.
Reduced blood flow, however, reduces shear stress, and the endothelium produces vasoconstrictors like endothelin-1 which cause the blood vessels to narrow. In a vicious cycle, vasoconstriction further reduces blood flow, and blood pressure rises to keep the blood moving. High blood pressure, or hypertension, is one of the predominant risk factors for cardiovascular disease. “That’s [vascular dysfunction] one of the potential mechanisms,” says Dunstan. “But the truth is that we haven’t been able to pinpoint the exact mechanisms, and there’s likely to be multiple. Whilst the underlying mechanisms are hypothetical, recent studies support the theory. A study with 16 young, healthy men found that sitting for three-hour periods increased blood pooling in the legs, peripheral vascular resistance, diastolic blood pressure and leg circumference. Another study finds that blood pressure increases with time spent sitting uninterrupted. Researchers generally agree that 120-180 minutes of uninterrupted sitting is probably the threshold at which you have probably spent too long in a seated position, but vascular dysfunction generally increases with time spent sitting.
Dunstan, who specialises in researching type 2 diabetes, also notes that sedentary behaviour increases post-meal, or post-prandial, rises in blood glucose and insulin. Impaired insulin sensitivity and impaired vascular function, both contribute to a higher risk of cardiovascular disease and type 2 diabetes. People are becoming more sedentary because it’s what society has encouraged. As things get more efficient, we don’t have to move around so much – Benjamin Gardner Given all these well-known potential consequences, why is it that we sit for so long – and can we break the habit? “I think people are becoming more sedentary because it’s what society has encouraged,” says
Benjamin Gardner, a social psychologist specialising in habitual behaviour at the University of Surrey, who has been researching why people sit for so long. “It’s not that anyone’s deliberately pushing it. It’s just as things get more efficient, we don’t have to move around so much.” In 2018, Gardner and colleagues found that encouraging standing in meetings presented unique social obstacles. “We encouraged people to try this [standing up] in three different meetings, and we interviewed them after each one to find out how they got on, and the findings were fascinating,” says Gardner. “In a formal meeting, it was felt it was not appropriate to be standing.”
Some researchers believe we need more social factors to make it easier for people to break up the time they spend sitting (Credit: Getty Images) Other interventions include height-adjustable workstations, sit/stand chairs, treadmill workstations, and fidgeting the legs which enhances blood flow. (Learn more aboutwhy fidgeting is good for you.) Just getting up every-so-often and going for a light walk or climbing some stairs has also been shown to be beneficial. Wearable technology may also help nudge us into action. In a promising new study, wearable devices called accelerometers provided 24-hour data on individual behaviour patterns including sitting, standing, sleeping and exercising.
As Dunstan pointed out, this potentially allows for tailored optimal sitting and standing times, with devices then sending automatic reminders whenever we sit for too long. However, the use of technology is not without its drawbacks, as some may become frustrated by or desensitised to its prompts. Above all, Gardner and colleagues encourage moving between sitting and standing positions more frequently. The premise of breaking up sedentary time by just standing up is simple, but has significant health benefits, particularly for low-activity individuals. For wheelchair users or others with mobility constraints, specific, adapted exercises can be beneficial. For many, sedentary behaviour can seem like an unavoidable consequence of modern life and work. But even small changes to your routine – be it stretching more, fidgeting or standing up to make a cup of tea – can help break your sitting habit. — For essential climate news and hopeful developments to your inbox, sign up to the Future Earth newsletter, while The Essential List delivers a handpicked selection of features and insights twice a week. For more science, technology and health stories from the BBC, follow us on Facebook and X.
