The Woke Street Journal
Market
The grid kind of tells the story of the divergence between the large cap growth stocks that have been rallying non-stop this year and everything else.
Tech selloff leads Magnificent Seven to nearly its worst day ever by this metric-MarketWatch
Declines in Tesla, Nvidia and other large tech stocks meant a $598 billion market-cap wipeout for the ‘Magnificent Seven’ — the second-largest one-day total on record
The question now is whether this was a one day rotation rally and we go back to our regularly scheduled programming, or this is the start of something bigger. It’s early, but everything is green this morning, however the QQQs are up 4bps while IWM is up 92bps. Sometimes green to red days are easy to spot, and yesterday was one of those. You had a sense that once the market popped on weaker than expected CPI and then immediately retraced those gains that you were in for something. This morning my long watchlist is all software and semi names and my short watchlist is a mile long with mostly value type names. I’m mostly a mean reversion trader so to go long a stock has to drop and to go short it has to pop, so we may not enter anything, just interesting to see the divergences in my own models.
Rates coming down certainly didn’t hurt things yesterday. Small stocks tend to be more rate sensitive. The market now seems to be fully pricing in a September cut, which is also why I wouldn’t panic on large cap tech.
Latest from Nickileaks…
Milder Inflation Opens Door Wider to September Rate Cut-WSJ
From Jefferies….
As long as Fed September rate cut expectations remain on the cards, we expect the narrative to support risky assets. Yesterday saw a big rotation out of Tech stocks into the broader index. Russell close up +3.47% while NASDAQ was down close to 2% on the day. A resilient economy with slowing inflation should indeed lead to Russell outperforming. But with our view that the economy (and the labour market) will slow down over the coming months, we do not see a sustained outperformance of Russell over NASDAQ. We do admit that positioning is more crowded in the Tech sector and some rotation makes sense. But when the froth is cleared up, we expect the Tech sector to continue its outperformance.
For those worried about breadth, the percent of S&P stocks above their 20 day moving average jumped massively.
TSLA was interesting yesterday, it got demolished intraday on a report that the robo taxi would be delayed. I’d watch the 10 day for support.
Tesla downgraded to sell as UBS says the stock overvalues growth opportunities-MarketWatch
The analysts say they don’t believe Tesla can get to 5 million vehicles by 2030, forecasting the electric-vehicle maker to reach 3.9 million units. And they say their outlook on the medium term, from 2025 to 2027, is 11% below consensus.
“Our view is informed by more tepid demand for EVs (and demand saturation for the current model lineup) in the U.S. and more competitive markets in Europe and especially China,” they say.
Bank earnings on tap…..
Bank Earnings: JPMorgan, Wells Fargo, and Citi Prepare to Release Results-Barron’s
Don’t forget the consumer….
Inflation-weary shoppers are finally cutting back on potato chips.
For the past few years as prices soared, many consumers kept buying affordable treats like Doritos and Lay’s in lieu of bigger-ticket splurges such as restaurants, concerts or travel. But now, they are limiting their spending in all areas, said Jamie Caulfield, PepsiCo’s PEP 0.22%increase; green up pointing triangle chief financial officer.
Signs keep accumulating that U.S. consumers are in trouble. Investors are paying heed.
Today we have PPI and U Michigan data. The only main Fed head is Goolsbee.
Biden
Oops…..
Woke Companies
Looks to be trying to bottom. Would see if it rejects at the 10 day, which could be a short entry.
ESG
Red State Anti-ESG Laws Seen as Continuing Obstacle by Companies-Bloomberg Law
Political backlash particularly at the state level remains a significant obstacle for corporations seeking to advance their environmental, social and governance policies, according to a new think tank study.
The findings released Wednesday come as at least 20 states have enacted anti-ESG legislation, including rules requiring that asset managers get consent from clients when investing in social objectives in Missouri and a law directing pension funds to prioritize returns without considering ESG in Florida. More than 60% of 125 companies surveyed in August 2023 by the nonprofit organization The Conference Board said that they expect political backlash to persist or intensify through 2025.
That’s what happens when you open that Pandora’s box. Companies should stay out of politics, period. Boards May Soon Be In A Shareholder Crossfire Over DEI And ESG-Corporate Board Member
Just as many corporate boards were determining how to deal with shareholder concerns involving Diversity, Equity and Inclusion (DEI) and Environmental, Social and Governance (ESG) issues, it appears they may have to contend with anti-DEI and anti-ESG activists as well.
Tractor Supply Company is one of the latest companies to make significant changes to its DEI and ESG policies after being targeted by backlash from conservative groups. After weeks of a conservative online campaign against the company’s support of DEI and climate-related policies, Tractor Supply issued a statement saying it would end those practices.
Anti-ESG group launches campaign around farm bill-The Hill
“The interests of consumers and the health of American agriculture must be paramount as Congress determines how to revise the Farm Bill,” he added. “In crafting the bill, Congress must ensure that ESG and onerous climate initiatives are kept far away.”
Hild argued that meant rejecting mandates regarding fertilizers that promise to reduce crop yields, or directives incentivizing electrification that would impose costs on farmers. A 30-second TV ad echoing those claims will air in New York City and Washington, D.C.
DEI
Former Kentucky AG Warns About Threat to Business From Woke Corporations-The Daily Signal
“We don’t need companies built on diversity, equity, and inclusion,” he told The Daily Signal. “We need companies built on excellence, merit, and intelligence.”
Honeywell employee fired for skipping DEI training has no bias claim, 7th Circuit affirms-HR Dive
Doctor who says Duke University fired him for criticizing ‘pledge to left-wing ideology’ speaks out-Fox News
Conger, who said that he feels DEI stands for "didn’t earn it," disagreed with the notion that racism is a public health crisis, particularly because the pledge claimed it was "guided by science."
Things That Get Blamed For Climate Change
Everything Else
Going after Elon again….
Elon Musk’s X deceives users and breaches online content rules, EU says-CNBC.com
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