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Daily Chartbook #3
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1. Consumer sentiment vs. unemployment. There’s a big gap between record low consumer sentiment and historically low unemployment. Which one gives?
2. Jobless claims. Initial jobless claims rose to an 8-month high. The 4-week average for initial claims is now 40% above its lows. According to The Bonddad, “Typically (not always!) it has risen by 15% or more over its low before a recession has begun.”
3. Philly Fed. The Philadelphia Fed Manufacturing Index declined for the 4th straight month with its second consecutive month of contraction (reading below 0).
4. Forecasting orders. New orders took a particularly sharp drop which doesn’t bode well for future activity.
5. How are the waters? Business Conditions in the region dropped 18.6 points to levels we haven’t seen since the early 90s.
6. Forward-looking indicators. The business outlook for the next 6 months has crumbled.
7. Not alone. With outlooks like that, businesses are cutting back on investments. Here’s a look at the 6-month CAPEX plans for all of the Fed’s regional manufacturing surveys. The Philly Fed CAPEX plans hit a 9-year low this month.
8. Why so serious? It’s not for a lack of cash. Businesses surveyed by Philly Fed have plenty of that.
9. Nord Stream. Russia reopened the natural gas pipeline to Europe. It’s currently running at 40% which is well below historic run rates.
10. Gas prices win. In the US, high prices at the pump have drivers keeping off the road. Demand has dropped to just above 2020 levels (very weak).
11. Fuel inventories. US inventory levels for crude, gasoline, and distillate stocks are rising but still remain historically low.
12. Earnings downgrades. Those resilient earnings we talked about yesterday are under pressure. Downgrades for US corporate earnings have picked up.
13. Could it already be priced in? Either way — as of Wednesday, 72% of SPY 0.00%↑ companies that had reported beat profit estimates, which is in line with historic norms (but below the 80% of the last 2 years).
14. In any case… As the chart below illustrates, earnings are quite resilient.
15. Record shorts. “Smart money” has never been shorter US equities.
16. Short where? Here are the sectors receiving the most selling pressure.
17. Short covering. All those shorts helped propel the latest rally in stocks.
18. Short crowds. These were the most shorted stocks from last week.
19. Dividend safety. Over the last week 28 SPY 0.00%↑ companies announced dividends in line with previous payments. Nine companies increased dividend payouts. No companies cut or suspended dividends.
20. The Pelosi Effect. Semiconductors have had a rough year, falling ~28% compared to the S&P’s ~17%. It might have something to do with a bill Nancy Pelosi is championing that will provide a $52B boost to the industry.
21. Cashing in on the Pelosi Effect. Her husband, Paul Pelosi, purchased millions worth of Nvidia—a semis company—in June ahead of the vote on the bill she has been pushing.
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