Daily Chartbook #5
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Welcome to PAV Chartbook: market charts, data, research, and insights pulled from various sources around the Internet by a solo retail investor.
1. Recession meter. The probability of a recession—according to Bloomberg—is around 40% and rising.
2. How does the consumer feel? Americans are reporting higher financial insecurity.
3. Prices over time. Presented without further comment.
4. Spending surge. Consumers are still spending: overall credit card volume jumped 20% in Q2. They’re shifting to lower-cost products, however.
5. Consumers punt on spending. On the other hand, consumers are opting to hold out for lower prices on some things at a higher rate.
6. Rich people keep doing rich people things. Rising interest rates haven’t stopped the wealthy from borrowing at a high pace.
7. Dallas Fed Manufacturing. General business activity index for manufacturing in Texas dropped 22.6 to 3.8—the lowest reading since May 2020. A reading below 0 indicates a contraction.
8. Unadjusted initial jobless claims. Sam Ro will do a better job explaining than I will, but the gist, from Tim Duy, chief U.S. economist at SGH Macro Advisors, is “My main point is that I think we should dismiss the rise in claims so far this year as being an artifact of the seasonal adjustment process; the future path of claims likely has more information value.”
9. Checking in on housing. Yup, affordability is still abysmal and getting worse. “The rate of change is even more impressive: almost +60% increase against 12 months ago.”
10. First-time homebuyers. Naturally, the share of first-time buyers is declining and “peaked at 65% in the third quarter of 2021, followed by three straight declines to reach the current 59% – its lowest point in almost two years (56% in the third quarter of 2020).”
11. Bidding wars (or lack thereof). Less than 50% of homes for sale in June receive more than 1 competitive offer. “A year ago the rate was 65% and in January it hit a high of 69.6%.”
12. Moving over to equities. Earnings downgrades are down to 2020 levels.
13. Earnings sans energy. If we remove energy from the equation, the earnings outlook gets much worse.
14. Earnings beats. Only 68% of S&P 500 companies that have reported have topped earnings estimates. That’s the lowest since Q1 2020 (63%).
15. Earnings growth. S&P 500 companies are reporting 4.4% YoY growth in earnings for Q2. That’s the lowest since Q4 2020 (4%).
16. Revenues. Sales, on the other hand, are putting up their 6th straight quarter of double-digit gains with 10.6% growth YoY for Q2.
17. Earnings bump. Stocks have seen gains since earnings season started.
18. Solid breadth. Nearly 60% of S&P 500 stocks are above their 50-day moving average, reflecting broad market gains.
19. Short interest rising. Overall short interest (as a % of market cap) is at an 18-month high.
20. Biggest shorts. These are the most shorted stocks by % over float.
21. Expensive shorts. You have to really be sure these are going down.
22. Pharma safety from harsh financial conditions. The tighter financial conditions get, the better pharma performs relative to the S&P 500.
23. Multiples outlook. The 5-year fwd P/E average is 18.6. The 10-year fwd P/E average is 17.0. The current fwd P/E ratio for the S&P is below both at 16.7.
24. Not bad enough yet? The decline in US broker account margin was much worse than during the Dotcom bubble and Global Financial Crisis.
25. Speaking of the Dotcom bubble. ARKK 0.00%↑ has provided us with a pretty solid analogy for what might be in store for the Nasdaq.
26. And finally—bear market recovery times. The average bear market recovery takes 19 months. However, when the market drops less than 30%, recovery times are historically much quicker.
