Daily Chartbook #106

Welcome back to Daily Chartbook: macro market charts, data, and insights pulled from various sources around the Internet by a solo retail investor.

1. 2023 oil prices. "The first half of 2023 could see an oversupply of crude and further inventory builds...With the possibility of large supply deficits in the second half of 2023".

2. Retail sales vs. oil prices. "As retail sales decline, so will oil prices".

3. Global freight. "Global container freight rates moved down to their lowest levels since September 2020 this week, 81% below peak 2021 prices".

4. Undershooting expectations. "Global inflation data are now undershooting expectations...this week’s second consecutive US CPI miss punctuates a broader negative swing in global inflation surprises over the last few months".

5. Food prices. "Fertilizer prices peaked in late March and are down 45% since, now at the lowest levels since June 2021," which is positive news for food prices.

6. US pessimism. "Roughly two-thirds say the nation’s economic trajectory is headed in the wrong direction". However, note that sentiment did improve from October to December.

7. US composite PMI (I). "US private sector ends year in stronger downturn as demand weakness and price pressures bite".

8. US composite PMI (II). "December saw the largest monthly cooling of firms’ input cost inflation seen in the 13 year history of the SP Global PMI US survey barring only the lockdown related slump in April 2020. This could have a big impact on #CPI #inflation in the coming months".

9. CPI forecast. "We now forecast core CPI to fall to 2.8% y/y in 4Q 2023, down from 3.2% previously".

10. Main street. "Main St finally outperformed Wall St significantly in 2022".

11. TLT vs. SPY. is on pace to outperform for the 5th straight week, "the longest winning streak since March of 2020".

12. Stocks vs. bonds. "The stock & bond rolling 3-month correlation is near the highest level of the past five years".

13. Equity inflows. Equity funds saw weekly inflows totaling $20.7 billion.

14. No capitulation. Zooming out, equity fund flows remain elevated.

15. Record value inflows. "Largest inflow to US equity value funds ever".

16. Tax loss selling? "Largest outflow from active equities since Dec’21 ... Largest inflow to passive equities since Dec’21".

17. Equity put/call. "The ratio of equity puts (bearish bets) to calls (bullish bets) over the last 30 trading days has only been this high a few times in the past: April 2008 and Oct/Nov 2008".

18. Index put/call. "Yesterday's Index put/call ratio 1.40, highest since the day after the CPI print in November".

19. Homebuilding stocks. "Homebuilding Industry Index surged relative to S&P 500 lately; ratio now at its highest in a year ".

20. Small caps vs. large caps. "Small caps are trading at a big discount to large caps. Haven't seen this sort of discount since the tech bubble".

21. S&P valuation. The S&P 500's P/E "multiple is still higher than where it was at prior major bear market troughs".

22. US vs. Rest of World valuations. "US equities still do not look cheap despite the market sell-off".

23. CY 2022 growth. "Analysts predict the $SPX will report Y/Y earnings growth of 5.1% and revenue growth of 10.4% in CY 2022".

24. Monthly returns. "January is not the strongest month of the year for the S&P 500 (positive total returns >60% of the time since 1936)".

25. SPX scenarios (I). "Should the economy slip into a “soft landing” or mild recession and valuations revert to the longer-term median of 15x earnings, such would imply a level of 3100".

26. SPX scenarios (II). "However, in a “deep recession” scenario, we expect a valuation and an earnings reversion (15x valuations on earnings of $160/share). Such would imply a price target of 2400 or a decline of roughly another 40% from current levels".

27. The wrong kind of record. And finally, the S&P 500 is "on pace for a record number of 1%+ declines to close out a trading week" in 2022.

Have a great weekend!