Daily Chartbook #163
Catch up on the day in 27 charts
Welcome back to Daily Chartbook: the day’s best charts & insights, curated.
1. Worker Adjustment and Retraining Notification. WARN "gives 60 to 90 days advance notice in cases of plant closings and mass layoffs. Looking at WARN notices for CA, FL, NY, OH, PA, and TX shows upside risks to jobless claims over the coming weeks."
2. Unemployment vs. inflation (I). "Our research indicates that the Fed, facing persistent inflation, will for now have to accept a de-facto inflation target of 3% to avoid the destruction of millions of jobs that would accompany achieving a 2% target."
3. Unemployment vs. inflation (II). "To reduce inflation to acceptable levels—using the personal consumption expenditures price index .. would mean the loss of 2.5 million to 6 million jobs...The unemployment rate, as a result, would have to rise to between 5.1% and 7.3%."
4. Hard landing. "With greater risk of tighter lending standards among banks, loan growth, job growth,and overall economic activity could decelerate more significantly. We see risks that a soft landing turns into a harder one."
5. Industrial production. "US Industrial Production is down 0.25% YoY in February - its first YoY drop since Feb 2021."
6. Manufacturing production. "Manufacturing output rose 0.1% MoM (better than the 0.3% drop expected, but offset by the upward revision from 1.0% to 1.3% MoM in January). That left Manufacturing output down 1.0% YoY."
7. Consumer sentiment. "Sentiment drops in March (mostly before banking sector stress)…Current Conditions 66.4 (-4.3pt): 4-mo low...Expectations 61.5 (-3.2pt): 4-mo low."
8. Consumer inflation expectations. Inflation expectations "slid further to 3.8% in the next 12 months (lowest since April 2021) and 2.8% for 5-10Y inflation."
9. Leading Index. "Leading Economic Index from [Conference Board] fell in February by 0.3% m/m, bringing year/year change down to -6.5% … rate is consistent with recessions when looking back at history."
10. Corporate cash. "US corporates still sitting on enormous amounts of cash."
11. Lending rates. "The difference between interbank lending rates and the Federal Reserve's benchmark rate has risen to the highest level since early 2020."
12. Discount window. "Banks borrowed a record $152.85 billion from the discount window in the week ended March 15. The prior all-time high was $111 billion reached during the 2008 financial crisis."
13. Fed put. "The "Fed Put" is back with assets on their balance sheet increasing $297 billion over the last week, the largest spike higher since March 2020. Thus nearly half of the Quantitative Tightening since last April was undone in a single week."
14. SPY inflows. Investors poured $7.3 billion into SPY 0.00 yesterday. That’s the most since the Covid vaccine was announced in November 2020 and the 6th largest inflow in over a decade.
15. Money markets. "Over the past week, Money Market Funds saw their largest weekly inflows ($121B) since the height of the March 2020 Covid Crash. This ranks as the 2nd largest weekly inflow to MM funds since 1990."
16. Risk takers. "The crowd has bought the dip despite a 'significant deterioration in financial conditions...the 8th largest purchase during substantial market corrections as well as US regional bank ETFs (+US$1.7bn).'"
17. Risky vs. safe. The overall spread between flows into risky and safe assets has collapsed.
18. Retail flows (I). "On Wednesday, retail traders bought nearly twice as much as the previous week's daily average, totaling US$ 1.43bn in purchases. Buying activity was concentrated in sectors like Energy and Financials, but large-cap consumer tech names also saw robust inflows."
19. Retail flows (II). "Retail investors jumped back into energy equities."
20. Retail flows (III). "Retail investors have been slowing their purchases of individual stocks. ETF buying bounced this week."
21. FANG. "Ratio of basket of largest/most popular growth stocks relative to S&P 500 is at its highest since April 2022."
22. Style rotation. "With an anticipated Fed pivot amid expectations of a weaker economy, growth has taken the upper hand once again."
23. Tech stocks vs. global market cap. "US Tech stocks are back up to 16.4% of the entire global stock market basket. The first time 16.4% was touched was March 8, 2000. The infamous NASDAQ bubble peak was two days later, March 10, 2000."
24. Global breadth vs. USD. "Dollar isn't even breaking out and yet global market breadth is breaking down. Fewer than 10% of ACWI markets are above their 50-day average, only half are above their 200-day average."
25. Correlations. "Yesterday we observed a significant increase in one-month index correlations. This suggests that the diversification benefits provided by uncorrelated assets are diminishing and that the market is becoming more susceptible to systemic fluctuations."
26. Valuation slump. "The equity bear market is due to a valuation slump. Profits are not anticipating a recession."
27. SPX P/S. And finally, “the S&P 500 is still as expensive as at its peak before the bursting of the dot-com bubble in 2000.”
Have a great weekend!
"12. Discount window. "Banks borrowed a record $152.85 billion""
That graph is just bananas!! 🍌🍌🍌🍌