Daily Chartbook #15
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1. Oil interest. US Crude oil climbed back above $90 a barrel today but no matter which way you slice it, oil interest/liquidity is down.
2. Insiders. “Energy insiders buying the dip even more heavily than before”.
3. O&G priorities. O&G (oil and gas) producers are prioritizing returning money to shareholders via buybacks and dividend payouts over capex for increased production.
4. Payout breakdown. Here’s how shareholders received payouts from the biggest O&G companies (>50% buybacks). Related: the Inflation Reduction Act—passed by the US Senate yesterday—will impose a 1% tax on buybacks on all publicly-traded companies.
5. Inflation Reduction Act & earnings. "We estimate a 1.1% hit to S&P 500 EPS based on 2023 consensus earnings and trailing net buybacks".
6. Fed talk. Here’s what Federal Reserve members said last week.
7. Inflation expectations. According to the New York Fed’s Survey of Consumer Expectations, expectations for 1-, 3-, and 5-year inflation have come down to 6.2%, 3.2%, and 2.3%, respectively.
8. Mixed expectations. Here’s a look at 1-year inflation expectations from the NY Fed, the University of Michigan, and the market.
9. CPI ahead. Inflation numbers come out Wednesday. Consensus calls for core inflation (excludes food and energy) to remain stubborn at 0.5% while headline inflation decelerates sharply to 0.2% (“which would be the smallest advance since the start of 2021”).
10. Margins under pressure. The PPI to CPI ratio has never risen faster. Mike Wilson: “That spells trouble for margins over the next several quarters...the mirror image of what happened in 2020-21 when companies had extreme pricing power and costs were lagging”.
11. Supply chain (I). We've featured several charts recently highlighting a healthier supply chain. There's still a ways to go.
12. Supply chain (II). But things are trending in the right direction. The Baltic Exchange Dry Index “is now off its peak by 71.6%”.
13. Food prices. The UN’s World Food Price Index had its largest drop since October 2008 with global food prices falling 8.6% in July. Prices remain historically high.
14. NBER indicators. The National Bureau of Economic Research’s 6 indicators are trending towards a recession.
15. Shifting to equities. Here’s an updated look at beats, misses, and in-lines by sector.
16. Revenues. The same, but for revenues.
17. Earnings growth. Q2 earnings growth by sector.
18. Energy 2022 MVP. Here’s earnings growth for the second quarter and the year, sans energy.
19. Revenue growth. Q2 revenue growth by sector.
20. 2023 revisions. Revisions to earnings estimates since July 1, by sector.
21. Q2 Mid-caps. Mid-cap earnings “are expected to be +16% YoY while sales are expected to be +16% YoY”.
22. Q2 Small-caps. Small-caps are expected to see “earnings growth of +14% YoY and on sales growth of +20% YoY”.
23. Small-cap shorts. Hedge funds’ bets against said small-caps are mounting.
24. Bearish smart money. Hedge funds remain bearish overall on equities.
25. “Sentiment remains negative”. Positioning is extremely light.
26. NAAIM exposure bounce. Although the National Association of Active Investment Managers Exposure Index is bouncing to the upside.
27. No profits, no problem. The non-profitable tech basket tracked by Goldman Sachs is having its best quarter since Q4 2020 after declining for 4 straight quarters.
28. Low S&P P/E (ttm). The trailing 12-month price-to-earnings ratio for the S&P is at 19.3 which “is below the 5-year average (22.9) and below the 10-year average (20.3)”.
29. Price-to-book gap. Looking at valuations a different way, “there is still a big gap between the cheapest vs most expensive parts of the market, and P/B ratios are generally still elevated vs history (no big overshoot to the downside like in previous major market bottoms).”
30. Theme performance. And finally, here’s a look at how thematic ETFs performed last week.