Daily Chartbook #160

Welcome back to Daily Chartbook: the day’s best charts & insights, curated.

1. Rapid re-tightening (I). "Outside the Lehman and Covid crises, conditions have never tightened faster."

2. Rapid re-tightening (II). Financial conditions are "as tight as they ever were last year."

3. Bank deposit betas. "Competition for [bank] deposits is likely to increase, implying higher rates...which would pressure Net Interest Margins...it’s no surprise that the chart below, depicting deposit betas, was one of the most-requested charts by our clients this past week."

4. Bank resiliency. "Overall, US banks are well positioned for a recession."

5. Small biz. "Inflation was once again most important problem for small businesses in February."

6. CPI (I).  Inflation rose 0.4% in February, down from 0.5% in January and in line with market estimates.

7. CPI (II). Annual inflation slowed to 6%, the lowest since September 2021.

8. CPI (III). "Powell’s ‘supercore’ CPI ex-energy, food & shelter & his wage proxy) rose from 0.36% to 0.5% MoM & FELL to 6.1% to 6.2% YoY."

9. Wages vs. inflation. "This is the 23rd straight month where Americans cost of living has outpaced their wage growth with real average hourly earnings down 1.3% YoY."

10. Wages vs. core- services inflation. "If wage increases continue to slow - the trend is pretty clear - core services inflation will follow."

11. Cuts vs. inflation vs. unemployment. "As the market ponders a Fed cut, here’s a look where core US inflation and unemployment were 'at the time of the first cut in each cycle over the last 70 years.'"

12. Fed vs. credit regimes matrix. "The Fed easing + credit tightening regime has been the weakest environment for equities."

13. Equities vs. rates volatility. "The VIX has picked up on the back of financial risks, but it is still low relative to rates vol."

14. Bond volatility. "MOVE index of bond vol at the highest since ~2009."

15. Bond liquidity. "10 year bond futures DV01 liquidity is 19K. This is the lowest since March 23rd, 2020."

16. Equity liquidity. "S&P 500 futures liquidity is $2.0M. This is the lowest level since March 30th, 2020."

17. Stocks vs. gold. "US large cap stocks are trading at a premium relative to gold on a long run basis, at 2.0x now versus the 1975 – present average of 1.6x."

18. Rush to safety. Safe havens saw "the biggest cumulative 3 day sigma move ever."

19. Risky vs. safe flows. Flows into safe assets relative to risky ones are at 2022 extremes.

20. Investor flows. "Flight to safety persists as government bonds have seen strong inflows of late (accounting for 61% of all ETF inflows on 3m basis) ... U.S. equity funds have only made up 11% of inflows ."

21. Exposure plans. Investors’ plans to increase exposure to equities ticked down further.

22. Global positioning. "GS Prime global long/short ratio fell to a new multi-year low. Now at 171.6% lowest level since early 2016."

23. Growth flows. "Investors piled into growth yesterday…[Bloomberg's] Pure Growth portfolio saw largest jump relative to Pure Value portfolio since June 2022."

24. Tech bears. "Small and big speculators keep on increasing bearish bets on tech."

25. Margins under pressure (I). "Increased costs have outpaced S&P 500 revenue growth, which is not good news."

26. Margins under pressure (II). "Estimate operating margins continue to fall as inflation rises and economic demand slows."

27. S&P correlation. "Stocks in the S&P 500 are moving together."

28. Bear market finale. "Buy staples, sell tech for the bear market finale."

29. Tactical breadth indicator. And finally, “the percentage of SPX stocks above 10-day MAs has hit oversold levels”.

Thanks for reading!