Daily Chartbook #173

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1. Unemployment. "With hiring in the service sector and layoffs in the tech sector, jobless claims may underestimate the ongoing slowdown in the labor market because only 14% of unemployed receive unemployment insurance benefits."

2. Labor force. “Aging has exerted a powerful influence on the post-pandemic drop in labor force participation. Once you control for aging, participation ‘has recovered a great deal since the large shock induced by the pandemic’.”

3. PCE (I). "The m/m slowdown after a Jan upside surprise is welcome--services' m/m contribution was the lowest since Nov & housing's the lowest since Feb 2022. Yields & USD down a bit after the release."

4. PCE (II). "The PCE Price Index moved down to 5%, its lowest level since September 2021. Peak was 7% in June 2022."

5. PCE (III). "US core PCE inflation, the Fed's preferred measure of pricing pressure, ticked lower in Feb, rising 4.6% vs. year-ago level--still well above Fed's 2% target. This key measure of inflation is looking sticky, which suggests further rate hikes may be coming."

6. PCE (IV). "Lowest core PCE services ex-rent print since last July. Starting to look maybe possibly perhaps a trend."

7. Personal income & spending. "February personal income +0.3% m/m vs. +0.2% est. & in prior month; personal spending +0.2% vs. +0.3% est. & +2% in prior month (rev up from +1.8%)."

8. Consumer sentiment. "Consumer sentiment fell for the first time in four months, dropping about 8% below February but remaining 4% above a year ago."

9. Inflation expectations. “Inflation expectations was lower than the flash print for 1Y (down from 3.8 to 3.6%) while medium-term inflation exp rose from 2.8 to 2.9% intramonth.”

10. Q1 GDP. "The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2023 is 2.5 percent on March 31, down from 3.2 percent on March 24."

11. Weak M&A. "The value of mergers and acquisitions dropped 45 per cent year-on-year to $550.5bn between January and March, the largest decline in the first quarter since 2001."

12. Oil positioning. "It's rare to see CTAs/HFs get this short when the curve is backwardated. Reminder: Shorts suffer negative roll-yld during periods of backwardation. CTA shorts = fuel for a bull run."

13. Cash inflows. "During the first quarter this year, investors poured $508 billion into cash funds in their largest quarterly inflow since the early days of Covid-19 three years ago...More than $100 billion have flocked into money-market funds in the past two weeks alone."

14. Fixed income flows. "Outflows from the riskier parts of the fixed income world. Inflows into 'safer' ones."

15. Equity fund flows. "US equity funds and ETFs saw outflows of -$8.63 billion this week."

16. Sector flows. "Energy and industrials saw the most redemptions this week."

17. Insiders. "Corporate insiders have been offloading their holdings in this rally."

18. Hedge fund positioning. "Combined Fundamental L/S Net exposure has fallen sharply YTD and is currently near five -year lows in the ~2nd percentile- suggesting managers have been shunning higher beta stocks."

19. CTA scenarios. "CTAs are buyers in any scenario: a) Flat tape: +$63.9bn to buy (+$21.3bn to BUY in S&P); b) Up tape: +$79.7bn to buy (+$25.5bn to BUY in S&P); c) Down tape: +$13.9bn to BUY (+$5.8bn to BUY in S&P)."

20. Semis vs. SPX. "You need to go back to 2009 to find this type of quarterly outperformance."

21. Value vs. growth. "The rotation from Value to Growth was violent. It has brought the Russell 1000 Growth/Value ratio to what has been resistance/support over the past few years. If Value is going to make a stand, this is a good of a place as any to do it."

22. New bull? "Two consecutive quarters of gains after a bear market could suggest the start of a new bull market."

23. Forward earnings (I). Real forward earnings are positive again.

24. Forward earnings (II). "Earnings and forward earnings’ behavior is historically consistent with a recession that has already started."

25. EPS estimates. "Consensus is still expecting a recovery in revenue and earnings in 2024."

26. Q1 EPS estimates. "During the first quarter, analysts lowered EPS estimates for the quarter by a larger margin than average. The Q1 bottom-up EPS estimate...decreased by 6.3% (to $50.75 from $54.13) from December 31 to March 30."

27. 2023 EPS estimates. And finally “the bottom-up EPS estimate for CY 2023 declined by 3.8% (to $221.50 from $230.33) from December 31 to March 30.”

Have a great weekend!