Welcome back to Daily Chartbook: the day’s best charts & insights, curated.
1. Oil vs. CPI. "Bloomberg’s economic scenario modeling tool — SHOK — suggests that supply cuts pushing oil to about $120 per barrel in 2024 would keep US inflation at nearly 4% by the end of 2024 compared with a baseline forecast of 2.7%."
2. Oil reversals. "For only the 5th time since 1984, crude oil futures (CL1) cycled from a 3-month low to a 3-month high in fewer than 20 trading sessions. If history rhymes, subsequent CPI reports could be interesting."
3. Truckload index. "Truckload spot rates have dropped by 21% since the start of the year (off the back of one of the worst 4Q in recent memory)."
4. PPI (I). March PPI surprised to the downside with a 0.5% MoM drop (largest since April 2020), “while energy was a big drag, services was the weakest since Mar 2020.”
5. PPI (II). Headline PPI was down 2.7% YoY (lowest since Jan 2021) in March and saw the "first drop in energy since Jan 2021."
6. PPI (III). YoY breakdown of subcomponents.
7. PPI (IV). "This is positive for margins theoretically as the CPI-PPI spread is at a record high."
8. Jobless claims (I). "Initial weekly US unemployment claims rose by 11k to 239k...Continuing claims, which incl people who have received unemployment benefits for a week or more and are a good indicator of how hard it is for people to find work fell to 1.81 mln."
9. Jobless claims (II). "New claims in year-over-year terms rose for a 7th straight week--an early sign of weaker labor market conditions ahead."
10. Hike probabilities. "Post-CPI report, a drop in market-based likelihood of 25bps rate hike at May meeting, from ~71% to ~64%."
11. Fed funds target. "Projected U.S. interest rates have reverted to their level at the start of February, before anxiety about inflation increased."
12. Loan voumes. "Chart below begs to differ from Yellen’s comment two days ago: 'I’ve not really seen evidence at this stage suggesting a contraction in credit, although that is a possibility.'"
13. Credit conditions. "Recession risk still high and financial conditions getting tighter."
14. Unicorn births. "The unicorn game got tougher with only 13 companies getting their horn in Q1’23. This was the lowest unicorn birth count in 6 years."
15. Uninverting. "Dropping inflation and a steepening yield curve out of a deep inversion both hint at recession being more likely later this year."
16. Junk debt. "Investors are shying away from the riskiest US corporate debt as fears of an impending recession fuel a growing divide between the highest- and lowest-rated companies in the $1.4tn high-yield bond market."
17. Gold near ATHs. "Gold now flirting with the highest closing prices ever, priced in traditional USD."
18. Gold vs. SPX. "Going back to 1970, this ratio tends to appreciate on average by 72% for the next two years after the US Treasury curve inverts by more than 70%."
19. Equity volatilities. "The SPY 5 day realized has not printed these levels in a very long time. 1 month implieds have moved lower as well."
20. Equity flows. "Weak investment flows are consistent with 6% downside to the S&P 500."
21. Risk appetite. "The risk appetite of US equity investors is still negative."
22. Hedge fund vs. equities. Hedge fund positioning "is at very conservative levels."
23. Hedge funds vs. energy. Hedge funds "have been cutting down on energy longs for months, and are not positioned for a further possible move higher in energy."
24. Buybacks. "So far, US share buyback authorization announcements are running at record level."
25. IPOs, buybacks & secondary offerings. "The most important driver of equity market is the reduction of stocks outstanding (high buybacks and low IPO)."
26. Rule of 20. "Rule of 20 (which combines S&P 500’s P/E and CPI year/year) continues to suggest market remains overvalued."
27. Fading highs. "The number of stocks that set new highs has declined on each successive rally this year."
28. Corporate margins. "Long term, corporate over-earning era may be coming to an end."
29. EPS growth. And finally, “this earnings season may bring about the largest year-over-year decline in EPS since Q4 2020.”
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