Daily Chartbook #193

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

Administrative note: There will be no newsletter from May 5-12 as I am taking Mrs. Chartbook on a well-deserved vacation. DC will resume on Monday, May 14.

1. Fed vs. unemployment. "The median time it takes from when the Fed starts hiking until the unemployment rate bottoms and moves higher is 14 months...with the first Fed hike in March 2022, we should begin to see the unemployment rate increase within the next couple of months."

2. Excess savings. "We estimate that excess savings were around $870bn at the end of March. The slowing in the rundown of excess savings is consistent with our view of a relatively benign downturn."

3. Construction boom. "Construction is usually among the first sectors to suffer job losses when rates rise--and so far, hiring is strong."

4. Construction spending. "March construction spending +0.3% m/m vs. +0.1% est. & -0.3% prior (rev down from -0.1%) … private residential -0.2%; private residential home improvement +0.3%; private nonresidential +1%; public +0.2%."

5. ISM Manufacturing PMI. "ISM Manufacturing improved a touch in April to 47.1 (but still in contraction territory). Prices Paid (not in this chart) came in at 53.2, above the est of 49.0 & last month's 49.2."

6. Q2 GDP. GDPNow model estimate for Q2 is now 1.8%, up from 1.7% on April 28.

7. Debt ceiling risk. "Treasury T-Bill yields jump from about 4.1% for bills maturing on May 30th and earlier to around 4.8% for bills maturing June 6th and later."

8. Credit default swaps. "The cost of insuring against a US government default over the next 6-months is now more than 3x the 2011 peak, when the US lost its 'AAA' rating from S&P."

9. Money supply. "I see some people saying that the reduction in money supply is due to a contraction in bank lending, but that's not really the case. Bank lending just consolidated so far."

10. Dollar shorts. "Hedge funds and other large speculators boosted their net bearish position on the greenback against major peers to more than 70,000 contracts as of April 25, the most since June 2021."

11. Commodities dispersion. "There is a growing dispersion among commodity price trends."

12. Commodities forecast. "The [World Bank] expects prices to fall 21% compared to last year during 2023. For 2024 [it] expects prices to remain stable. Energy is projected to fall by 26%, Agricultural to fall by 7%, Raw Materials by 6%, Fertilizers by 37%, Base Metals by 9% and Precious Metals are actually projected to rise by 6%."

See:

13. Bond allocation. "Average recommended allocation to bonds by Wall Street strategists ticked up, remains near a 10-year high."

14. Treasury positioning. "Investor positioning has shifted to its longest levels since August 2020."

15. Equity positioning. "The GS equity sentiment indicator is back to neutral."

16. Euphoriameter. "When the 'Euphoriameter' (combined signal from forward PE ratios, the VIX, and bullish surveyed sentiment) goes below zero and turns up, that is typically a bullish medium-term signal."

See: ,

17. Retail selling. "Retail/individual investors have sold twice what they had bought during the pandemic."

18. ETF volumes. "Just $2.1 trillion worth of US ETF shares traded in April, the lowest monthly total since August 2020."

19. Buybacks. "Stock buybacks by corporate clients accelerated last week and remain strong."

20. Seasonality. "Sell in May this year? Since 1950, the average annualized return of the S&P 500 from May through October has been 5%."

21. NDX breadth. "NASDAQ has climbed to its highest since September 2022 but only 3% of members have made a new 6-month high."

22. SPX breadth (I). The top 10 stocks have accounted for 86% of the S&P 500's gains YTD.

23. SPX breadth (II). "Market breadth has contracted to one standard deviation below average for the first time since 2020. .. Following 9 sharp declines of a similar magnitude since 1980, the $SPX has posted below-average subsequent returns and larger peak-to-trough drawdowns."

24. SPX correlation. "Narrow S&P 500 breadth brings lower correlations among its components, with less than 40% of the internals outperforming the broader index."

25. Equal- vs. cap-weighted. "Still have much more time this year, but thus far, equal weight S&P 500 is having its worst performance relative to cap weight S&P 500 since 1999."

26. Weak demand. "Mentions of weak demand soared to record levels, topping prior recession levels during COVID and GFC."

27. Labor costs vs. margins. "Profit margins have been shrinking because of high labor costs."

28. Earnings reactions. "Earnings beats not seeing much in the way of positive stock price reactions."

29. EPS estimates (I). "After falling 13% since June, consensus 2023 EPS started to bottom, rising 0.3% w/w, the strongest weekly revision since the June peak."

30. EPS estimates (II). And finally, “analysts are selectively raising estimates for future quarters on the back of the beats we’re seeing.”

Thanks for reading!