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Daily Chartbook #196
Catch up on the day in 28 charts
Welcome back to Daily Chartbook: the day’s best charts & insights, curated.
As a reminder: There will be no newsletter from May 5-12. DC will resume on Monday, May 14.
1. Global supply chain. "One measure of global supply chain pressures hit a new low going back to 2010."
2. Lending conditions. "Lending conditions continue to tighten. This was the point the Fed made yesterday which 'act' as defacto rate hikes in slowing economic activity."
3. Recession probability. "The probability of a US recession beginning within 12 months remains high."
4. Auto sales. "Auto sales have bounced to highest since May 2021, keeping broader uptrend in place (now mostly in line with longer-term average)."
5. Q2 GDP. "Projected Q2 GDP growth revised up to +2.7% in a matter of days (right side of chart) after a strong upside surprise to auto sales."
6. GDP forecast. Wells Fargo "sees three consecutive quarters of GDP contraction starting in the second half of this year."
7. Balance of trade. "March trade deficit at $64.2 billion vs. $63.1 billion est. & $70.6 billion in prior month (rev from $70.5 billion) … significant change from a year ago, when deficit was at $106.4 billion."
8. Challenger job cuts. "Challenger lay-offs fell back in April, another positive sign for NFPs tomorrow after the ADP report yesterday."
9. Jobless claims (I). "Initial jobless claims rose 13,000 to 242,000 last week, while the 4 week average rose 3,500 to 239,250. Continuing claims, with a one week lag, declined -38,000 to 1.805 million."
10. Jobless claims (II). "YoY initial claims are up 11.0%, the 4 week average is up 10.8%, and continuing claims are up 20.5%. This is enough to reinstate the “yellow flag” caution, but not across the 12.5% boundary where I would begin to hoist the “red flag” recession warning."
11. Productivity & unit costs (I). "Productivity plunges 2.7% q/q in Q1 '23 & -0.9% y/y. Unit labor costs +6.3% q/q."
12. Productivity & unit costs (II). "The 5 consecutive quarters of year-over-year declines in productivity is the first such instance EVER with data going back to 1948! Productivity down 0.9% y/y in Q1 2023, which is exacerbating the compensation pressures & pushing up unit labor costs, up 5.8% y/y."
13. IPO drought. Global quarterly IPOs have fallen to their lowest level in almost a decade.
14. 3M vs. 10Y. "The 3-Month Treasury yield of 5.26% is now 1.88% higher than the 10-Year Treasury yield (3.38%). The bond market is screaming recession."
15. Bond yields vs. manufacturing PMI. "We believe bond yields will continue to be flat/down from here."
16. Fed funds rate. "Current market expectations for path of the Fed Funds Rate."
17. Sectors vs. last hike. "Staples and Healthcare tended to outperform around the last Fed hike."
18. Equity re-rating. "The Federal Reserve may not begin cutting rates for some time. In light of this, it’s worth asking whether the recent stock market rally is overdone."
19. AAII sentiment. "AAII bears > bulls for 11th week in a row (and 72 out of past 76). Stocks typically do well when pessimism fades, not when it persists."
20. Money market funds. “Money market holdings hit record $5.3T in week ended May 3…Up $47BN in one week, up $100BN in two weeks…the bank run is accelerating.”
21. Overweight tech. "The share of tech in global equities has risen sharply this year, approaching the 2021 highs, implying that the world as a whole has become more overweight tech."
22. Homebuilders. "S&P 500 Homebuilding Index has completely erased its >40% decline from late-2021 thru mid-2022, rising to a new all-time high."
23. Middle market. "Small and medium-sized businesses have been underperforming in the stock market since the SVB collapse, suggesting investors are worried about the negative impact of the ongoing credit crunch on middle market companies."
24. US vs international stocks. "US equities remain richly priced versus international peers."
25. Earnings beats. "Q1 saw a sharp spike in the proportion of companies beating earnings estimates [81%]."
26. Unit profits vs. costs. "This surge in unit profits at a time when unit costs are rising sharply is a clear sign of corporate greedflation. It is not what normally occurs - ever."
27. Profit margins. "The net profit margin of companies in the S&P 500 has ticked up to 11.5% from 11.3% in the fourth quarter, based on actual results and estimates for companies that haven’t yet reported."
28. Operating margins. And finally “the S&P 500’s operating profit margin ‘is on track to bounce back to 12.0% in Q1, which while well below the record highs of 2021 would be at the top end of its pre-pandemic range...The margin for the median company is also set to bounce off its Q4 low.’”
Thanks for reading!