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Daily Chartbook #198
Catch up on the day in 30 charts
Welcome back to Daily Chartbook: the day’s best charts & insights, curated.
1. Housing market. "The US Housing Market Index rose for the 5th consecutive month, highest since last July, reflecting increasing homebuilder confidence. Major reason: lack of existing supply, with new construction representing 33% of current housing inventory vs. a historical average of 13%."
2. Industrial production. "Headline Industrial Production rose 0.5% MoM in April (up from the 0.5% MoM rise in March and well ahead of the 0.0% change expected). However, on a YoY basis, industrial production remain languishing around unchanged."
3. Industrial production vs. commodities. "This is perhaps one of the strongest cases for the long-term demand for commodities in the following years. For the past two decades, US industrial production has remained stagnant, despite experiencing exponential growth for the preceding 80 years."
4. Manufacturing production. "After a 0.8% MoM decline in March (revised down from -0.5%), US Manufacturing production rose 1.0% MoM (smashing the 0.1% MoM expectation)."
5. Auto production. "Production of autos & trucks increased 14.5% m/m in April & is near an all-time high. If this continues, the added supply should help bring down car prices, and in turn help bring down core inflation."
6. Retail sales. "US retail sales increased 0.5% over the last year, the lowest growth rate since May 2020 & well below the historical average of 4.8%. After adjusting for inflation, though, the story is far worse. Real retail sales fell 4.2% over the last year, the 6th consecutive YoY decline."
7. Landing outcome. Most global fund managers (FMS investors) predict a soft landing for the global economy in the next 12 months.
8. CPI & Fed expectations. FMS investors expect lower inflation and rate cuts ahead.
9. Credit event sources. FMS investors see real estate as the most likely source of a credit event
10. Debt ceiling impasse. "Most investors expect the debt ceiling to be raised by the X-date."
11. Biggest tail risks. "Credit crunch & global recession risks still top of mind."
12. Growth expectations. "65% of survey participants now expecting a weaker economy."
13. FMS pessimism. "The mood among global fund managers soured further in May, with investors flocking to cash amid concerns that a recession and credit crunch are looming."
14. Risk appetite. "The [Goldman Sachs] risk appetite model and the momentum model are close to zero which fits well with the flat market over the last 45 days."
15. Overweight bonds. "Bond allocations are now the biggest since 2009."
16. Equity exposure plans. Just 35% of JPMorgan clients plan to increase exposure to equities.
17. Systematic positioning. "Systematic equity positioning is in the 48th percentile" and is now positive for the first time this year.
18. Investor flows. "Government ETFs have regained some popularity among traders, with share of monthly inflows rising to nearly 19% ... aggregate bond funds still attracting most over past month, while equity funds have seen modest interest."
19. Equity positioning. "Most respondents say they are underweight US equities."
20. Most overweight. "Investors most overweight: Bonds, Staples, Cash, Utilities."
21. Most crowded trades. "Investors love tech and hate banks."
22. Real estate positoning. "FMS investors most UW the Real Estate sector since Jul'09. Investors have been net UW the asset class since Sep'22."
23. Cyclicals vs. defensives. "Defensive sectors have seen inflows the last four weeks vs cyclical outflows (ex-Tech)."
24. Balance sheet strength. "Stocks with strong balance sheets have recently outperformed."
25. Days since ATH. " trading days since the S&P 500 made its most recent all-time high, one of the most extended stretches since 1950...We are above average... which is 310 trading days."
26. Cash spending. "GS expects a slowdown in buyback and dividend spending in 2023."
27. Average surprise. "Earnings beats and average surprises are still tracking above pre-pandemic averages."
28. Earnings rebound. "The market seems to discount an unrealistic rebound in earnings growth."
29. Real yield gap. "Equities are currently very expensive relative to real rates. The 426 BP real yield gap ranks in the 80th percentile since 1976 and is the lowest since late 2007."
30. Valuation ranges. And finally, “US equity valuations are near the top of their historical range.”
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