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Daily Chartbook #203
Catch up on the day in 30 charts
Welcome back to Daily Chartbook: the day’s best charts & insights, curated.
Administrative note: There will be no Daily Chartbook on Monday, 5/29.
1. New home sales (I). "New home sales surge 4.1% MoM (thanks in large part to a notable downward revision from +9.6% to +4.0% MoM in March)."
2. New home sales (II). "That jump pushed new home sales up 11.8% year-over-year with sales at their highest SAAR since April 2022."
3. New home prices. "Median new home price fell 8.2% y/y to $420,800; average selling price at $501,000."
4. Home supply. "There were 433,000 new homes for sale as of the end of last month, the lowest since April."
5. Bankruptcies. Bankruptcies are on the rise led by discretionary and healthcare companies.
6. Consumer health. "The US economy at the moment is doing fine as the consumer, but we see signs of deterioration, slowdown in the economy, some indicators. And also consumer, gradually, the buffers that they build in their savings through the pandemic has been eroded."
7. Recession calls. "The consensus has been forecasting negative growth since October 2022, and the recession has yet to arrive because it has taken longer to run down excess savings in the household sector. Put differently, it is taking longer to remove from the economy the $5trn fiscal and $5trn monetary expansion done during covid."
8. Truck tonnage. "American Trucking Associations’ advanced seasonally adjusted (SA) For-Hire Truck Tonnage Index fell 1.7% in April after decreasing 2.8% in March."
9. S&P Global Flash PMI (I). The headline composite output index "registered 54.5 in May, up from 53.4 in April, to signal a solid and faster expansion in private sector business activity."
10. S&P Global Flash PMI (II). "Manufacturing [plunged] to 48.5 (contraction) down from 50.2 (that was the first time back above 50 since Oct). Services, however, surged to 55.1, the highest print since April of last year."
11. Richmond Fed manufacturing. "Richmond Fed manufacturing index declined 5 pts to -15 (7pt worse than est). New orders dropped 9 and prices dropped 2.62. Business conditions improved 10 to -17."
12. Philly Fed services. "The Philadelphia Fed non manufacturing activity index improved 6.8pts to -16 which was really driven by a massive uptick in new orders (+26.6 to 2.7). Prices were higher and employment was stronger."
13. Liquidity withdrawal. “The combination of US Treasury General Account spend down and the Federal Reserve’s regional bank liquidity provisions has completely offset the Fed’s attempts to reduce its balance sheet. Liquidity withdrawal lies ahead and will remove a major tailwind for equities.”
14. Equities vs. liquidity. "Far from being a risk-on stimulus, a debt-ceiling resolution will expose stocks to a correction as the resulting increase in Treasury issuance sucks liquidity from the system."
15. Valuations vs. liquidity. "Equity valuations keep rising despite deteriorating liquidity."
16. Monetary policy vs. earnings. "The turn higher in the monetary conditions index also suggests that Q1 was likely the trough in the earnings decline."
17. T-bills vs. X-date. "The T-bill market is getting even more worried about a possible default. Bloomberg chart shows the widening spread between bills maturing in the ‘x-date’ time frame and those maturing later on."
18. Equities vs. bonds. "Despite a good week for equity etf flows the spread of equity to bond ETF flows remains elevated and at one of the highest levels ever, which is weird considering the great returns. We call it the FOMO Drought."
19. Investor flows. "Diverse backdrop last week for fund flows, as government bond ETFs retook top spot, aggregate bond fund were in second, and large-/mid-cap equity funds were in third; small-cap equities in fourth but still took in nearly $1.5 billion."
20. BofA client flows. "Last week (S&P 500 +1.6%, best week since March), clients were net buyers of US equities with the biggest inflows since Oct. (+$4.4B)."
21. Hedge funds vs. megacap tech. "Mega-cap tech has become its largest share of hedge fund long portfolios since early 2020."
22. Consumer discretionary positioning. "Positioning is very light, with...GS PB data showing long/short ratios near 5-year lows in discretionary."
23. SPX short interest. "Short interest for the typical stock remains extremely low."
24. Exposure plans. JPMorgan clients are mostly bearish but equity exposure plans have increased to 38% from 35% last week.
25. Call options. "Demand for equity call options surged in recent days."
26. Put options. "The most hated rally...Put option open interest across major equity ETFs stands at 41mm contracts, the highest reading since August 2011 (debt limit version 1.0)."
27. Earnings sentiment. Earnings sentiment is improving across markets.
28. SPX breadth. "Around 60% of the $SPX is still in a technical bear market, down -20% from their recent peaks. We understand the optimism, but without broader participation, this rally remains thin."
29. Fed pause. "Could a Fed pause be a 'buy the rumor...sell the news' event? Historically, the stock market weakens just prior to a Fed pause and then rallies. This time, the market has rallied on anticipation of a pause…"
30. NTM PE. And finally, valuations for last year's most underweight stocks (Big Tech) have surged while those for the rest of the market have remained stagnant.
Thanks for reading!