Daily Chartbook #204

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1. Mortgage demand. "The contract rate on a 30-year fixed mortgage increased 12 basis points to 6.69% [a 2-month high]...The index of applications for home purchases fell 4.3% in the week ended May 19 to the lowest level since early March."

2. Supply chain metrics. "Our aggregate of most-watched supply chain metrics continues to maintain below-average levels with Consumer inflation expectations being the only real outlier. Manheim’s Index of Used Vehicles declined 7% YOY."

3. Shipping rates. "Quite a remarkable move for shipping rates from Shanghai to Los Angeles … from March 2020 low to September 2021 peak, rates shot up by 836% … since then, they’ve fallen by -85%."

4. UK inflation. "Headline inflation fell from 10.1% to 8.7% but core rose from 6.2% to 6.8%. Both April readings are above the consensus forecasts."

5. G4 PMI. "Economic growth across the four largest developed economies has accelerated to the fastest for 13 months in May...Growth was driven entirely by services, however, as manufacturers continued to report broadly stalled production."

6. National Financial Conditions. The index "ticked down to –0.31 in the week ending May 19, suggesting financial conditions loosened again."

7. Bank lending. "There are two downside risks to the outlook for the economy and markets. The first is rates higher for longer because of sticky inflation driven by high wage inflation and the ongoing recovery in the housing market . The second is the ongoing tightening in credit conditions with banks holding back lending."

8. Recession probability. "We still do not expect a recession in the US this year."

9. Real spending. "We expect that real spending will grow by 2% in 2023".

10. Excess savings. "Household balance sheets remain strong, but households continue to rapidly draw down excess savings."

11. T-bills vs. debt ceiling. "The T-bill market response has been faster and more severe than in previous debt ceiling episodes."

12. Assets vs. 2011 debt ceiling. "This is how different assets performed into the debt ceiling drama of 2011."

See:

13. Oil demand forecast. "The IEA has been revising up its global oil demand growth forecast over the last six months."

14. Oil positioning. "Oil positioning is back to early Covid levels."

15. Strategic Petroleum Reserves. "For the 8th straight week, the Biden admin drew down from the SPR (1.6mm barrels)."

16. US petroluem inventories. "US commercial crude stocks fell by 12.5 MMbbl last week—LARGEST IN SIX MONTHS—with smaller draws also in gasoline (-2.1) & distillates (-0.6). Total petroleum down 10.8 MMbbl, largest since product-driven draws in March."

17. Copper slides. "Copper fell below $8,000 a ton for the first time in six months as investors cool on the prospects for a robust economic recovery in China this year."

18. M2 plunge. "The US Money Supply has fallen 4.6% over the last 12 months, the largest year-over-year decline on record (note: M2 data goes back to 1959)."

19. USD vs. breadth. "Dollar resiliency has been detrimental to global stock market strength."

20. Equity volatility. "We remain of the view that equity vol has become irrationally complacent relative to today's macro risks and has material potential to spike higher."

21. Stocks vs. bonds. "When stocks are outperforming bonds, that should mean that investors have plenty of risk appetite. Amazingly, stocks reached a post-pandemic high by this measure on Monday."

22. Twitter Financial Sentiment Index. Here's a look at the Fed’s new Fintwit index.

23. US stock ownership. 61% of US adults "have money invested in the stock market, the highest percentage Gallup has measured since 2008. Stock ownership fell during the Great Recession and stayed depressed for more than a decade, including lows of 52% in 2013 and 2016."

24. Flows vs. returns. "Fund flows have not been supportive of recent market gains, but that is due to the concentration of flows into a narrow group of mega-cap."

25. ARK flows. "Large-cap Growth has been dominant, but based on flows, investor interest yet to translate back to the ARK suite of ETFs. Wonder if this will change."

26. Aggressive CTA positioning. “SPX + NDX and Blue = RUT (where trend-followers are the most short on record), even a modest shift in market positioning could spark a plunge in tech and surge in small caps.”

27. Puts vs. calls. "Equity put/call ratio sub .60 [yesterday] for 3rd straight day  (last time: early Feb)."

28. Buybacks. "Companies in the Russell 3000 have unveiled plans to buy back more than $600 billion in shares this year, in line with last year’s record pace."

29. Energy FCF. "S&P 500 Energy sector's free cash flow yield continues to soar to multi-decade high."

30. EPS growth: Nasdaq vs S&P. And finally, “we are told that the NASDAQ is populated by all of these fast-growing companies whose earnings jump by leaps and bounds with each passing year. Here is the cold reality.”

Thanks for reading!