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Daily Chartbook #233
Catch up on the day in 30 charts
Welcome back to Daily Chartbook: the day’s best charts & insights, curated.
1. REITs debt. "US REITS hold approximately $14 billion of debt maturing this year."
2. Recession indicators. ISM new orders, yield curve spreads, and consumer sentiment are screaming recession.
3. Used cars. "Wholesale used-vehicle prices (on a mix, mileage, and seasonally adjusted basis) decreased 4.2% in June from May. The Manheim Used Vehicle Value Index (MUVVI) declined to 215.1, down 10.3% from a year ago…the largest decline since the start of the pandemic in April 2020."
4. Inflation expectations. Consumer expectations for 1-year ahead inflation dropped to 3.8% (from 4.1%), the lowest since April 2021. 3-year ahead inflation expectations edged down while those for 5-year moved up to 2.99, the highest since March 2022.
5. Q2 GDP. The Atlanta Fed's GDPNow model estimate for Q2 GDP growth increased to 2.3% from 2.1% on July 6.
6. Consumer credit. "Consumer credit is contracting....consumer credit rose a mere $7.24bn in May versus $20bn consensus. That's down from $23bn in April as well. Non-revolving actually declined $1bn."
7. Oil pullbacks. "After being down 45% from its recent highs, the risk/reward to buy oil today appears heavily skewed towards the upside."
8. Crude shorts. "Last week's rally triggered a powerful Managed Money buy signal for Crude. Hedge funds short positioning had reached levels last seen during the initial COVID craze. They are now unwinding."
9. Digital asset flows. "Digital asset investment products saw US$136m of inflows last week bringing the last 3 consecutive weeks inflows to US$470m, fully correcting the prior 9 weeks of outflows."
10. Treasury positioning. "Aggregated positioning in US 2, 5 and 10 year notes...plenty of fuel for a rally (if/once it gets started)."
11. Stocks vs. bonds. "The real rate/equity return correlation has now fallen more definitively into negative territory."
12. Investor positioning. Consolidated positioning remained flat in overweight territory (68th percentile) as systematic strategies edged down (78th) while discretionary positioning rose (58th).
13. Sector positioning. "Positioning is overweight for Consumer Staples (86th percentile), Tech (69th) and Communication Services (79th)...At the bottom, positioning is very underweight in the Financials (28th percentile), Consumer Discretionary (21st), Real Estate (12th), Healthcare (16th) and Materials (9th)."
14. Sector fund flows. "Across sector funds, Tech ($0.9bn) and Industrials ($0.6bn) received notable inflows. On the other hand, Financials and Real Estate saw outflows of -$0.4bn each. Energy (-$0.3bn) also continued to see outflows."
15. Equity fund flows. Last week, "flows to equities turned positive with a +$12.28bn outflow vs. a-$2.69bn outflow in the prior week."
16. Levered ETFs. "You can see clearly both the euphoric frenzy that took hold in 2021, as well as the subsequent collapse in bullish speculation… and now, after a year of slumber, bullish speculation is back in style."
17. Retail orders. "Retail participation is currently at 11.1% of the total market volume, and at 92nd%-ile relative to the last 6 years."
18. HFs vs. industrials. "The US Industrials L/S ratio is now at 1.77 (vs. a YTD high seen in late Feb of 2.01), near multi-year lows in the 4th percentile vs. both the past year and vs. the past five years."
19. HFs vs. banks. "Regional Bank L/S ratio sitting at 10-year lows."
20. EU vs. US. European stocks are trading at the largest discount in history vs. US stocks.
21. Market cap growth. The top 20 largest S&P 500 companies have grown by a collective $4.7 trillion YTD. The bottom 480 have grown by just $970 billion.
22. Return differentials. "After the tech bubble in 1999 and the pandemic-fueled collapse in 2020, once the six-month relative return differential between the biggest stocks and the rest reached current levels, it kept expanding for at least several more months."
23. Earnings forecasts. "Forecasts will matter more than usual this time around given elevated equity valuations, higher interest rates and dwindling liquidity...further cuts to analysts’ earnings projections in the second half of the year pose risk to rally."
24. Earnings downgrades. "US Earnings Downgrades are picking up pace."
25. Forward EPS change. "$SPX positive 3-month % change of forward EPS is at highest level in more than a year."
26. Big Tech EPS. "While headline EPS for S&P 500 appears resilient, our sector analysis indicates that...Big Tech guidance has substantially offset deteriorating earnings estimates elsewhere."
27. Revisions momentum. "Earnings-revision momentum has nearly turned positive. If it continues to improve it may add a fundamental tailwind to stocks in 2H."
28. Revisions vs. returns. "There is generally a good correlation between S&P 500 earnings revision sentiment and returns."
29. Profit margins. "Consensus expects margins to trough in 2Q and recover in 2H23."
30. H2 outlook. And finally, “the average of strategists’ year-end outlooks represents a decline of around 8% in the S&P 500 in the last six months of 2023. That’s the most bearish second-half view since at least 1999.”
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