Daily Chartbook #245

Welcome back to Daily Chartbook: the day’s best charts & insights, curated.

1. New home sales. "New home sales dropped 2.5% MoM (the first drop since Feb), a miss from the 5% expected, but only because last month's 12.2% surge in sales was revised down to a 6.6% rise. New home sales are still up almost 24% YoY."

2. Home prices. Data from the US Census Bureau "shows the first half of 2023 has seen the largest decline in US home prices on record."

3. Homes vs. realtors. There are 600k more realtors than there are homes for sale.

4. Trucking volumes. "Trucking volumes across the US have started to show some life, as the OTVI breaks out to the highest levels all year. July is usually a slow month, but not this year."

5. Interest rate costs. "The top 10% ex-financial companies by market cap haven't seen interest costs rise, while the bottom 40% have seen a significant rise."

6. Cash vs. debt. "The top 10% of companies with the biggest cash piles own 70% of the cash but only hold 40% of the total debt."

7. Hikes vs. loans. "Since the Fed started raising interest rates, we have seen an increase in downgrades of loans and a rise in the share of loans trading at distressed levels, i.e. below 80."

8. Defaults. "We continue to expect a faster pace of defaults among US leveraged loan issuers vs. their peers in the HY bond market."

9. Corporate spreads. "Spreads on US high-yield bonds are the lowest since April 2022. Financial conditions are loosening at a fairly steady clip, even as the Fed prepares to hike rates to the highest level since 2001."

10. Fed decision (I). The Fed unanimously raised rates by the expected 25 bps to 5.25-5.50, the highest in 22 years.

11. Fed decision (II). There were few changes to the FOMC statement.

12. M2 supply. "The US Money Supply increased in June for the second month in a row, following a record streak of 9 consecutive monthly declines. Still down 3.6% year-over-year but perhaps this is signaling a change in trend."

13. Real yield curve. "The real-yield curve has been inverting rapidly as short-term inflation expectations ease."

14. Commodities rally. "Bloomberg Commodity Spot Index currently having its best monthly performance since March."

15. EIA stocks change. Crude oil, Cushing, gasoline, and distillates stocks all declined in the week ending July 21. 

16. Risky vs. safe. "Risky vs. safe assets fund flows are slightly negative."

17. Beta sentiment. "We are seeing an extreme stretch in 'Beta' sentiment right now and this is driven by the recent cyclical rally."

18. Global equity flows. Global equities have seen inflows for 2 months in a row for the first time since March 2022.

19. Retail flows. "With the savings rate still high and the labour market looking resilient in the US, there is likely enough ammunition available on hand for retail to keep chasing stocks higher absent a negative growth shock."

20. Retail vs. institutions. Retail investors are buying more call options than institutions.

21. Smart money index. "The SMART money flows index is also at the YTD highs again, suggesting that more bears have capitulated recently."

22. Smart money vs. small-caps. "Asset managers and leveraged funds are net long Russell 2000 futures."

23. Smart money vs. large-caps. "We haven't been this net long in a while, more room to go, though."

24. Asset allocation. "Despite the recent risk-on rally, equity allocations by mutual funds and retail looks far from excessive,  and broadly in line with historical levels."

25. YTD flows. "The bigger picture remains one of safety and defensiveness as YTD flows are skewed towards cash and bonds."

26. Breadth by cap. "Still below where it was in February, but a larger percentage of mid-caps than large-caps have 50d > 200d."

See:

27. Sector P/E vs. cash flow. "Energy is the cheapest sector in the S&P 500, and makes the most cash."

See:

28. Earnings revisions. "U.S. Earnings Revisions Index from Citi has been in negative territory for past six weeks … longest streak since beginning of this year."

29. Dow streak. "Dow up for 13 days: only other time this happened was in Jan 1987."

30. SPX vs. last hike. And finally, “the S&P 500 has climbed an average of 7.6% in the 12 months after a rate hike cycle has ended.”

Thanks for reading!