Daily Chartbook #260

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1. Mortgage demand. "The gauge of mortgage purchase applications slipped for a fifth-straight week to the second-lowest level since 1995...Mortgage purchase applications were down 12.2% over the past seven weeks."

2. Housing starts. Housing starts jumped 3.9% to 1.452 million in July. Single-family starts are at the highest since May while multi-family starts are at the lowest since July 2022.

3. Building permits. Building permits edged up by 0.1% to 1.442 million in July. Single-family permits are at the highest since June 2022 while multi-family permits are at the lowest since October 2020.

4. Affordability (or lack thereof). "Real-time US Housing Affordability Index...probably at fresh 40-year lows...Imagine if wages weren't so strong."

5. Wage growth. "Posted wages grew 4.7% year-over-year as of July...That’s down from 5.1% in June and 6.2% at the beginning of the year."

6. Shipping rates. "Global shipping rates slowly turning higher, with Shanghai to New York route leading recent increase."

7. National Financial Conditions Index. The NFCI "edged down to –0.39 in the week ending August 11, suggesting financial conditions loosened again."

8. Lending standards vs. NFP. "With consumers facing higher interest rates and tighter lending standards, the downside risk to nonfarm payrolls over the coming six months is significant."

9. NY Fed Services. The NY Fed's "services activity index rose 0.6 vs flat reading in June.  Employment declined -0.6 but wages rose (+5.8 to 38.9) as did prices paid (+5.7) and prices received (+2.8)."

10. Industrial production.  The July “report was better-than-expected continuing a string of strong data to start 3Q. A jump in motor vehicle and utilities production drove the headline production increase.”

11. Q3 GDP. The Atlanta Fed's GDPNow estimate for Q3 GDP increased again and now stands at 5.8% (up from 5% yesterday) which would mark the strongest growth since 2003.

12. Crude backwardation. "The backwardation of the WTI curve has increased, which is indicative of a tight physical market."

13. US petroleum inventories. "US commercial petroleum inventories declined by 7.4 MMbbl last week, driven by a 6 MMbbl crude draw."

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14. Strategic Petroleum Reserves. "For the second week in a row, the Biden administration 'refilled' the SPR (adding a mere 600k barrels)."

15. Duration demand. "Over the past few months, institutional asset managers have pared back their demand for duration, although they remain somewhat bullish."

16. T-bills vs. SPX. "3-month Tbill yield and 6-month Tbill yield exceed the S&P 500 earnings yield at the highest level since 2001."

17. US-China yield gap. "The yield gap between 10-year US and Chinese government bonds is now more than 160 basis points, the widest since 2007."

18. US 10-year. “The 10-year at 4.27% is its highest closing level since June 16, 2008.”

19. Risky vs. safe flows. "Risky vs. safe assets fund flows remain negative."

20. Foreign inflows. "The June foreign equity inflows were by far the strongest monthly number on record."

21. HF trading flow. "After experiencing one of the largest active de-grossing months in recent years led by short covering, overall Prime book saw increased grossing trading activity in 9 of the last 10 sessions, suggesting renewed risk appetite."

22. HF short flows. "US equities collectively saw increased shorting activity in 8 of the last 10 sessions. MTD short flow already exceeds the covering in July by ~2.5 to 1 in notional terms."

23. SPX vs. VIX. Yesterday "was only the third 1% daily swing in the S&P 500 in the past two months...the absence of fear (e.g. VIX > 28.5) suggests the path of least resistance for stocks is lower."

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24. SPX vs. M2. "Relative to M2 money supply, the S&P 500 is trading at the exact same level as July 2007….Logical resistance zone?"

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25. SPX vs. earnings season. "The S&P 500 typically rallies during earnings season, with a median average return of 2.0%. But not this time."

26. Earnings revisions. "The revision index has rebounded from -15% to zero, so the earnings cycle does seem to be bottoming here after a modest decline."

27. Bank forward earnings. "Forward earnings for regional banks have yet to bottom."

28. Banks vs. SPX. "S&P 500 is outperforming KBW Bank Index by more than 33% thus far this year ... if it holds, it will be widest performance gap (in favor of former) on record."

29. Less austerity, more capex. "The latest Global Fund Managers Survey shows a rising share of equity investors that call for companies to spend cash on capex, at the expense of those that prefer companies to pay back debt."

30. SPX vs. yield curve. And finally, “other than the 1980 cycle (with which today’s cycle has little in common), the stock market has never been able to advance further than it has now (before some sort of drawdown) once peak inversion was reached.”

Thanks for reading!