Daily Chartbook #268

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

Administrative note: DC will not be published on Monday, September 4.

1. Tender rejections. "Freight market conditions are improving. Tender rejections are the highest levels in 6 months at 4%. Tender rejection measures the percentage of truckloads that are turned down by trucking firms in the market."

2. Default cycle. "With the strong uptrend in defaults over the past six months, and the Fed keeping interest rates at elevated levels, the HY default rate could reach 6% by the end of 2023."

3. Household interest payments. "Households’ interest payments as a share of personal disposable income have been rising."

4. Credit card spending. "Confounding the predictions that household spending would soon weaken, the BEA credit card data points to an ongoing strengthening trend over the past three months."

See:

5. Student loan spend profile. "Which companies will be most affected by a restart of payments?"

6. Dallas Fed Manufacturing (I). "The production index fell six points to -11.2—its lowest level since May 2020."

7. Dallas Fed Manufacturing (II). Not a chart, but "the comments from the Dallas Fed were brutal this month."

8. JOLTs (tomorrow). "We forecast another decline in the series to a below-consensus 9.3mn in July."

9. Gas prices. "Prices at the pump experienced their fourth largest increase since 2004 during this summer driving season."

10. Gold ETF flows. "Fed higher for longer has hit gold pretty hard here. Outflows keep increasing."

11. Gold vs. real yields. "With inflation running hotter than historical standards, gold is highly likely to decouple from Treasury prices, much like it did during the 1970s."

12. Corporate spreads. "The high yield bond market--often considered the canary in the coal mine for markets--is showing little signs of stress. Average HY spreads going back to 2000 are 528 bps. They're currently at 392, well below historical levels."

13. CTAs vs. bonds. "There is no scenario in which CTAs are bond sellers. There is a scenario in which they get squeezed to the moon."

14. CTAs vs. equities. "CTAs have sold equities over the past weeks and convexity isn't tilted to the downside only here. They are buyers in an up scenario now."

15. CTA scenarios. "Expected flows in different scenarios by market."

16. Systematic funds vs. SPX. "Systematic funds are primed to continue selling here, and a market upturn doesn't necessarily mean they'll start buying again. This is a concerning setup from a positioning standpoint."

17. Dealer gamma. "The short dealer gamma set-up in a less liquid tape could exacerbate intraday price action [this] week given the amount of U.S. macro data releases."

18. Liquidity stress. "Worth watching Liquidity stress falls sharply in last two trading days, coincident with Fed at Jackson Hole. Something cookin' or a blip?"

19. Momentum crowding. Crowding risks are near historical highs. 

20. HFs vs. Magnificent 7. "Magnificent 7 exposure via our PB data is at all time highs."

21. HF trading flows. Hedge fund buying YTD has been concentrated in the Magnificent 7 while the rest of the S&P 500 has been sold. 

22. HF TMT divergence. "Comm Svcs was one of the most net bought sectors while Info Tech was among the most net sold" last week.

23. Homebuilder positioning. Short sellers have added aggressively to bets against homebuilder stocks. 

24. Energy supply/demand. The Energy sector's "demand/supply spread was greater than that of the rest of the S&P 500 for the entirety of 2022 and to begin this year." 

25. Chinese equities vs. foreign investors. "Chinese measures not working. Investors keep dumping."

26. China vs. SPX. "Chinese stocks are trading at their lowest level relative to the S&P 500 since 2001."

27. Investor uncertainty. Going into today, "nineteen trading sessions [had] come and gone in August without a single back-to-back gain in the S&P 500."

28. Proft margins. "S&P 500 profit margins expanded to 11.9% in Q2, the highest since Q1 2022 and well above the historical average of 8.9% since 2000."

29. Forward P/Es. “$SPX forward PEs dropped sharply last week. Especially for megacap tech.”

30. Expensive stocks. And finally, “the most expensive stocks are now again more expensive than in 2000.”

Thanks for reading!