Daily Chartbook #282
Daily Chartbook #282
Catch up on the day in 30 charts
Welcome back to Daily Chartbook: the day’s best charts & insights, curated.
1. NAHB Housing Market Index. "US homebuilder sentiment falls to its lowest level since April according to the NAHB's September report."
2. Labor market conditions. The US labor market is cooling.
3. GDP: Fed divergence. "The Atlanta Fed estimates that GDP this quarter is 4.9%, and the St. Louis Fed estimates that the US economy is currently in a recession."
4. 2024 GDP forecast. "After a Q4 Pothole, We Expect GDP Growth Near Potential of 1.75-2% in 2024"
5. Interest coverage ratios. "Interest coverage fell at the fastest pace [last quarter] since 2016Q3, -1.9x on a YoY basis and -1.0x on a QoQ basis; however, the aggregate ratio is 10.8x now versus 9.7x at YE19."
6. Interest expense vs. earnings. "Over the LTM, rising interest expense has increasingly weighed on EPS relative to operating income."
7. NY services PMI. Activity in NY's services sector declined to -3 in September (from 0.6) while the future activity index fell to 13.9 (from 20.7).
8. FOMC preview. "The immediate question for markets is whether the median dot will continue to project an additional hike this year to 5.5-5.75%, presumably in November."
9. Government shutdowns vs. Treasury yields. During previous government shutdowns, "Treasury yields declined ahead of the [Continuing Resolution] expiration and continued lower over the shutdown horizon."
10. Speculators vs. USD. "Hedge funds have turned bullish on the dollar for the first time since March as speculation builds that Federal Reserve policymakers will retain a hawkish bias when they meet this week."
11. USD vs. oil. "WTI crude oil and the dollar are the most correlated in about 20 years."
12. Oil vs. breakevens. "Lack of rise in inflation breakevens as oil heads toward $100 signals the gains in oil are mostly about supply, not demand, and hence not inflationary."
13. Oil vs. CPI. "We estimate that the recent rise in oil prices is likely to boost YoY headline CPI by 0.6pp in the next couple quarters if prices stay where they are relative to a scenario where prices stay at their June 30 levels."
14. HFs vs Energy. "HFs net sold Energy for the first time in 3 weeks despite the price strength in oil markets (the global Energy L/S ratio fell-2.0% on the week and is hovering around 1-year lows)."
15. Exposure plans. Among JPMorgan clients, "32% plan to increase equity exposure and 74% to increase bond duration."
16. MMF vs. SPX. "Historically there does seem to be some link between buildups in cash and subsequent market performance… but judging by the chart below, you need to see flows into cash peak and turn down (i.e. the cash actually being deployed)."
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17. Institutional flows. "Cumulative long only net flow has now hit a new 2-year low after selling another $2.3bn net [last] week."
18. HF flows. "Single Stocks saw the largest net selling in two months (-1.1 SDs), driven by short sales outpacing long buys 2.3 to 1."
19. Sentiment Indicator. Positioning has become stretched once again according Goldman’s Sentiment Indicator.
20. Equity positioning. Consolidated, Discretionary, and Systematic positioning are in the 61st, 52nd, and 72nd percentiles, respectively.
21. Positive data vs. positioning & flows. "Positive data surprises have been key for discretionary equity positioning as well as equity fund inflows."
22. Sector positioning. "Only Technology (z score 0.25, 64th percentile) and Consumer Staples (z score 0.18, 63rd) remain in modestly overweight territory currently, albeit both down from their recent highs."
23. Sector fund flows. Inflows to Tech funds ($1.3bn) resumed last week following the previous week's outflows.
24. Energy vs. Discretionary. "While XLE started to see AUM growth in late July, XLY has moved in tandem...Could be a signal for a more persistent bid for cyclicals."
25. SPX divergence. "The S&P 500 has been levitating more than 5% above its 200-day average for months. But lately, no more than 60% of index members managed to hold above their own long-term averages. This is one of the longest divergence streaks since 1928."
26. Implied volatility. "Two-thirds of $SPX constituents (330 stocks) have implied vol trading sub 10th percentile (3y lookback), one-fifth of $SPX constituents (100 stocks) have implied vol trading in the ~zero percentile."
27. Median IPO. "The median IPO completed during 2020-21 lagged the Russell 3000 by 48 pp in the first 12 months following its IPO (vs. -20 pp for the median deal since 1995), with just 18% managing to outperform (vs. 35% for all IPOs completed since 1995)."
28. Q3 EPS estimates. "Analysts have increased Q3 EPS estimates for $SPX companies by 0.4% since June 30, which marks the first increase in the quarterly EPS estimate during the quarter in almost 2 years."
29. EPS & sales revisions. Over the past month, only Energy, Tech, Discretionary, and Financials have seen positive earnings revisions. All but Tech, Industrials, and Comm. Services have seen negative revenue revisions over the same period.
30. Return drivers. And finally, “over the long-run, equity returns are driven by earnings and dividends.”
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