Daily Chartbook #286

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

1. Housing payments. Monthly housing payments have reached a new all-time high at $2,661 (+12.3% YoY).

2. Used car prices. "Used car prices are unlikely to 'crash' anytime soon. Why? Because we potentially under-produced *8.5M* cars the past 3 years."

3. Credit card utilization. "Credit card utilization rate has started to increase but remains below historical levels."

4. Net interest payments vs. government receipts. "US annualised net interest payments as a percentage of federal government revenues have risen from 8.3% in April 2022 to 14.2% in August 2023, the highest level since August 1998."

5. Hard vs. soft data. "The last few months have seen 'hard' (real) macro-economic data serially disappoint, while at the same time, 'soft' (survey-based) economic data has dramatically outperformed, sending 'hope' - the spread between 'hard' and 'soft' - to two year highs."

6. S&P Global US Flash PMIs. Composite = 50.1 (prev 50.2); Manufacturing = 48.9 (prev 47.9); Services = 50.2 (prev 50.5).

7. Observable crude inventories. "Global crude oil inventories have fallen to multi-year lows."

8. Real oil prices. "$100+ nominal [oil] prices are below 2008 and 2011 peaks when measured in real terms."

9. OPEC vs. Energy. "OPEC is likely to add in the next 12 months. Historically, this has been supportive for energy equities as it typically indicates improving underlying fundamentals (demand)."

10. Median term premium. "Historically, the term premium, the spread between 10y US bonds and Fed funds rate, has been 1.3ppts. Even if the Fed were to cut rates again, we are still miles away from that."

11. TIPS. "Markets have completely bought into the higher-for-longer narrative, with even 5-yr/5-yr real yields now heading to 2%, a level that has not been sustained for long since before the global financial crisis."

12. Stocks vs. bonds. "The correlation between stocks ( $SPY ) and bonds ( $TLT ) is hitting multi-year highs, reflecting the market’s response to the Fed’s hawkish stance."

13. Bond yields vs. dividend yields. "Bond yield now exceeds dividend yields by the most since before the GFC. In theory, that should mean that stocks’ yields might need to rise a bit, and hence their prices fall."

14. Bond flows. Global ($2.5bn) and US bond funds ($2.1bn) saw their 26th and 38th consecutive weeks of inflows, respectively.

15. Equity fund flows. US equities saw their largest weekly outflows ($17.9bn) since December 2022.

16. HFs vs. US equities. Across hedge funds, "net weighting [of US equities] vs. MSCI ACWI remains near record lows."

17. HF thematic flows. "HFs have net bought Defensives while heavily net sold TMT and Consumer Disc stocks in the past month. Net exposure in Cyclicals vs. Defensives is near the lowest level since Mar ’20."

18. Private client ETF flows. BofA private clients are "buying value, growth & Japan ETFs past 4 weeks, selling TIPS, financials, low vol ETFs."

19. HF risk exposure. "Both Overall book and Fundamental L/S Net exposures have seen a sharp decrease from their respective one-year highs, driven by increased Short exposure."

20. HF L/S ratios. "Both overall book and Fundamental L/S long/short ratios are approaching five-year lows following the recent decrease."

21. Short interest. Short interest in $SPY is low but short interest in its individual components is even lower.

22. Magnificent 7 vs. Bottom 493. Hedge funds have been selling the bottom 493 faster than they have been selling Magnificent 7 over the past few weeks.

23. Magnificent 7 vs. SPX. The Magnificent 7 "all have an outsized piece of the market cap compared with their revenue and net income."

24. Leadership gap. "The leadership gap between the S&P 500's top 10 performers and the rest of the index has fallen from historically high levels (from 99th percentile in June to ~80th percentile currently).

25. Buy the dip? "The S&P 500's peak-to-trough decline has reached 5% (4588 to 4330). Going back to 1950, there have been 125 previous 5% pullbacks. 60% of the time, the market has moved on to new highs before going into a 10% drawdown."

26. SPX vs. government shutdowns. "The chart below shows stock market performance during government shutdowns."

27. Real assets vs. financial assets. “Higher inflation & interest rates mean real assets outperform financial assets.”

28. EPS estimates vs. Fair Value. "Even if the ambitious earnings estimates for 2024 and 2025 are correct, the only way for the market to trade at a higher multiple is for the ERP to come down below 4%."

29. Q3 growth expectations. Analysts expect a 0.2% YoY decline in Q3 earnings. They see revenue growth of 1.5% YoY.

30. Bottom-up SPX price target. And finally, “industry analysts in aggregate predict the S&P 500 will see a price increase of 19.0% over the next 12 months.”

Have a great weekend!