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Daily Chartbook #299
Catch up on the day in 30 charts
Welcome back to Daily Chartbook: the day’s best charts & insights, curated.
1. Mortgage demand. "US Weekly mortgage applications ticked up 0.6%" despite a 5th consecutive week of rising mortgage rates. Applications remain down over 33% YoY.
2. Refinancing incentive. "Percentage of outstanding 30-year conventional mortgages with at least a 50bp incentive to refinance."
3. Geoeconomic risk. “Even before recent events, we find that a meaningful geoeconomic risk discount is being applied to global equity markets, though below historical highs.”
4. CRE snapshot. "While some sectors of commercial real estate (CRE) have held up relatively well, prices have fallen for the office sector and vacancy rates have increased more for the office sector, with office vacancies above 25-year highs."
5. Corporate Misery. "Our Corporate Misery Indicator, our macro gauge of profit cycle, ticked up in 3Q for the first time since 3Q22."
6. PE exits. "The value of exit deals in the U.S. during the third quarter tumbled to the second-lowest amount since the same period in 2010, excepting the pandemic-ridden second quarter of 2020."
7. WARN notices. "WARN notices suggest that jobless claims will jump this month."
8. Card spending. "Total spending in Oct wk 1 (ended 10/7) decreased 11.9% .. October is starting off weaker than September (which was -10.8%, and -10.9% ex-food), the weakest month of the year so far."
9. Wage Growth Tracker. The Atlanta Fed’s Wage Growth Tracker (blue) ticked down to 5.2% in September (from 5.3%). Wage growth was unchanged for job switchers (beige) at 5.6% but fell for job-stayers (red), to 5% from 5.2%.
10. Excess savings (I). "Consumers are on a strong footing, with between $400 billion and $1.3 trillion in excess savings that they can draw upon as the economy moves back toward price stability amid tightening financial conditions."
11. Excess savings (II). "Nearly half of the $400 billion in excess savings was held by the top 25% income earners, with $191 billion by the end of August. The bottom 50% accounted for only 20% of the total savings surplus."
12. Global savings rates. "While savings rates in the US are now below pre-COVID levels, savings rates in other areas of the world have increased."
13. PPI (I). Both headline and core PPI came in hot, printing 0.5% (vs. 0.3% est, 0.7% prev) and 0.3% (vs. 0.2% est, 0.2% prev), respectively.
14. PPI (II). Similar story on a YoY basis, with both headline (2.2% vs. 1.6% est, 2% prev) and core CPI (2.7% vs. 2.3% est, 2.5% prev) rising more than expected.
15. CTA estimates vs. global bonds. "We estimate +$394B worth of global bonds to buy in an up big tape."
16. Institutional Investor Risk Appetite Index. "Institutional investors have been risk-averse in 2023, only getting sucked in at the July highs. They are especially cautious now but may well have to add risk if the current rally continues."
17. Market sentiment. Morgan Stanley's Market Sentiment Index has flipped positive.
18. HF short flows. "Cumulative short flow across US equities reached a fresh YTD high on Friday (10/6), and we only started to see covers mainly via Macro Products yesterday."
19. HFs vs. regional banks. "US regional banks L/S ratio is at the highest level [as of 10/6] since Mach as HFs have consistently increased exposure coming out of the summer."
20. Systematic positioning. "This is the first time this year where we have seen this large of a divergence. Was the selling too fast?"
21. CTA estimates vs. SPX. "CTAs now present asymmetric upside risk after selling -$75bn in US equities over the last month and -$137B globally. This is the largest (and fastest) one month change on record...In an up tape, we estimate CTAs have $84bn in S&P futures to buy."
22. New money. "Over the last 30 years, +20bps of new money comes to the market every November, on $22 Trillion in assets, this is >$44 Billion of new $~2.5B per day."
23. Q4 seasonality. Over the past 20 years, the S&P 500 has averaged gains of over 5% in Q4.
24. New lows vs. new highs. "New lows have exceeded new highs for nine weeks and counting and the new low list continues to expand. New lows last week climbed to their highest level since the S&P 500 was bottoming in October 2022."
25. Earnings season. "We hit peak earnings season on the last week of this month."
26. Global earnings. "The forward PE ratio on MSCI World has dropped to around 15.6x (from 16.8x in August) against the backdrop of steady improvement in earnings expectations, which, however, is driven increasingly by the US."
27. Net margins. "Margins are expected to improve for the second straight quarter in 3Q."
28. AI vs. margins. "Pharma, Biotech & Life Sci is the only industry group that our analysts expect to experience operating margin contraction due to AI implementation."
29. AI vs. revenue. "The industry groups most likely to drive significant revenue growth from AI products and services over the next 5 years are Financial Services (41% increase), Semis (27% increase), Tech Hardware (26% increase) and Software (18% increase)."
30. P/E distribution. And finally, “the distribution of single stock valuations for the Russell 2000 small-cap index is already comparable to previous market bottoms...while the S&P 500 distribution still looks different compared to previous lows.”
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