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Daily Chartbook #302
Catch up on the day in 30 charts
Welcome back to Daily Chartbook: the day’s best charts & insights, curated.
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1. Empire State Manufacturing. The headline index fell back into contraction, dropping to -4.6 in October (vs. -7 expected) from 1.9 in September. The six-month outlook remains relatively optimistic.
2. Government interest payments. "US government interest payments per day have doubled from $1bn per day before the pandemic to almost $2bn per day in 2023."
3. Cash-to-assets. "Cash to assets for the aggregate index now ranks in the 13th percentile since 2010 and in the 9th percentile for the typical stock. The challenge of weaker cash balances will be compounded by a more restrictive financing environment."
4. Consumer card spending. "Significant jump in Chase card spending data to kick-off the seasonally strong Q4 shopping season."
5. Semis inventories. Global semiconductor inventory growth remains elevated but appears to be rolling over.
6. Inventories vs. ISM. "The positive turn in the inventory cycle also signals an upswing in manufacturing activity."
7. ISM vs. EPS. Recent improvements in ISM Manufacturing point to a positive earnings outlook.
8. Geopolitical risk hedges. "Gold miners are trading on cheaper valuations ... [but] energy sector ETF assets outnumbers that of the same for gold miners by more than 3x."
9. Oil positioning. "Hedge funds and other money managers sold the equivalent of 140 million barrels in the six most important petroleum futures and options contracts over the seven days ending on October 10."
10. Households vs. stocks & bonds. "Households own 9% of outstanding US Treasury bonds, up from just 2% at the start of 2022...[and] are the largest owner of US equities at 39%."
11. Household flows. "Aside from Treasuries, households have purchased $448bn in money market mutual funds through June...[and] sold only $168 billion of their $40 trillion in corporate equity and mutual funds positions in 1H23."
12. Household allocations. "Households are already heavily invested in equities. Their current 42% allocation to stocks ranks in the 96th percentile since 1952 ... bond allocation equals 17% (46th percentile), the allocation to cash is low vs. history at 16% (25th percentile)."
13. Foreign investor demand. "Treasury TIC data shows that during the past six months foreign investors have bought US stocks at the fastest pace since 2021...we forecast foreign investors will net buy $150 billion of US equities in 2023 and an additional $100 billion in 2024."
14. Sector fund flows. "Consumer goods (-$1.2bn), Financials (-$1.0bn) and Healthcare (-$0.5bn) continued to see notable outflows."
15. Global equity positioning. Aggregate positioning ticked up (39th percentile) last week as discretionary positioning (46th) moved from underweight to neutral and systematic positioning fell below neutral (37th).
16. CTAs vs. global equities. "CTAs equity positioning flipped to underweight for the first time since Nov 2022 (22nd percentile)."
17. Spec positioning. Speculator positioning in S&P 500 futures is back to neutral.
18. HF trading flows. "Comm Svcs, Health Care, and industrials were the most notionally net bought sectors...while Consumer Staples (short sales), Info Tech (long sales), Utilities (long-and-short sales), and Real Estate (short sales) were the most net sold."
19. Sentiment Indicator. "Goldman's sentiment indicator flips negative for the first time since May."
20. Buyback growth. "We cut our expectation for 2024 buyback growth from +10% to +4% due to the more challenging financing environment."
21. Weak rally (I). "This rally has been historically weak."
22. Weak rally (II). "$SPX is up 22% since its Oct 2022 low, marking 4th slowest start to bull market since 1932. Our analysis indicates that year 2 following a major low has been positive 19 of 22 cycles."
23. Weak rally (III). "Just passed 1-year mark for S&P 500’s Oct 2022 low, yet only 2% of members are making new one-year high … vastly different compared to bear markets that ended in 2002 and 2009, when >20% of members were making new highs."
24. SPX vs. peak hawkishness. "History suggests that US equities typically rally following 'peak hawkishness' if the economy avoids a recession."
25. Q3 earnings estimates. "Q3 earnings estimates are down -3% from last quarter once you strip out Tech and Energy."
26. FY EPS estimates. "Both 2023-24 consensus EPS have stabilized."
27. EPS & sales revisions. Over the past month, only Energy, Healthcare, and Financials have seen positive earnings revisions for 2023.
28. Earnings revisions. "Earnings revisions have been much better behaved so far this year, but are starting to deteriorate again."
29. Earnings revisions breadth. "Earnings revisions breadth for the overall S&P 500 has fallen sharply over the last couple of weeks (the most significant 2-week decline since July 2022)—directionally in line with historical seasonality."
30. Forward margins. And finally, “margins appear to have troughed in April and consensus expects a recovery into 2024.”
Thanks for reading!