Daily Chartbook #313

REMINDER: This is the last free edition of Daily Chartbook. 

Starting tomorrow, the newsletter will require a paid subscription. ICYMI, prices have been lowered by 20% and the additional 10% launch discount will be in effect through November 30.

1. Case-Shiller. "Home prices rose for the 5th straight month in August...up 1.01% MoM (better than the 0.8% rise expected). The ongoing MoM rises pushed the YoY gain in home prices at America's 20 largest cities up 2.16%, the most since January 2023."

2. House Price Index. "HPI rose 0.6% MoM (vs 0.5% cons. est and 0.8% in July). That puts YoY at 5.6% (up from 4.6% in July)."

3. Rent Index. "Our national rent index fell 0.7% in October, the third straight monthly decline. Year-over-year growth is still negative at -1.2% but appears to be bottoming out."

4. Employment Cost Index. ECI "came in 0.1% higher than consensus at +1.1% (0.1% above Q2). That puts YoY at 4.3% (vs 4.5% in Q2) as it continues to moderate."

5. Employment Cost Index (II). "For what it's worth, the Federal Reserve's favorite measure - private wages excluding incentive paid occupations - is much lower for the quarter, even near prepandemic levels."

6. Redbook. The recent strength in retail sales continues. Redbook Index increased to +5.3% YoY in the week ending October 28.

7. Dallas Fed Services. The "Index plunged to -18.2 vs. -8.6 in prior month … now closer to retesting last November’s low."

8. Chicago PMI. The Chicago Business Barometer ticked down from 44.1 to 44 (vs. 45 est) for the 14th consecutive month of contraction.

9. Consumer Confidence. Consumer confidence fell for the 3rd straight month to a 5-month low. Current conditions dropped to the lowest in nearly a year while future expectations fell to a 5-month low.

10. Excess savings. "Household excess savings down to $148 billion in Sept 2023 from a peak of $2.1 trillion in 2021."

11. Fiscal policy. US Treasury marketable securities held by the public "is scheduled to increase to a record $27.3 trillion over the next six months. In other words, fiscal policy is simply out of control."

12. Bill holdings. "The amount of bills left in the hands of primary dealers (meaning that they couldn’t find institutional buyers for them) has risen, but not to the kind of scary extent that might have been feared."

13. Gold demand. "Gold demand (excluding OTC) in Q3 was 8% ahead of its five-year average, but 6% weaker y/y at 1,147t. Inclusive of OTC and stock flows, total demand was up 6% y/y at 1,267t."

14. Central banks vs. gold. "Net buying hit 337t, +120% q/q. On a y-t-d basis, central banks demand totals an astonishing net 800t, 14% higher than the same period last year."

15. SPX vs. gold. "The long run mean S&P/gold price ratio is 1.6x with a standard deviation of 1.2, making the one standard deviation upside level 2.8x. In practice, that has been a reliable ratio that signals that stocks are overvalued both to gold and on an absolute basis."

16. Rates vs. stocks. “Should you be afraid of rates as a long-term investor? Not if you're holding a wide swath of profitable stocks. Rates matter for your cash. Earnings and the economy matter for your stocks.”

17. Exposure plans. Among JPM clients, "41% plan to increase equity exposure and 84% to increase bond duration."

18. Client flows. Last week, BofA "clients were net sellers of US equities ($0.4B) for the first time since July."

19. Global insider activity. "Insider buys picking up vs sells."

See:

20. Healthcare insiders. "Healthcare sector insider selling has plunged to a very low level. The healthcare sector has been dead money for 2.5 years. So why aren’t they selling heavily?"

21. Staples insiders. "Consumer staples sector insiders continue to be heavy buyers into a decline (ala 2010, 2018 and 2020)."

22. Asset managers vs. leveraged funds (I). Asset managers and leveraged funds are on opposite sides of $SPX and $NDQ futures.

23. Asset managers vs. leveraged funds (II). Both are short Russell 2000 futures.

24. Buybacks. The trend in buyback announcements is weak.

25. Energy breadth. "Energy is on track to finish as the worst-performing sector in October, but long-term breadth readings have not yet broken down. The percentage of Energy stocks trading above 50-day moving averages all the way through one-year moving averages far exceed any other sector."

26. Large- vs- small-caps. "The gap between the S&P 100 and the S&P 600 Small Cap index widened to the highest level since the peak of the pandemic crisis in March 2020. This extremity points to heightened aversion by investors."

27. SPX futures liquidity. "S&P 500 liquidity is dropping, leading to larger price moves and more erratic trading conditions."

See:

28. Stocks vs. excess liquidity. "Rising excess liquidity has been a key tailwind for risk assets this year, but it’s showing the first signs of rolling over."

29. Upgrades vs. downgrades. "Analysts’ earnings downgrades have exceeded upgrades for seven weeks in a row."

30. Global P/Es. And finally, “US equities trade near the top of their historical valuation range.”

Thanks for reading!