Daily Chartbook #44

Welcome back to Daily Chartbook: macro market charts, data, and insights pulled from various sources around the Internet by a solo retail investor.

1. Mortgage payments. "The monthly mortgage payment on the median home for sale in the US has increased 42.5% over the last year ($1,674 to $2,385)".

2. Builder confidence down. Homebuilder sentiment fell for a record 9th consecutive month and is at its lowest level since May 2020.

3. US home values drop. In August, soft demand “from buyers contributed to the largest monthly drop in home values, 0.3%, since 2011”.

4. Different inflation. Inflation drivers and levels vary around the world.

5. Global tightening. "More than 40 central banks have increased interest rates by at least a three-quarter point in one go since the start of 2022".

6. US tightening. Financial conditions in the US are at their tightest since the pandemic broke out.

7. Global GDP. According to a World Bank model, "in the event of a recession, global GDP would not reach the level predicted on the pre-COVID trend for 2024 until somewhere around the end of the decade".

8. US GDP forecasts (I). Goldman now expects 1.1% growth in Q3, 0.0% growth in 2022, and 1.1% growth in 2023.

9. US GDP forecasts (I). Citi is forecasting 1.8% GDP growth for Q3.

10. Soft landing requirements. What a soft landing would look like, according to Goldman Sachs.

11. Economists survey (I). Most economists predict the federal funds rate will peak somewhere between 4-5% (in March 2023).

12. Economists survey (II). Most of them see unemployment topping 5% in the next recession (which they believe will start in the first half of 2023).

13. Consumer expectations. From Goldman: “The decline in consumer inflation expectations should reduce fear of an unanchoring and support the case for slowing the pace of hike after September”.

14. NY Fed Household Spending Survey. "Median expected monthly overall spending growth over the next twelve months declined from 5.4 percent in April to 4.4 percent in August".

15. Wage growth ahead? “Real Income has likely bottomed, and we expect 3½% real income growth in 2023”.

16. IG corporate yield. The IG corporate yield has topped 5% and is at its highest since 2009.

17. Global bonds down. “Global government bonds are on track for their worst annual loss since 1949”.

18. S&P without OpEx. Recall Friday’s Triple Witching. "In case you were wondering how much pain could have been avoided by staying out of the market during OpEx weeks".

19. Indider transactions. “The Insider Transaction Ratio (officer, director or owner of 10% or more of a company's securities) is back in the bullish zone”.

20. Growth factors. From Kantro: “We've preferred Growth > Value since Q2 as we've expected an EPS slowdown and rising recession risks to shift investor preferences to higher-quality stocks. Within growth, there is plenty of quality dispersion. Remain selective, avoid stocks w/o EPS or CF”.

21. EPS outlook. Is Wall Street's earnings outlook too optimistic?

22. Revenues & USD. "The strong dollar poses a major headwind for U.S. corporations that have big foreign sales".

23. Margins under pressure (I). From Goldman: "Margins are at all-time highs and we think vulnerable to downgrades".

24. Margins under pressure (II). "Morgan Stanley’s Michael Wilson observed that the divergence between rising labor costs and slowing demand is sending a bearish signal for profits".

25. Financials drive drop in ROE. "The ROE for the [S&P 500] declined quarter on quarter for the second time this year and financials were the major reason".

26. Bounce levels (I). A put/call ratio of 1.5 has historically been a turning point for the S&P 500.

27. Bounce levels (II). The average stock is now down nearly 2 standard deviations, a level "that is often associated with a bounce".

28. Real Estate safety. Real Estate is the only sector that has seen an increase in buy ratings (62% from 55%) since February. The rest (led down by Energy) have seen a decline.

29. Volatility breadth. Volatility breadth “ranks among the most extreme years this far into the calendar since 1928”.

30. Earnings risk. And finally, here’s Mike Wilson’s earnings risk heat map.