Daily Chartbook #54

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

1. OPEC+ (I). The market is expecting OPEC+ to cut production at its meeting this week by ~1 million barrels per day (roughly 1% of global supply).

2. OPEC+ (II). Crude production has been below target levels since mid-2021

3. Global QT. "Balance Sheets for the Fed, ECB, BoJ and BoE have reduced -$3.1 trillion in the past 7 months".

4. Scenarios. In a higher for longer (inflation and rate hikes) scenario, Goldman Sachs assumes "that the FOMC would hike by 25bp per meeting in 2023H1 and 25bp per quarter in 2023H2, taking the funds rate to 5.75-6%".

5. Historically low inflation expectations. At 2.7%, consumers’ long-term (5-10 years) inflation expectations are actually below their 50-year average.

6. Negativity streak. Goldman's sentiment indicator has been negative for 31 consecutive weeks, the second longest streak on record.

7. Rapid savings drawdown. "The new data show that the peak savings stock was $2.1T, in August last year, and some $630B has been spent, about 31%".

8. Construction slowdown. Construction spending fell for the second straight month, declining 0.7% in August (vs. -0.3% expected) for the biggest drop since February 2021.

9. Mixed manufacturing PMIs. ISM Manufacturing (green) disappointed in September, falling to 50.9 (vs. 52.2 expected) while S&P Global US Manufacturing (blue) improved to 52 (vs. 51.8 expected).

10. US manufacturing. ISM and regional manufacturing indexes.

11. ISM Manufacturing PMI (I). While prices eased and production ticked up, new orders fell to their lowest level since May 2020 and employment dropped to its lowest since June.

12. ISM Manufacturing PMI (II). "Only two instances in past 60+ years when ISM New Orders Index was as low as it was in September and economy was not already in (or heading into) recession: 1995-96 & 1967".

13. ISM Manufacturing PMI (III). How far each component is from 50 (above/below = expansion/contraction).

14. ISM Manufacturing PMI (IV). Will the decline in manufacturing prices paid soon be reflected in CPI data?

15. Fed pivot. From Mike Wilson: "The dollar’s price action 'will eventually get the Fed to back off.' But even though a Fed pivot will likely lead to stock rallies, it 'won’t change the trajectory of earnings estimates, our primary concern for stocks at this point.'".

16. Wealthy investors. BofA's private clients equity as a percentage of assets under management is declining but still above average.

17. Smart money exposure. "Hedge funds and mutual funds slashed exposure, but remain invested".

18. JPM cross-asset survey. Investor appetite for equity exposure has increased significantly since August.

19. Equity sentiment. Goldman's equity sentiment indicator has moved from "extreme light" to "light".

20. US funds allocations. Active weighting by industry group.

21. Gold outflows. Rising yields have driven the longest streak of outflows in gold since January 2014

22. Treasury demand. "JPMorgan is worried about who's going to buy all the bonds".

23. Comeback requirements. What kind of returns will it take for the S&P 500 to get back to its peak?

24. Biggest drawdowns. "Below are the top 20 largest peak to trough drawdowns for the S&P 500 going back to 1961. Never ever have Treasuries, the risk-off asset, gone down more than stocks".

25. Commodity breadth is weakening. “About 20% of commodities have positive return on rolling 1-month basis, way off peak of ~80% not long ago”.

26. S&P EPS revisions (I). Of 106 S&P 500 companies that have issued quarterly EPS guidance for Q3, "65 have issued negative EPS guidance and 41 have issued positive EPS guidance".

27. S&P EPS revisions (II). Relative to Q2, real estate, industrials, and consumer discretionary sectors have issued both the largest increase in positive guidance and the largest decrease in negative guidance in Q3.

28. Too high? And finally, earnings estimates for 2023-2024 remain ambitious.

Thanks for reading!