Daily Chartbook #56
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Welcome back to Daily Chartbook: macro market charts, data, and insights pulled from various sources around the Internet by a solo retail investor.
1. “Adjustment factors”. Though some "missing barrels" are typical, the US Energy Information Administration (official barrel counter) has made a "record adjustment factor so big it equals the production of some OPEC nations"
2. US petroleum inventory monitor. "Total petroleum stocks now back [below] the 5-year avg, and gasoline/diesel stocks down biggly."
3. Oil catalysts. With OPEC+ cutting current output limits by 2 million barrels per day today, "Bernstein sees many reasons (catalysts) to be bullish crude in Q4".
4. Mortgage rates rise again. Mortgage rates hit their highest level in 16 years at 6.75% after 7 consecutive weeks of increases.
5. Mortgage demand is collapsing (I). With mortgage applications plummeting 14.2% from last week, "overall mortgage application activity dropped to its “slowest pace” since 1997".
6. Mortgage demand is collapsing (II). The purchase applications index is now "lower than it was at the depth of the COVID crash".
7. Mortgage refinancing sinks. The refinancing index fell 17.8% to its lowest since September 2000. "The most surprising thing is that there's anyone refi-ing their mortgage at all. Like how isn't this zero?"
8. Housing search trends. Google search trends for housing market "in U.S. have declined on 1-year basis as high prices and mortgage rates keep large portion of Americans out of market ... 2022 looks dramatically different from 2021".
9. Global trade slowdown. The World Trade Organization now expects trade in goods to increase by just 1% in 2023 (previously forecasted 3.4%) as “factories around the world are reporting a decline in new orders from overseas buyers.”
10. Surprise US growth? "Relative to expectations, growth will surprise to the upside over the next 12 months. It will weaken again towards the end of 2023, with a recession likely in 2024".
11. Trucking demand. Truckstop.com's "Market Demand Index, which gauges relative supply and demand in the spot truckload market, was down 57% YoY on average in 3Q22 from a year earlier and 47% sequentially".
12. CPI forecast. Goldman's sell-side is forecasting 6% core CPI by the end of 2022 and 2.9% by the end of 2023.
13. ADP payrolls. Private businesses added 208k jobs in September, well above estimates of 200k.
14. ISM services (I). "Stronger September ISM Services at 56.7 vs. 56 est. & 56.9 prior; new orders down to 60.6, prices paid fell to 68.7 (lowest since January 2021), new export orders strengthened to 65.1, and supplier deliveries fell to 53.9 … employment up to 53 (highest since March)".
15. ISM services (II). "As ISM Services Prices Paid continues to fall, it will be interesting to see how service sector CPI in the US evolves".
16. S&P Global US Services PMI. "Improved demand conditions resulted in a weaker decline in business activity, as the S&P Global US Services rose to 49.3 in September (Aug: 43.7)".
17. Global composite PMI ticks up. "September saw the level of global economic activity contract for the second successive month, as output fell more quickly manufacturers but stabilised at service providers".
18. Q3 GDPNow. The Atlanta Fed’s model estimate for real GDP growth has increased to 2.7 from 2.3 on Monday.
19. Too much tech? "At the height of the Tech Bubble, Info Tech represented 33% of S&P 500 equity capitalization before collapsing to 13%. Today, Info Tech represents 26% of S&P 500 equity capitalization".
20. Seasonality (I). "The S&P 500 bottoms on September 30 during midterm years before the strong seasonal strength takes over".
21. Seasonality (II). October is historically the most volatile month of the year for stocks.
22. Retail vs. Insiders. Retail put buying has surged while corporate insider selling has plunged.
23. Gold pressure. "Buying of put options in gold has accelerated (relative to calls) in recent months with the gold put to call ratio having recently reached a multi year high".
24. Pivot expectations. "Expectations for a US rate cut in 2023 have returned and are already edging back towards pricing in a move of around 40 basis points."
25. S&P earnings. Morgan Stanley expects YoY EPS growth of 8% and 7% in 2022 and 2023, respectively.
26. S&P multiple compression. "S&P 500 P/E multiple compressed by 27% from 21x in January to 16x before the latest bounce".
27. NAAIM. Equities exposure among active investment managers is at bounce levels. New number tomorrow.
28. Exceptional breadth. "What can we expect from the recent double thrusts in the market? Historically, they have always preceded positive returns".
29. No redemption. And finally, a “recession is usually accompanied by a big redemption cycle”. Current equity flows remain resilient.
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