Daily Chartbook #87
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Daily Chartbook #87
Catch up on the day in 29 charts
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 rates drop. "US 30y mortgage rates post biggest drop since 1981, falling to 6.61%".
2. Housing starts & building permits. October housing starts and building permits dropped by 4.2% and 2.4%, respectively. The latter fell to its lowest since August 2020.
3. SFH vs multi. "Single-family building permits are down 31% from peak compared to 11% for multi-family".
4. Record units under construction. Combining single and multi-family, "there are 1.722 million units under construction. This is the all-time record number of units under construction".
5. Container rates. "Collapse in shipping rates continues to look unreal … cost to ship 40-foot container from Shanghai to Los Angeles has fallen by 83% from peak, by far largest drop on record (bringing level to lowest since June 2020)".
6. Re-shoring talk. Mentions of re-shoring, which "increases cost and keeps inflation 'persistent'", have surged in 2022.
7. Inflation factors. The impact of energy, material, and salary costs on businesses worldwide, according to S&P Global's new PMI Comment Tracker.
8. Second act. Are calls for peak inflation premature?
9. New normal. "There is 'no consistent pattern' to economic trends right now, says B of A. The job market is 'hot,' consumer spending is 'solid,' but housing is 'weakening even faster than normal'...Is this unusual? Yes."
10. Tight financial conditions. "Despite a strong bounce in U.S. financial markets following better-than-anticipated inflation data for October, financial conditions remain tight".
11. Credit conditions. From BofA: "The latest reports from the Fed on financial stability (Financial Stability Report) and bank lending practices (SLOS) show that credit conditions are tightening rapidly and credit problems are likely to expand faster than markets currently anticipate for 2023".
12. Fed funds rate forecast. "Goldman Sachs expects the Fed to hike 50 bps in December, and then 25 bps for February, March, and May. They expect a terminal rate of 5-5.25%".
13. Restrictive zone. "If FFR ends up in the 'restrictive zone', it'll be painful".
14. Labor market still healthy. "If jobless claims were to stay at current levels, by the end of January they will be negative YoY and up over 20% from their lows, which would turn this indicator - which has been one of the most positive all this year - negative".
15. Philly Manufacturing. "The general activity index declined further, the new orders index remained negative, and the shipments index remained positive but low. The employment index declined but continued to suggest overall hiring, and the price indexes continued to suggest overall increases".
16. Fed & dollar. "Market sentiment is hugely Dollar bearish. One thing I hear lots is that many hikes are priced (red), taking the policy rate above 5 by mid-2023. But lots of cuts are priced after, counter to the Fed's "higher for longer" message (green). The Fed is a Dollar-positive catalyst".
17. Gridlock performance. With Washington divided, how do stocks perform in gridlock?
18. No foreign buyers. "The drop in US Treasury market liquidity stems from one key buyer - foreigners - not showing up".
19. Bearish much? "Yesterday’s PUT/CALL ratio was the highest in all history I could pull. Higher than 2008 & 2001. 1.46 put/call ratio.
20. Heavy short covering (I). The last four days (prior to today) have seen a massive surge in short covering.
21. Heavy short covering (II). "20d short flows also much closer to an extreme (like we saw in mid-Aug) than they were a week ago".
22. De-grossing. "JPM is of the view that the bulk of the de-grossing (especially the type of extreme reductions we’ve seen in the past week) seems likely to be over. The total amount of gross that was added from late Aug to end-Sep appears to be mostly reversed".
23. Lots of selling. "For a month that everyone was so excited about (November) there have been an awful lot of high TRIN days (high TRIN usually means a lot of selling)".
24. 1DTE options (I). "Measured in notional volume terms, S&P options with less than 24 hours to maturity now represent 44% of the index's trading volume".
25. 1DTE options (II). "The byproduct of the growth in 0dte expiry volume is beginning to rob the validity of the signal we see at the 30 day $VIX. It's not just relative volumes. We are seeing absolute transaction activity at this tenor deteriorate markedly. In simple terms, beware of false signals".
26. Implied volatility. "Volatility coming in today despite the sell-off, tells you puts being sold on way down (not added), contributing to the intraday pop".
27. Household holdings. "Households still have near-record exposure to equities".
28. Sector margins. "Margins in most sectors are well above their norm, especially in tech".
29. Sector rotations. And finally, the “rotation from growth to value, virtual to real has just begun”.
Thanks for reading!
Daily Chartbook #87
thx! always appreciated!