Daily Chartbook #88
Catch up on the day in 27 charts
Welcome back to Daily Chartbook: macro market charts, data, and insights pulled from various sources around the Internet by a solo retail investor.
Programming note: Daily Chartbook will be off Thursday and Friday next week (Nov. 24-25).
1. Deflationary pain. From BofA's Hartnett: "If bond market can't bid with forward-looking data this weak, we about to enter whole new world of deflationary pain".
2. Existing home sales (I). Sales of existing homes in the US dropped 5.9% in October to -28.4% YoY (worst level since 2008).
3. Existing home sales (II). "Absent the nadir of the COVID lockdowns, this is the lowest existing home sales SAAR since Dec 2011".
4. Existing home sales (III). "The median existing-home price for all housing types in October was $379,100, a gain of 6.6% from October 2021 ($355,700)".
5. Affordability (I). "U.S. homebuyer must now earn $107,281 to afford typical $2,682 monthly mortgage payment, up 45.6% from $73,668 a year ago".
6. Affordability (II). "Using median wages if prices were to revert to more usual 5.5x that would imply price back at 300k and a 20% fall".
7. Affordability (III). Fittingly, "median home prices look like a middle finger."
8. Supply chain improvements. “The Morgan Stanley Supply Chain Index dropped 48% in October, the largest MoM decrease this year. The MSSCI Index [right], which keeps track only of supply side developments, also improved substantially, -20%MoM”.
9. Holiday shopping. "Results point to a choppier holiday spending backdrop this year, with 46% of consumers planning on spending less this holiday season and 23% planning to spend the same amount as last year".
10. Household health. "Household balance sheet levels remain strong, but we estimate that households have drawn down about 25% of their excess savings so far and will have spent around 60% by end-2023".
11. LEI streak continues (I). "The Conference Board's leading index has fallen for the eighth consecutive month".
12. LEI streak continues (II). "The 6-month growth rate in the Leading Economic Index fell further into negative territory in October and is at levels that have signaled a high probability of recession in the past (2020, 2008, and 2001)".
13. LEI streak continues (III). "A 4th straight negative print (on a YoY basis) of Conference Board’s Top 10 Leading Indicators signals that recession is looming".
14. Recession talk. Across all sectors except healthcare, fewer companies cited "recession" on Q3 earnings calls compared to Q2.
15. Runoff. "The Fed's balance sheet is at a 52-week low for the first time since Dec 2019, down $340 billion from its peak in April and $133 billion over the last 5 weeks. This is the largest 5-week decline since July 2020".
16. Fed curve inversion. "The Fed's preferred yield curve, which is the market implied 3-month T-bill yield in 18 months minus the current 3-month T-bill yield, is about to invert".
17. 10y vs 2y. "With the caveat bond markets have been wrong plenty of times in the past, they are now screaming the Fed will overdo it".
18. USD leading indicator. "The US Dollar’s correlation to stocks, bonds, commodities and gold has gone to a remarkable extreme of late".
19. Stocks vs. bonds. "Equities have established a strong positive correlation with bond prices in 2022. 3-month rolling correlation between the SPX and the ICE US Treasury 7-10 Year Bond Index" below.
20. Equity inflows. "Biggest inflow to equities in 35 weeks…chase is on".
21. Wealthy investors. "BofA private clients are sharply overweight stocks".
22. Buyers to sellers. "Central banks, both the Fed and foreign, have morphed from the largest buyers of Treasury notes and bonds over the past two decades into the largest net sellers".
23. Commodity MTD performance. "Industrial Metals best-performing commodity sector MTD, +9%, with Precious Metals hot on its heels, +8%; Energy has been at back of pack among commodities sectors, -4% MTD".
24. Highs & lows. "Bear markets aren't usually over when the new low list peaks anymore than bull markets are over when the new high list peaks".
25. Happy OpEx Day. $2.1 trillion of option notional expired today.
26. Options trading volumes. Meanwhile, "about 46 million options contracts have changed hands each day in November, poised for the busiest ever month".
27. 2008 analogy. And finally, the 2008 analog remains intact.
Have a great weekend!