Daily Chartbook #92

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

1. Crude oil prices. "Historically when crude has crossed $75 in one direction or another, it then spent several years on that side of the border". Prices fell below the mark today before reclaiming it after rumors of another OPEC production cut.

2. Crude oil vs. energy stocks. There is an extreme divergence between the performance of energy stocks () and crude oil prices.

3. China mobility data. JPMorgan's mobility indicators and city lockdown tracker worsen as outbreaks rise.

4. Freight rates. "Cost to ship 40ft container from Shanghai to Los Angeles has plunged to lowest since May 2020, which means pandemic boom is close to being completely erased".

5. Dallas Manufacturing. "November Dallas Fed Manufacturing Index ticked up to -14.4 vs. -21 est. & -19.4 prior;  new orders, shipments, hours worked, and delivery times fell deeper into contractionary territory; notably, employment (orange) fell to lowest since July 2020".

6. Job openings. "The UBS Evidence Lab data points to ongoing declines in job openings".

7. Retail sales weakening. "After adjusting for inflation, seasonal sales are likely to fall 1.2%, the first decline since 2009".

8. Strapped for cash. "New Vanguard Group data through Oct 2022 show hardship withdrawals and loans from retirement accounts are ticking up in 2022, suggesting that more households are in need of cash".

9. Social security COLA. "Recent social security cost-of-living adjustments are the largest percentage increase since 1982".

10. Strong corporate balance sheets. "It has been 50 years since nonfinancial corporations devoted such a low % of cash flow to interest expense".

11. False positives. "The Fed recession indicator has been correct at identifying recessions all the way back to the ‘70. Had 2 false positives. How about this time?"

12. Deep inversion. "The 3-Month Treasury bill yield is now 0.73% higher than the 10-Year Treasury bond," the fourth deepest inversion in the last 60 years.

13. 2023 outlook. "The economic outlook for 2023 has dimmed appreciably over the past year, with private forecasters now predicting that real GDP will increase by 0.8% next year and the unemployment rate will average 4.2%".

14. 10-year outlook. "The current valuation for the S&P suggests price returns of about 5% over the next decade".

15. Dollar & rates. "Weaker dollar coming as real yields fall with a decline in inflation".

16. Rates market. "As inflation declines and economic growth slows, yields will fall. expects the 10-year yield to drop to 1.57% in the US. Such a decline will provide for a strong return in bonds next year".

17. Big USD shorts. "People are very short the dollar via options positions".

18. CTAs selling USD. "Momentum chasers have sold the dollar aggressively over past weeks".

19. Everything rally. "Bloomberg’s Global Aggregate gauge of fixed-income securities has gained 5%, heading for its best month since December of 2008, while MSCI’s world stocks index is up even more".

20. Bond inflows. Wealth investors "continue to buy bonds, as bond yields are looking more attractive".

21. Copper-to-gold. "The Copper/Gold ratio suggests weaker growth ahead".

22. Global revisions. "The Global Earnings Revision Ratio jumped last week from 0.59 to 0.83, led by Japan (1.14), Energy (2.11), Banks (1.71), and Insurance (1.14) as the rate of earnings downgrades slowed".

23. Global valuations. "Global equities still don't look very cheap".

24. Q3 real sales growth. "Half of S&P 500 companies posted negative real sales growth in 3Q". Chart shows % of companies with positive real sales growth in 3Q22

25. Record negative sentiment. "AAII Sentiment (bulls less bears) is negative for 35 consecutive weeks, breaking the Feb-Oct 2020 record of 34 weeks".

26. Small vs. large performance. "Historical relative performance cycles also tend to last about a decade… …and history would suggest 2023 could be a strong year for small vs. large".

27. Small cap valuations. "Including non-earners & outliers, small caps’ forward P/E is 21x, close to its long-run average of 19x".

28. Small cap volatility. "Small caps have actually seen lower average realized volatility than large caps in key years of market stress".

29. Strong breadth, but... "Even with today's mild drawdown, the number of $SPX components trading above their 50-day moving averages ranks in the 99%ile. Historically, we've seen rallies start to deteriorate around this level".

30. Not priced in. And finally, according to Goldman, the stock markets "don’t yet reflect the risk of a US recession".

Thanks for reading!

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