Daily Chartbook #101

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

1. China reopening (I). "Still wonder why they are reopening? Hartnett shows it in one simple chart".

2. China reopening (II). Goldman Sachs "forecasts that China's real GDP growth will rise 1.5 percentage points to 4.5% in 2023, and then to 5.3% in 2024".

3. PPI (I). Producer prices "came in above est on both headline (7.4% vs 7.2% est) & core (6.2% vs 5.9% est). Still falling quickly on a y/y basis, but upside surprises don't bode well for upcoming CPI prints".

4. PPI (II). Here's the month-to-month breakdown including the top 5 subcomponent contributors.

5. PPI (III). "Energy prices dropped to their lowest since Feb 2022, Food prices soared to record highs".

6. PPI (IV). "The pipeline for PPI remains significantly softer".

7. PPI (V). "And based on a 16-month-lagged M2 rate-of-change, PPI (and CPI) are about to lurch considerably lower".

8. Household wealth. Total wealth fell by ~$400 billion led by a $1.9 trillion drop in the value of equity holdings.

9. Household income. "The expected change in household income during the next year advanced for the third consecutive month to 2.7%, the highest since 2007".

10. Spending habits. "Spending on leisure services has overtaken spending on durable goods relative to pre-pandemic levels".

11. Consumer sentiment ticks up. "December University of Michigan Consumer Sentiment Index (blue) up to 59.1 vs. 57 est. & 56.8 prior; current conditions up to 60.2 vs. 58.8 prior; expectations (orange) up to 58.4 vs. 55.6 prior".

12. Inflation expectations. One-year inflation expectations dropped 4.6% to the lowest since September 2021 while five-year expectations remain unchanged.

13. Terminal rate. "The FOMC’s median projection is expected to show the policy benchmark peaking at 4.9% in 2023 — reflecting a 4.75%-5% target range — compared to 4.6% seen in September".

14. Slow growth, higher unemployment. "Fewer than half of the economists are looking for rate cuts in 2023. Those who do are looking for the unemployment rate to jump to 5% from 3.7%, and most see rising joblessness and recession as the major cause of the reversal".

15. Recession consensus. "A growing consensus of 81% of economists see a US recession as likely".

16. Hiking cycles. "Going back to early 1970s, Fed hiking cycles have lasted an average of 219 days (from first hike to first cut); we're currently just beyond 260".

17. After the last hike. "During the era of persistently high inflation in the 1970s and 1980s, equities had fallen after the last hike".

18. Massive bond losses. "30-year UST yield -100bps past 6 weeks, follows biggest loss since 1920".

19. Peak USD? Most FX survey respondents believe the US dollar has peaked.

20. USD losses. "Quarter-to-date performance for U.S. dollar is worst since 3Q2010".

21. Bull & Bear Indicator. BofA's sentiment indicator jumped "to 2.6 from 2.0 driven by bond inflows, EM inflows, rubber-stamping end of contrarian “buy signal” for risk assets".

22. Equities outflows (I). "Two largest combined weeks of selling in over 6 months".

23. Equities outflows (II). "Retail hitting the bid? .. on average, -$16.5bn of equity outflows every week for the last month … this pace is rivaled only by Oct 2008 (financial crisis), Dec 2018 .. Oct 2020 .. historically / stocks have traded higher in the months following"

24. US vs. rest of world. "Bold statement: 15 year bull market of US over RoW likely reverses in ‘23".

25. Upgrades > downgrades. "For the first time in 26 weeks, there were more earnings upgrades than downgrades".

26. 2023 preview (I). The world's top money managers see double-digit gains for stocks next year.

27. 2023 preview (II). Led by Consumer Discretionary, S&P 500 earnings are expected to grow 5.5% in 2023, which is below previous estimates of 8.2% (Sept 30) and 9.6% (June 30).

28. 2023 preview (III). Financials and Consumer Discretionary are expected to lead the S&P 500 to 3.3% (YoY) revenue growth in 2023, which is below previous estimates of 4.4% (Sept 30) and 4.7% (June 30).

29. 2023 preview (IV). And finally, the estimated net profit margin for the S&P in 2023 is 12.3% (compared to 12% for 2022). "At the sector level, six of the eleven sectors are projected to report higher net profit margins in CY 2023 relative to expectations for CY 2022".

Have a great weekend!