Daily Chartbook #105

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

1. Oil price indicator. "Global recession is coming. Single most important indicator is the oil price, which has fallen despite an OPEC+ production cut in early October, the G7 price cap this month and now China COVID reopening. The fact that prices are down despite all this says demand is super weak".

2. Hike projections. "We continue to expect three additional 25bp rate hikes in February, March, and May, for a peak funds rate of 5-5.25%".

3. Low bar. "The Fed’s forecast for Q4 2023 Core PCE 'sets a low bar,' allowing for 0.3% MoM inflation for most of the year — 'which means it is unambitious. .. inflation could easily fall faster .. even if the unemployment rate only rises modestly'".

4. Jobless claims. Initial jobless claims dropped unexpectedly to the lowest since September while continuing claims edged up.

5. Job postings. "Job postings down 7.7% in the past year".

6. Retail sales (I). "Against expectations of a 0.2% MoM drop, US retail sales tumbled 0.6% MoM - the weakest since last December".

7. Retail sales (II). "In nominal terms, US Retail Sales still appear to be strong, rising 5.4% over the last year. But after adjusting for inflation, the story changes. Real Retail Sales peaked in March 2021 & are down 1.6% over the last year".

8. NY manufacturing (I). "December Empire Manufacturing Index fell to -11.2 vs. -1 est. & +4.5 prior … new orders still in contraction, prices moved up, workweek popped back into expansion, and shipments dipped but are still expanding … employment rose to highest since July".

9. NY manufacturing (II). "Capital spending intentions rose to +23.4, highest since June".

10. Philly manufacturing (I). "Current general activity remained negative but rose 6 points to -13.8 this month. This is its fourth consecutive negative reading and sixth negative reading in the past seven months".

11. Philly manufacturing (II). "The current prices paid index decreased 9 points to 26.4, its lowest reading since September 2020 and near its long-run average".

12. Industrial production. "US Industrial Production did not do anything to help matters as it fell 0.2% MoM (worse than the 0.0% expected) - its weakest MoM drop since Sept 2021. On a YoY basis, the +2.5% growth is the weakest since March 2021".

13. Manufacturing production. "Manufacturing also tumbled in November, dropping 0.6% MoM - also the worst since Sept 2021".

14. Capacity utilization. "Overall capacity utilization dropped further in November to 79.66% - the lowest since Feb 2022".

15. Fed vs. 2Y. "Fed rate hike cycles typically end when the Fed Funds rate catches up to where the 2-year yield has already gone. We have that condition now. So the Fed should stop, but there is no indication that they know that, based on the post-meeting announcement".

16. S&P 500 vs. Fed pause. "It’s a bit wonky, but this chart of SPX performance following an FOMC pause is worth noting".

17. Still crowded USD. Long the US dollar is still viewed as the most crowded trade, but less so than in November.

18. 1DTE options. "44% of $SPX options volume is trading contracts with less than 24 hours to maturity".

19. Volatility (I). "Interest rate vol declined from a recent peak of 133.6 on Dec 12 to 119.9 on Dec 14".

20. Volatility (II). "Six month Vix futures declined form 17.4 on Nov 28 to 25.7 on Dec 14".

21. Volatility (III). "2022 is likely to end up as the 6th-most-volatile year since the Great Depression".

22. Downside risk. "History suggests there is more downside risk to markets next year if we hit a recession".

23. Non-US stocks. "Improvement outside the U.S. continues with more stocks making new highs than new lows".

24. Semis vs. financial conditions. "The sector with a reputation of being on steroids and with many false starts is already looking ahead to brighter days of easier financial conditions".

25. No dividend growth. "Roughly $66 of dividends have been paid this year, yet implied dividend markets are pricing in $63-66 annually across the next decade".

26. NAAIM. Active investment manager exposure jumped to 71.6, the highest since August.

27. Retail order flows. And finally, “retail traders net sold $1.3B this past week, consisting of +$2.0B buying in ETFs and $3.3B selling in single stocks. Notably, they have net sold every single day of the week”.

Thanks for reading!