Daily Chartbook #116

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

1. Global shipping. "The majority of global shipping rates have now normalised and lie within their historical range".

2. Forecast error. "Chart below shows broadly wrong consensus calls into & within US recessions from the late 60s. It's almost a perfect score. History repeating itself".

3. Most anticipated recession. "If the recession is so well anticipated as is post pandemic normalisation, shouldn’t we be looking through all of that to the recovery and refocus on structural growth stories once more? ".

4. Used cars. "The Manheim Used Vehicle Value Index was down 14.9% from a year ago. This was the largest annualized decline in the series’ history. The non-adjusted price change in December was a decline of 1.9% compared to November".

5. Consumer expectations (I). "The NY Fed's survey of inflation expectations shows 1-year-ahead inflation expectations continued to decline in December, falling 0.2 pp to 5.0%, its lowest reading since July 2021".

6. Consumer expectations (II). "The mean perceived probability that U.S. stock prices will be higher 12 months from now decreased by 0.8 percentage point to 34.9%".

7. December CPI. "Ahead of US CPI on Thursday, here is the Cleveland Fed Nowcast".

8. Chinese equities. "Chinese stocks started the new year with a bang".

9. RoW vs USA. "Rest of the World (RoW) is trading at a massive discount to US equities".

10. Fx vs. earnings. "Q3 conference calls mentioned FX as a major headwind. Since the start of Q4, the US Dollar index has fallen over 7%. Keep that in mind as Q4 earnings season ramps up in a couple of weeks".

11. Dollar shorts. Hedge fund are most bearish on the US dollar since August 2021.

12. Junk bond inflows. "$JNK saw a $1.7B inflow last week as investors and traders discount the possibility of higher risk borrowers defaulting".

13. Highs over lows. "New highs > new lows last week for first time since August and only 3rd time since Nov 2021".

14. Retail flows. Retail investor flows into single stocks flipped positive last week.

15. Sentiment vs. positioning. "The gap between Consumer Sentiment and Equity Exposure is the largest we have seen in the past 30 years".

16. Main street vs. Wall Street. "Economic sentiment has come right down to meet investor sentiment. Main Street now agrees with Wall Street".

17. Put option activity. There were 4 weeks in Q4 where traders spent +$40 billion on new put option purchases and sales.

18. Multi-year declines (I). "Extended valuations tend to play a role in multi-year down markets... but we find that the detrended Bond/Equity yield ratio seems to give the best signal - but even this appears 'necessary but not sufficient'".

19. Multi-year declines (II). "Extended market cycles (in age and scale) also yield multi-year declines... if we exclude the 'biological' pandemic bear market (short-lived as looser policy extended the cycle), the Bull market ending Jan-2022 lasted almost 13 years and saw a 5-fold rise in Equities".

20. Multi-year declines (III). "A final word of warning... previous multi-year bear markets (other than 1913-14) saw the second year deliver larger losses than the first".

21. Q4 earnings season (I). "By February 10th, companies representing 77% of S&P 500 market cap will have reported".

22. Q4 earnings season (II). "If consensus expectations for 4Q were to materialize, it would represent the weakest quarter of growth since 3Q 2020".

23. Earnings revisions (I). "The 3-month trend of S&P 500 FY2 EPS revision sentiment stands at -31%, the most negative reading outside of the 2008 and 2020 recessions".

24. Earnings revisions (II). Earnings revisions breadth is trending lower.

25. Earnings revisions (III). Of 100 S&P companies that have issued guidance for Q4, "65 have issued negative EPS guidance and 35 have issued positive EPS guidance".

26. Earnings revisions (IV). "Information Technology (-5) and Consumer Discretionary (-3) sectors have seen the largest decreases in the number of companies issuing negative EPS guidance".

27. Earnings drivers. "Some 31% of survey participants expect cooling inflation to be the biggest positive driver for earnings this period, with slightly lower tallies for cost-cutting and supply-chain improvements".

28. Earnings outlook. Investors are expecting an ugly first half for 2023.

Thanks for reading!

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MONDAY BONUS: Cheat sheet. Global markets week in review.