Daily Chartbook #120

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

As a reminder: Daily Chartbook will be off Monday, January 16.

1. Home sales forecast. "We expect home sales volume to trough in 2023H1".

2. Imports (I). "US import prices +0.4% in Dec 2022, first monthly increase since June".

3. Imports (II). "Still despite this one-month rise, the imported disinflationary trend remains strong".

4. Strong households. "Households across the income distribution continue to have a higher level of cash available than before the pandemic, and the speed with which households are running down their cash balances in recent quarters has been very slow".

5. Consumer sentiment. University of Michigan's consumer sentiment for the US jumped from 59.7 to 64.6, the highest since April and well above expectations of 60.5.

6. Inflation expectations (I). One-year inflation expectations dropped to 4% (vs. 4.3% expected), the lowest outlook since April 2021. However, medium term (5-10 yrs) inflation expectations ticked up from 2.9% to 3%.

7. Inflation expectations (II). "The uncertainty around this forecast is extremely high".

8. Buying conditions. "Buying Conditions improved for all cohorts".

9. Deflation. "A whopping 59% of CPI components are now in outright deflation, a leap of 800bp in a single month .. the bond market got it right. Inflation is undershooting the Fed and consensus view".

10. Interest expense. "The Interest Expense on US Public Debt rose to $775 billion over the past year, a record high. If it continues to increase at the current pace it will soon be the largest line item in the Federal budget, surpassing Social Security".

11. Loan loss provisions. "Excluding covid shock, Big 4 banks' loan loss reserves are the highest in 10 years".

12. Consensus. "New consensus is Fed hikes 50bps in H1'23 then cuts 200bps next 18 months".

13. S&P vs. CPI. Yesterday's 0.34% gain for the S&P 500 was the "smalles reaction to a CPI print since April".

14. US02Y. "The 2year Treasury yield has crossed under the Fed funds rate for the first time this rate hike cycle. This cross has an excellent track record of leading to easier policy".

15. Bond inflows. "Largest inflow to bond funds since Jul ‘21".

16. JPM tactically bearish duration. "JPM says Treasuries appear significantly rich to fundamental drivers".

17. Credit fund inflows. "Largest inflow to credit funds since Jun'21".

18. Ripple effect. "Steep moves in commodity prices often lead to a ripple effect in the market. Gold broke out, then silver, copper, and now we have a list of others already up double digits in the last 3 months. Energy & agricultural commodities are likely the next ones to move".

19. Emerging Market inflows. "Largest inflow to EM assets since Apr '22".

20. Global stocks > US stocks. "Strategists are increasingly favoring European and Asian shares over US peers against the backdrop of higher rates".

21. Momentum chasing. "CTA exposure has gone from "healthy" short to "healthy" long. Do we see them push even more longs? The problem with these strategies is that they tend to work poorly in non trending markets, and this market is stiill struggling to find a new trend".

22. Smart money. "Managed money is starting to get more bullish of gold as they both cover shorts and increase longs".

23. Margin expectations. "Margin expectations have fallen, record margins are no longer penciled in by analysts".

24. Earnings revisions. Over the last 3 months, "energy was the only sector with upward revisions".

25. ISM vs. EPS. "ISM shows -10% EPS priced-in".

26. Q4 EPS. "For Q4 2022, the estimated earnings decline for the S&P 500 is -3.9%. If -3.9% is the actual decline for the quarter, it will mark the first time the index has reported a year-over-year decline in earnings since Q3 2020 (-5.7%)".

27. Price targets. "S&P 500 weighted average price target ahead of earnings season is one of the highest over the past 11 years".

28. Seasonality. "January is the strongest month for the market during pre-election years". 2023 is a pre-election year.

29. Swear count. And finally, “good job everyone”.

Have a great weekend!