Daily Chartbook #126

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

1. SPR. "In mid-January, Strategic Petroleum Reserve (SPR) didn't have a weekly decline for first time since September 2021, marking end of largest drawdown in history".

2. Oil positioning. "Portfolio investors have piled back into petroleum futures and options at the fastest rate for more than two years as concerns about a global business cycle downturn have eased".

3. Housing inventory. "Inventory remains below pre-pandemic levels across the majority of housing markets".

4. Existing home sales. "We expect existing home sales to have bottomed by the end of Q1; purchasing intentions have rebounded sharply in recent months".

5. Home prices. "We expect a 6% peak-to-trough decline in national home prices".

6. Financial conditions (I). "Index has risen (eased) back to where it was in February 2022, when fed funds rate was at 0%".

7. Financial conditions (II). "Financial conditions remain too loose for the Fed".

8. US PMI data (I). "The headline Flash US PMI Composite Output Index registered 46.6 in January, up from 45.0 at the end of 2022".

9. US PMI data (II). Manufacturing and Services PMIs both came in better than expected, but they were the 7th and 3rd monthly prints below 50, respectively.

10. Global PMIs. The US “remains the worst-performer among the global major economies and still in contraction”.

11. Richmond Manufacturing. "Mfg Index from [Richmond Fed] fell in January to -11 vs. -5 est. & +1 in prior month; new orders sank to -24, backlogs fell deeper into contraction, lead times bounced higher (but still contraction), and employment dipped to its lowest since July 2020 (and is contracting)".

12. Underwater indicators. "It’s possible that we’re in a “rolling recession” where categories of macroeconomic activity (employment, production, income, spending) go through mild contractions but with an asynchronous cadence that avoids the reinforcing depth, diffusion, and duration of a true recession".

13. NYSE vs. FINRA. "One of the more interesting divergences developing is the spread between margin debt and the NYSE index.  Like 2019... and 2002... and even the summer rally in 2008... we are NOT seeing margin debt confirm higher prices".

14. QT offset. "Decent liquidity is helping stocks, despite the Fed’s efforts to take the liquidity tide back out to sea. The orange line below explains the market’s zigs and zags almost perfectly. QT is being offset by market liquidity and bank reserves, which is keeping stocks afloat".

15. Money supply. "There's a first for everything.  The y/y change in M2 money supply went negative in December for the first time on record".

16. Gold positioning. "While still at historical lows, speculative positioning in gold has picked up in recent weeks".

17. Underweight commodities. "Investors are significantly under-allocated to commodities".

18. Bond inflows. After $260 billion in outflows last year, bond funds have seen $14.4 billion in inflows over the first 3 weeks of January.

19. RoW. "Rest of world (ROW) stocks have just posted a rare 1-year outperformance relative to the S&P 500. This has only happened 3 other times since the Financial Crisis".

20. Global breadth. "When this indicator goes from having no indexes above their 200-day MA to more than 90% in just 50 days...Global stocks have historically continued their rally in the coming months".

21. Sentiment indicators. "This does not look like an absolute peak of a bear market rally".

22. Equity positioning. "Zoom out and the crowd is running very low risk when it comes to equities".

23. Investor flows. "Despite market strength, equity funds had large outflows over past few weeks; largest share of past month's fund inflows went to international assets ... interest in fixed income remains relatively strong with aggregate bond funds most popular choice right now".

24. Exposure plans. "According to the latest JPM survey, clients are not overly interested in adding to equity exposure, but the question is can they afford not to add when things are squeezing?"

25. Buybacks. "Corporates still doing buybacks…but not announcing new ones".

26. Small cap flows. "While sentiment on small caps has been positive in most of our recent client meetings, flows suggest investors haven’t yet been buying small caps in earnest".

27. Short-covering. "Info Tech saw the largest 1-day notional short covering since Jun ’22 (99th percentile 5-yrs), led by Semis .. Tech Hardware, and IT Services stocks. This certainly lines up with what we saw on the trading desk & and how the mkt felt in general yesterday".

28. 2023 earnings. And finally, “we are kicking off the year in a pretty sanguine way. It’s particularly cautious when you consider the big Fx tailwind US stocks will benefit from this year”.

Thanks for reading!