Daily Chartbook #154

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

1. Credit card spending. "By historical standards, total card spending in Feb 2023 looks soft relative to Jan."

2. Loan loss provisions. "Loan loss provisioning is rising from a very low level in the banking sector, but we are still not close to the levels seen in 2008 and during the pandemic."

3. Junk bond issuance. "Companies issued almost as many bonds in January and February as they did in the entire second half of 2022."

4. Maturity wall. "A significant wall of maturities won’t arrive until 2025."

5. Hard vs. soft data. "Hard data has been very strong, while soft data has been very weak."

6. Factory orders. "January factory orders -1.6% m/m vs. -1.8% est. & +1.7% prior; orders ex-transportation +1.2% vs. +1% est. & -1.2% prior … year/year trend for headline orders (blue) has fallen to +4.3%, which is slowest since February 2021."

7. NFP forecast. "We expect job growth to moderate to 230k in Feb. These signs of a short-lived re-acceleration would make it easier for the data-dependent Fed to stick to a 25bp hiking pace."

8. Q1 GDP. "We boosted our Q1 GDP tracking estimate to +2.0% (qoq ar)."

9. Oil prices vs GDP. Goldman on why oil prices have not risen along with global GDP expectations: "Our main answer is that the oil market, which remains in a spot surplus, is much more a spot asset than an anticipatory asset."

10. Earnings call topics. "Trend on corporate earnings calls has been to focus a lot on free cash flow to equity margin, reshoring, and loss costs; while new debt issuance, limitation, and antitrust haven't been mentioned nearly as much."

11. Global M&A. "Year-to-date global M&A activity is off to its slowest start since 2010."

12. Healthy households. "Elevated excess pandemic savings and healthy household balance sheets have supported the market’s view that a soft landing is possible. .. would suggest equity upside for the full year .. opens up the potential for the 2023 Upside Case of 4,600."

13. Event catalysts. "Forward implied volatility is back in the low 30s for the consumer-price-index day and nearing 40 for Fed rate-decision day later, meaning traders are betting on some big swings...However, a forward implied volatility reading of 26 on jobs data day indicates the market is underpricing that risk."

14. Complacent spreads (I). "The corporate bond market is less worried about a near term decline in profits than at most points since the start of capital market volatility over a year ago. This supports a bullish, or at least neutral, stance on US equities."

15. Complacent spreads (II). "The spread [between IG corporate credit and 6-month T-bills] is less than 1%."

16. Cash not trash (I). "Two-thirds of investors in a Bloomberg survey said they expect cash to help, not harm, their portfolios."

17. Cash not trash (II). "Cash like ETFs are about to hit $100b, they had about half that a year ago. It's weird to say but they are in a way this market's shiny objects eg $BIL is beating 90% of ETFs over rolling 12mo."

18. SPX vs. Treasuries. "Stocks and Treasuries very correlated again."

19. Hedge funds vs US02Y. "Hedge funds entered February holding their biggest ever short position in 2-year Treasuries futures. The CFTC data is lagging by 3 weeks too, so that position could be even bigger now."

20. Global active fund flows. "The strongest period is yet ahead of us. Global active fund flows tend to be stronger during April to June."

21. Equity allocation. "Equity allocation from BofA's private clients remains at 60%."

22. Stock positioning. "The GS sentiment indicator remains negative."

23. Thematic fund flows. "Momentum and low-vol funds continue to see outflows."

24. Relatively cheap cyclicals. Cyclicals "still looking cheap from a relative perspective. Chart 1 vs Defensives and chart 2 vs overall market."

25. Nasdaq PE vs. real yield. "Nasdaq PE diverged from real rates recently."

26. Tech bubble multiples. "Today's Tech relative Price-to-Sales ratio vs. Nifty Fifty, Energy Crisis, Tech Bubble and Financial Crisis (Cap Weighted)."

27. Balance sheets. "Shares of companies with the weakest balance sheets have outperformed of late. This suggests minimal fear of defaults."

28. EPS expectations. And finally, “stable earnings expectations is the single best answer” as to “why US stocks remain resilient in the face of renewed interest rate uncertainty.”

Thanks for reading!