Daily Chartbook #162

Welcome back to Daily Chartbook: the day’s best charts & insights, curated.

1. Housing starts & permits. "Housing starts and permits posted a significant upside surprise as new residential starts rose by 9.8% while permits increased by 13.8% in February."

2. Under construction. "Combined, there are 1.691 million units under construction, just below the all-time record of 1.711 million set in October 2022."

3. Freight costs. "Freight components of PPI are mostly rolling over (lines shown are levels); air (white) is an exception as it has been turning higher, but there is a decisive rolling over in truck (blue) and deep sea (orange)."

4. Truckload index. "Truckload spot rates (net fuel) are at $1.66/mile. The last time it hit this level, was in June 2020 when truckload rates crossed above the 2019 seasonal number and continued their surge to unprecedented levels."

5. Import prices. "US Import prices were down 1% over the last year, the largest YoY decline since September 2020."

6. Recession odds. "We are raising our subjective probability that the US economy will enter a recession in the next 12 months by 10pp to 35%, reflecting increased near-term uncertainty around the economic effects of small bank stress."

7. Jobless claims. "Initial jobless claims declined -20,000 this week, back below 200,000 to 192,000. The 4 week average declined -750 to 196,500. Continuing claims, delayed one week, declined -29,000 to 1.684 million."

8. Wage growth tracker (I). "Median wage growth in Feb was unchanged at 6.1% year-over-year."

9. Wage growth tracker (II). "While the headline measure is steady, there are some signs of moderation. Wage gains for job switchers are trending down."

10. M2 growth. "The sharp decline in M2 growth (-2%) is the most negative M2 growth seen in U.S. in the last 50 years and the first time that such a drop has coincided with a rate hike cycle."

11. Fed funds rate. "Market expectations for the Federal Funds Rate suggest investors now expect the Fed to cut interest rates sharply in 2023H2."

12. High-yield bonds. "HYG put options volume jumped to highest since June 2022."

13. US02Y (I). "The 2-year Treasury yield has moved from 5.05% down to 3.93% over the last 5 trading days, which is the largest 5-day decline in yields (-112 bps) since October 19-26 in 1987 (Black Monday crash was on October 19)."

14. US02Y (II)."The yield on the 2-year treasury has moved 20 bps or more for six straight days.  Longest streak since at least 1977."

15. Bitcoinzzz. "Inflows have done nothing for almost a year now."

16. VIX vs. VXN.  “We are close, but not yet at, a level on the VXN/VIX ratio which signifies truly outsized market worries about the US/global banking system.”

17. Record contract volume. "10-Mar saw the largest SPX contract volume on record and the 2nd-highest for 0DTEs, but 0DTE volume was a smaller portion of total call + put volume than usual as longer-term SPX options saw a greater uptick in turnover."

18. Risk appetite. "The risk appetite indicator is slightly positive."

19. Active managers. "NAAIM Exposure down to 42, same place it was late December."

20. Bulls vs. bears. "Latest AAII sentiment reading shows an even bigger divergence as bearish sentiment hits the crowd."

21. Analysts ratings (I). "Overall, there are 10,966 ratings on stocks in the S&P 500. Of these ratings, 53.5% are Buy ratings, 40.3% are Hold ratings, and 6.2% are Sell ratings." 

22. Analysts ratings (II). "The overall percentage of Buy ratings has declined over the past 13 months from a peak of 57.5% at the end of February 2022 to 53.5% today."

23. Analysts ratings (III). "At the sector level, 10 of the 11 sectors have seen a decline in their percentage of Buy ratings since the February 2022 peak."

24. Lost decade. "There are concerns that a 60/40 portfolio is potentially facing another 'lost decade'."

25. Regime indicator. "The BofA 'US Regime Indicator' is in 'Downturn mode'. The indicator confirmed Downturn in February. Large cap, low risk, cash generative are styles that perform better in this regime…"

26. Equity valuations. "For equities, the valuation picture is improving now that yields are falling, although at 17x forward earnings, the market remains several P/E points ahead of itself."

27. Peak to trough. And finally, “with just over 300 trading sessions since the $SPX peak last year, history suggests we see a bottom in the next 150 sessions. Only 1932 and 2002 saw otherwise. It's also possible we bottomed last October, but with macro risks ahead, our bias towards a new 52-week low remains.”

Thanks for reading!