Daily Chartbook #164

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

1. Oil demand. "We have lowered our 2023 and 2024 demand estimates for the US and Europe. We incorporate softer realized oil demand data, reduced US GDP growth forecasts (given tighter small bank lending standards), and our refined OECD demand model estimates."

2. Oil oversupply. "Brent’s nearest timespread — a measure of how well supplied the market is — declined by the most since January on Friday, almost flipping into a bearish contango structure that indicates oversupply."

3. Tight conditions (I). "Regional banks are impacted by higher funding costs, deposit risks, regulatory pressures, and asset declines, including future credit losses from the lagged effects of Fed hikes, and these forces combined are likely to result in tighter credit conditions."

4. Tight conditions (II). "Bloomberg's Financial Conditions Index went from loose (green) to the tightest since Mar 2020. Gives the Fed an excuse to pause if it wants to."

5. Small banks. "Banks with less than $250bn in assets account for roughly 50% of US commercial and industrial lending, 60% of residential real estate lending, 80% of commercial real estate lending, and 45% of consumer lending."

6. Q1 GDP. "We boosted our Q1 GDP tracking estimate to +2.5% (qoq ar)."

7. Fed uncertainty. "1y1y vol, which represents uncertainty around Fed policy, exceeded the ’08 crisis levels and reached 203bp."

8. Global bonds rally. "The value of all bonds has increased $2.1tn since the banking stress erupted 10 days ago."

9. Bond spreads. "US Corporate bond spreads have risen quickly since March 1st. While they are near levels that signaled tradeable lows in stocks last year, let’s wait for them to stabilize before sounding the 'all clear'."

10. Gold rally. "Gold tops $2,000/oz for 1st time since March 2022."

11. CTA vs. gold. "CTAs massively boosted exposure to gold.".

12. Money markets (I). "Flows into money market funds have accelerated."

13. Money markets (II). "Since the Fed began to raise interest rates a year ago, the amount of money in money market funds has increased by roughly $400bn, and the inflows increased by more than $100bn last week."

14. Options volume record. "258 million options were traded [last] week, the most in history".

15. CTA vs. equities. "Projected flows via Goldman's flow guru Scott Rubner for the next week ranges from $33bn in an up tape to $84bn in a down tape."

16. Sentiment indicator. "GS sentiment indicator is on its way to ‘must buy’ territory."

17. Exposure plans. Percentage of respondents planning to increase equity exposure and decrease bond duration, respectively. 

18. Hedge funds vs. megacaps. "Hedge fund nets in mega-cap tech are increasing but still not extreme."

19. FANG vs. the field. Megacap tech has decisively outperformed the S&P 500 since December.

20. Large vs. small caps. "Large caps nearing 52wk highs vs small caps."

21. Cyclicals vs. defensives. "Cyclicals gave back several months of outperformance very quickly."

22. Cyclicals. "Cyclicals are pricing real GDP growth of roughly 1.5% after sell-off."

23. Strong balance sheets. "Strong balance sheet stocks have sharply outperformed" in 2023.

24. Factor performance. “The best signals are ALWAYS underneath the market’s hood - the rotation taking place, over the last year and 6 weeks, has been to quality. For investors, balance sheet quality has mattered more than income statement quality for some time.”

25. SPX breadth. Today’s "breadth [was] exceptionally strong under the surface."

26. Global breadth. “After a valiant attempt at getting back to bull, global equities have failed from intermediate overhead resistance, the breadth rebound has failed, and now a major support line looks to be in the process of getting taken out.”

27. Volatility. "A look at S&P 500 price action since 1960 shows US equity markets have become more much volatile over the last +6 decades. Good returns are still possible (e.g., 2010s), but at the cost of larger price swings."

28. Q1 earnings. And finally, “$SPX is expected to report a Y/Y earnings decline of -6.1% for Q1 2023, which would be the largest decline since Q2 2020 (-31.8%)."

Thanks for reading!