Daily Chartbook #174

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

1. OPEC+ surprise cut. OPEC+ announced a surprise +1 million-barrel production cut. "The Oil price DROPS on average 1,3 and 6 months after production cuts. Typically a sign of weakness."

2. Oil positioning (I). Oil "positioning has been bearish, which could support further gains."

3. Oil positioning (II). "Not overly surprising...the CTA crowd were caught short into the latest squeeze move in oil. They continue shorting lows, and buying highs, across assets."

4. Credit investor concerns. "Recession remains the #1 investor concern, followed by Inflation and bank stress."

5. Labor demand. "The pace of US hiring in March likely continued to show firm yet moderating labor demand ... Non-farm payrolls are seen climbing by nearly a quarter million after employers added 311,000 jobs in February."

6. Excess savings. "JPM shows how at this rate US excess savings are likely to be totally depleted by June 2023."

7. Construction spending. "February construction spending -0.1% m/m vs. 0% est. & +0.4% in prior month (rev up from -0.1%) … residential spending -0.6% while nonresidential +0.4%; public -0.2%."

8. ISM manufacturing PMI. "Mar ISM Manufacturing came in weaker than expected at 46.3 vs the est of 47.5. Components were weak across the board, with Employment taking a notable step down. Prices Paid (not in chart) also fell from 51.3 to 49.2."

9. ISM vs. revenue. "Here's what the ISM Index tells us about the earnings outlook of the market's favorite segment: Growth. It argues that Revenue Surprises will continue to deteriorate for at least six more months."

10. S&P Global manufacturing PMI. "Global manufacturing conditions worsened as the headline PMI fell to 49.6 in March (Feb: 49.9). Though mild, the downturn stemmed from the decrease in new order intakes, while growth in output and employment moderated."

11. Q1 GDP. "Atlanta Fed's Q1 GDP growth tracking is down to 1.7% vs the 3.5% est less than two weeks ago. Notably weaker momentum as we head into Q1 earnings season."

12. Money markets vs. bank deposits. "Growth in bank deposits & money market funds (rebased to 100 at start)."

13. Ultra short term. "$BIL has seen inflows for seven straight quarters — a record streak."

14. ETF flows. "Equity ETFs took in a measly $27b in Q1, their lowest cash haul since COVID (and despite a solid +7.5% gain for S&P500). Meanwhile Treasury ETFs took in $40b, one of their best quarters ever and have now taken in an absurd $166b in the past 5 quarters."

15. Retail pulls back. "Individuals bought ~$8.9 billion of U.S. equities on a net basis in the 10 trading sessions ended Thursday, down from a peak of $17 billion last month."

16. Deep pessimism. "The Absolute Strategy Research survey of asset allocators for the second quarter...found the deepest pessimism since the survey started in 2015."

17. Equity positioning. "Consolidated equity positioning has fallen sharply."

18. Equity sentiment. "Historically, when the SSI has been as low or lower, subsequent 12m S&P 500 returns were positive 94% of the time (vs. 81% overall) with a median 12m return of +22%."

19. Equity valuations. "The only times, other than today and the Tech bubble, that these 'fundamental' long run valuations were as extended was in 1929."

20. Tech premium. "Tech’s PE has now jumped so much that it now trades at a 38% premium to the S&P. This is even higher than at the pandemic bubble peak in late 2021!"

21. Sector contributions. "Tech is driving a lot of the US equity action."

22. Theme performance. "AI and Meme/YOLO stocks rule in 2023."

23. Duration performance. "Long duration stocks have outperformed YTD despite elevated rates."

24. Earnings growth. "SPX is expected to report a Y/Y earnings decline of -6.6% for Q1 2023, which would be the largest decline since Q2 2020 (-31.8%)."

25. Highs > lows. "Q1 saw the fewest stocks making lower lows and the most stocks making higher highs since Q2 2021."

26. Seasonality. And finally, “April has been the S&P 500's second-strongest month for returns since 1950.”

Thanks for reading!