Daily Chartbook #179

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

1. Global freight. "Container spot rates from China to the US West Coast have dropped to the lowest point in the history of the Freightos - Baltic Index (2016)...Rates are down 94% YoY."

2. Global GDP. The International Monetary Fund (IMF) "cut 2023 world GDP growth outlook to 2.8% from 2.9% in Jan as financial risks raise pressure. That compares w/3.4% expansion in 2022. IMF sees global #inflation rate at 7% this year, 0.4ppt higher than Jan projection, though down from 8.7% in 2022."

3. Q1 GDP. The Atlanta Fed's "GDPNow model estimate for US real GDP growth is 2.2% for 2023:Q1."

4. CRE vs. GDP. "With commercial real estate construction being roughly 75% the size of residential investment...the bursting CRE bubble could be a drag on GDP growth of around 0.75% over the coming three years."

5. CRE loan ownership. "Over half of the CRE loans outstanding is owned by banks."

6. Financial stress. "Rising financial stress tends to precede further tightening of credit conditions and then a ultimately recession. We're seeing financial stress on the rise to levels that are similar to the LTCM collapse and Dot Com bubble bust."

7. Corner office outlook. "US CEO business confidence has ticked up lately."

8. Small biz (I). "March NFIB Small Business Optimism Index (blue) fell to 90.1 vs. 89.8 est. & 90.9 in prior month … outlook (orange) unchanged at -47 … hiring plans, expectations for higher sales, easing of credit conditions, and compensation plans all deteriorated."

9. Small biz (II). "Inflation remains largest issue for small businesses per [NFIB], but share saying it is single most important problem has fallen markedly from peak."

10. Small biz (III). "March saw biggest tightening in US Small Business Credit Availability since 2002 (joint 2nd biggest on record). NFIB confirms credit tightening happening as a result of bank failures. 1st clear sign for Fed to digest. Hard to see this as temporary at this stage of cycle $USD."

11. Small biz (IV). Responses to the question “'a good time to expand' equaled a 43-year low, the same as March 2009 (Great Recession). Only 1980 was worse.”

12. Price plans vs. CPI. Small businesses’ "price plans print at 26, which is consistent with core/median inflation at 3.5% in 6 months from now."

See:

13. Fed vs. market. "The blue line the what the Fed is communicating. The orange line is what the market is pricing in. The two have VERY different outlooks."

14. Oil longs. "Net-long positions in Brent crude jumped by more than 73K contracts in the week to April 4. The only other time a bigger net-inflow occurred was in 2016."

See:

15. Bitcoin at $30k. "Highest levels since last June, but still 30% from a 52-week high and less than half its all-time high from right before Powell retired transitory."

16. Money supply. “Collapsing money supply alarms economists. US M2 growth plunges to -2.4% YoY in Feb, lowest in history, in a warning of recession & deflation.”

17. Liquidity. "S&P 500 bid-ask spreads are tightening (aka liquidity is improving)."

18. Deep inversion. "The gap between US 3-month & 10-year yields is now the most inverted since the early 1980s. This often indicates recession."

19. Corporate spreads. "US corporate bond spreads (IG: 1.46 pts over Treasuries, HY: 4.84 over) remain well below every period since the late 1990s where recession fears or outright economic contraction affected pricing in this market. There's little concern here about future earnings/cash flows."

20. Bond flows. "Bank of America private clients are piling into bonds over the last 9 months, a risk-off rotation."

21. Investor flows. "Fixed income ETFs have taken in a lot of capital over past week (high yield the biggest winner, with government right behind) ... flows into government bond ETFs made up >60% of all inflows in past month."

22. Hedge funds vs. SPX. Yesterday we noted hedge funds' highest net short positions vs. SPX since 2011…"Not so fast. Relative to open interest, it is actually the largest hedge fund short position since right before the top of the market in 2007."

23. Hedge funds vs. tech. Exposure to tech is rolling over.

24. Leveraged funds. "Net short positioning in S&P 500 futures is at the highest level since **August 2022** among leveraged funds."

25. Shorts vs. market cap. "Investors added shorts street wide on the order of $27-30bn at the single-name level and $6-9bn at the index level. Single-name shorts as a % of market cap now sits above average at 1.4% (75th %ile vs the last 3Y) vs ETF shorts that remain around median levels at 1.5% (59th %ile vs the last 3Y)."

26. Insider buying. "Some believe that when insider buying abates from a peak, that’s ‘bearish.’ BUT heavy insider buying typically pays off over 1-3 years. So when buying abates is often when the party is just getting started."

27. SPX valuation. "The forward 12-month P/E ratio for the S&P 500 is 18.0. This P/E ratio is below the 5-year average (18.5) but above the 10-year average (17.3)."

28. Company guidance. "Guidance Index from [Bianco Research] shows net positive reading but also a deceleration from recent high ... key to watch given earnings season is upon us."

29. EPS estimates (I). "Even with macro concerns about recession and bank lending, analysts still see the S&P 500 posting record profits by Q3 ($56.79/share versus that $56.64/share in Q2 2022) as well as Q4 ($58.37/share) and Q1 2024 ($57.45/share)."

30. EPS estimates (II). And finally, “Deutsche Bank is more upbeat on Q1 earnings than the consensus estimates.”

Thanks for reading!