Daily Chartbook #184

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

1. Housing starts & building permits. "Housing starts & building permits fell by 0.8% & 8.8% m/m, respectively, in March. The mid-month financial stability concerns & subsequent decline in mortgage rates muddy the picture though, as they pull in different directions."

2. Under construction. "There are 1.674 million units under construction, just 37 thousand below the all-time record of 1.711 million set in October 2022."

See:

3. Agricultural commodities vs. food prices. "Agricultural commodities just had another significant move [yesterday], which indicates that food prices are poised to rise considerably from their current levels."

4. Credit event. "Fund managers see commercial real estate as the most likely source for a systemic credit event."

5. Easing cycle. Less than half of FMS investors see rate cuts this year. 

6. Consumer spending. "[Bank of America] says consumer spending was still strong, up 9% YoY in Q1 23."

See:

7. Q1 GDP. "We increased our Q1 GDP tracking estimate by 0.1pp to +2.2% (qoq ar), reflecting stronger-than-expected consumption data."

8. Credit spreads. "Credit spreads aren't pricing a recession. At the moment current spreads sit 30% below median mild recession levels."

9. Credit preference. "Investors prefer being long IG vs. HY."

See:

10. Gold overvalued. FMS investors see gold as overvalued.

See:

11. FINRA customers. "March margin debt rose $21B while cash balances fell $14B... sign of retail investors chasing the rally."

12. Foreign demand. "There is NO shortage of demand for US assets. In fact, foreign demand for US assets other than Treasury debt is on record to be the strongest since before the 2008 recession. Foreign demand for Treasuries is down compared to 10 years ago, but that post-GFC period is an outlier."

13. Bond allocation. "Credit crunch fear drives up bond allocation to a net 10% overweight in April — the highest since March 2009."

14. Stocks vs. bonds. "Investor allocation to equities relative to bonds has dropped to its lowest level since 2009."

15. Cash > equities. "Big institutions remain overweight cash and underweight stocks."

16. Cash levels. "Cash levels remained at 5.5% in April and have remained above 5.0% for 17 consecutive months, eclipsed only by the 32-month dot-com bear market."

17. Defensive stance. More than half of respondents to JPMorgan’s investor survey see defensives as the best way to position in equities.

18. Investor positioning. "April rotation into US, consumer, bonds, and out of EU, materials, UK."

19. FMS equity allocation. "A net 34% of global investors say they underweight US equities, down from 44% last month."

20. Dumb money. "Dumb money confidence is reaching the danger zone again."

21. FMS sentiment. "Sentiment turned more bearish in April to the most pessimistic so far in 2023, which is 'contrarian supportive for risk assets,' according to Michael Hartnett."

22. Exposure plans. "Only 26% of JPM clients are considering increasing equity exposure".

23. Tech insiders. "Tech insiders are using this rally to offload their holdings. XLK insider buy/sell ratio has been on a rapid decline."

24. Corporate client buybacks. "Strong buyback activity to start 2Q."

25. Global breadth. "Priced in local currencies, 79% of ACWI markets are above their 50-day averages. This challenges the narrative that global equity strength is just a function of US dollar weakness."

See:

26. US breadth. "% of stocks with 50-day averages above their 200-day averages continues to retreat - that is not a sign of healthy or improving participation."

27. Resilient revenue. "While margins have come under pressure, double-digit profit sales growth has more than compensated for that...revenues are still rising at a rate near 10% in the US, excluding energy."

28. Rare buy signal. “The Coppock Curve—a long-term momentum indicator—recently gave a buy signal for the first time since 2009.”

29. Major lows. And finally, “the S&P 500 has gone 6 mos without a new 52-wk low after a bear market. Only twice did it do this and go on to make new lows, in 1946 and 2001. The other 11 saw gains, some saw big gains. In other words, new lows from here would be quite rare.”

Thanks for reading!