Daily Chartbook #188

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

1. Chicago Fed National Activity Index. "US economic activity was below trend in March...but recession risk remains low. In fact, the 3mo avg continued to edge higher to +0.07, far above the -0.7 mark that signals recession."

2. GDP forecast. "Technical recession is now forecasted for Q3-Q4."

3. Dallas Fed manufacturing. "Analysts expected a rebound from -15.7 to -11.0 but instead the headline index plunged to -23.4 (just shy of post-COVID-lockdown lows)...That is the 12th straight month of 'contraction' in the survey."

4. Consumer spending & stress. "Low end consumer still outperforming 3 years after the lockdowns; self-reported financial stresses stabilizing and possibly easing."

5. Delinquency rates. "Credit card delinquency rates for folks in their 30s not far from the GFC high."

6. Consumer cash. "Cash on consumer balance sheets has started falling, but so far only gradually."

7. Disposable income. "Real income growth has accelerated to a +7.7% annualized growth pace over the last three months."

8. Excess savings. "Households continue to rapidly draw down excess savings."

9. Global VC. "Venture funding hit a 6-year low in Q1."

10. CTAs vs. gold. "CTAs have loaded up on gold, but the most recent decline leaves it vulnerable for a bigger sell by the trend followers. The 'flip' is around 1950 according to BofA."

11. Dollar drivers. "Many explicitly state that they are bearish because the yield path as priced is too high. Interestingly, the second most popular response is that banking sector stresses will largely be confined to the US, which further implies that the Fed will be forced to be more dovish than global peers."

12. 1- vs. 3-month Treasuries. "Yield spread between 1-month and 3-month Treasuries is at a never seen before level."

See:

13. Volatility. "Equity and currency volatility have eased with VIX (blue) near lowest in a couple years and JPM Global FX Volatility Index (orange) at lowest in a year … meanwhile, bond volatility (MOVE Index, white) is off peak but still above where it was at start of year."

14. Hedge funds vs. US10Y. "Leveraged investors boosted their net shorts on 10-year Treasury futures to a record 1.29 million contracts as of April 18."

15. Hedge funds vs. stocks. "Hedge funds remain unconvinced by Wall Street's recovery from the March banking shock and have instead amassed their biggest bet in over a decade that the S&P 500 will fall…most bearish since 2011."

16. Hedge fund short flows. "US hedge fund short flow is still not showing a clear 'capitulation' signal."

17. Put/call ratio. "Smart money is betting big on the downside...This recently happened twice: 1. Before the 2022 bear market; 2. During the Aug 2022 rally...Both times the market declined rapidly."

18. Retail buying. "Individuals bought a net $77.7 billion in equities and ETFs on U.S. exchanges" in Q1…"That sum trails only the first quarters of 2021 and 2022, when they bought about $80 billion."

19. Corporate insiders. "More than 1,000 officers and directors at more than 600 companies bought their own stock in March. That is the highest number on an individual and company basis since last May."

20. Sentiment indicator. Goldman's positioning/sentiment indicator remains in negative (light positioning) territory.

21. Systematic strategies. "Reduced market volatility has been increasing systematic strategies’ positioning."

22. Tech downside. "Cost of contracts protecting against 10% decline in QQQ is now 1.7 times more than cost of options that profit from 10% rally, most since April 22."

23. Zombies. "Zombie companies started 2023 with a strong push higher but have since lagged S&P 500 ... dwindling expectations for Fed rate cuts (especially back to 0%) have dented performance."

24. Cheap energy. "Energy’s discount to the S&P 500 is close to the largest of the last 30 years."

25. SPX breadth. "Only 4% of S&P 500 members have made new 52-week high (orange) … worth watching given % started to tick up meaningfully after new bull markets in 2002 and 2009 were turning ~6 months old."

26. Profit margins. "The (blended) net profit margin for the S&P 500 for Q1 2023 is 11.2%, which is below the previous quarter’s net profit margin, below the year-ago net profit margin, and below the 5-year average net profit margin (11.4%)."

27. Operating margins. "S&P 500’s forward 12m operating margin (blue) has both fallen to lowest since April 2021 and remained in downtrend, while index’s price (orange) has continued to move up since October."

28. Earnings decline. And finally, “true [market] bottoms are followed by an earnings rebound ~2-4 months post-bottom. Across cap sizes - Mega (SP100), Mid (SP400) and Small (SP600) - there have been no signs of an earnings bottom yet.”

Thanks for reading!