Daily Chartbook #210

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

1. Global food prices. "The FAO Food Price Index plunges to a 2-year low but, food inflation still remains quite steady. Grocery bills are not declining as fast as expected."

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2. Nonfarm payrolls (I).  The US economy added 339,000 jobs in May, the most since January and well above estimates of 190,000. March and April figures were also revised up.

3. Nonfarm payrolls (II). Payrolls were higher than market expectations for the 14th consecutive month. 

4. Household survey. "While the Establishment survey was a blowout beat and the strongest print since January, the Household survey unexpectedly tumbled by the most since April 22 as it plunged by 310K jobs."

5. Unemployment rate. "US Unemployment Rate moved up to 3.7% in May from the 54-year low of 3.4% in April."

6. Participation rate. "Still a major bright spot: prime-age labor force participation rate rose again in May; now at highest since January 2007."

7. Average hourly earnings (I). "On month/month basis, average hourly earnings increased by +0.3% in May, down from +0.4% in prior month (rev down from +0.5%)."

8. Average hourly earnings (II). "Average hourly earnings ticked down on a year/year basis despite the stronger than expected gain in jobs."

9. Average hourly earnings (III). "Average weekly hours dropped again. Ex pandemic in 2020, it's near a ten-year low."

10. Vehicle sales. "The BEA estimates sales of 15.05 million SAAR in May 2023 (Seasonally Adjusted Annual Rate), down 6.5% from the April sales rate, and up 19.6% from May 2022."

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11. NBER indicators. "Here's the update of the monthly indicators that the NBER analyzes in figuring out if the economy is in a recession."

12. Treasury bulls. "As Fed's hawkishness fades, investors are positioning on the long part of the yield curve. The $TMF (Direxion Daily 20-Year Treasury Bull 3X), a tripled leverage ETF which gains as long-term yields drop, has more than doubled in size since the beginning of the year."

13. Credit AI. "AI also 'at work' in credit.  While not as spectacular as in the equity market, the AI theme has also performed well in credit."

14. Retail army. "Retail investors finally jumped into the market."

15. Equity fund flows. "US equity funds and ETFs saw strong weekly inflows."

16. Tech fund flows (I). "Record inflows into tech are being driven by a frenzy surrounding artificial intelligence."

17. Tech fund flows (II). Monthly inflow to tech funds in May was the biggest since February 2021.

18. Hedge fund flows. "Gross trading activity increased for a fourth straight month, driven by long buys outpacing short sales ~1.7 to 1."

19. Buyback authorizations. Despite announcements being down 15% YoY, "US buy backs are still going to be a decent source of liquidity."

20. Sell-side indicator. "Today’s SSI yields an expected +16% price return over the next 12 months, which would put the S&P 500 at 4600 by year-end and ~4900 in 12 months."

21. Skew index. "The SKEW Index,  a measure of potential tail risk or blackswan events in financial markets derived from out-of-the-money options, has spiked to extreme levels. The last time we saw a level this high was at the start of 2022."

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22. EPS changes (I). "During the months of April and May, analysts lowered EPS estimates for the second quarter by a smaller margin than average."

23. EPS changes (II). "Analysts lowered Q223 EPS estimates for $SPX companies in 9 of 11 sectors in April and May, led the Energy (-12.1%) sector."

24. Bad breadth (I). "Concentrated gains in stocks are consistent with the idea that the market is pricing recession. The S&P 500 equal-weighted index underperformed by over 1,000 bps in the last 12 weeks, a performance shortfall that has only happened in and around US recessions since 1990."

25. Bad breadth (II). "May marked second-widest performance spread between 50 largest names in S&P 500 and broader index itself … 3.56% was slightly less than 3.59% seen in March, which was widest going back to at least late-2005 (data limited)."

26. Tech vs. ex-tech valuations. "Almost 40% of the market has PE of 27x, while 60% of the market has PE of 16x."

27. Nasdaq streak. "The Nasdaq Composite [notched] its 6th consecutive week of gains, the longest weekly winning streak since **January 2020**."

28. SPX vs. Fed pause. "A Fed pause is not necessarily positive for equities if the Yield Curve is inverted."

29. SPX vs. Fed. And finally, “the S&P500 is exactly flat since the Fed started to hike rates.”

Have a great weekend!