Daily Chartbook #211

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

1. Global freight. "Global Container Freight Rates (cost of 40′ Containers) are lower today than they were in February 2020."

2. Excess savings. "Households still have plenty of excess savings left...That is the reason why consumer spending remains so strong, in particular consumer spending on services such as airlines, hotels, restaurants, etc."

3. Fed vs. unemployment, CPI. "The Fed has never started cutting rates with CPI above 3% and UE below 5%."

4. Surprise. "Since the FOMC's most recent meeting, the economic data have come in stronger than expected, driving the Bloomberg U.S. Economic Surprise Index to a 17-month high."

5. ISM Services PMI. "ISM services declined 1.6 to 50.3, just barely remaining in expansionary territory.  New orders dropped 3.2 to 52.9, prices dropped 3.4 to 56.2 and employment dropped into contractionary territory again dropping 1.6 to 49.2."

6. S&P Global US Services PMI. "The S&P Global US Services PMI for May tells a different story as this index posts its 'strongest upturn in business activity for over a year as demand conditions improve'."

7. Services prices vs. wages. "The fall in [ISM] prices paid .. is consistent with a steep drop in wage growth .. Wages are by far the biggest expense for services firms, and the Fed has made it clear they want to see slower wage gains bear down on core PCE services inflation ex-rent."

8. Factory orders. "April factory orders +0.4% m/m vs. +0.8% est. & 0.6% in prior month (rev down from 0.9%); core orders -0.2% vs. -1.0% prior (rev down from -0.7%) … in year/year terms, growth in headline orders +0.2%."

9. Saudi production cuts. "Saudi Arabia will cut its oil output to 9m b/d in July. Excluding the Covid-19 pandemic, it would a level unseen in more than a decade, and similar to the 2005-2008 period."

10. Junk bond inflows. Junk bond ETF "$HYG posted its biggest weekly inflow since November 2020 last week."

11. CTAs vs. bonds. "CTAs overall allocation to bonds was in the 25th percentile last week."

12. CTAs vs. equities (I). "CTAs overall allocation to equities was in the 43th percentile last week."

13. CTAs vs. equities (II). "From a Z-score longer term perspective, CTAs are not that extreme record long US equities."

14. Hedge funds vs. equities. "Net exposure has moved from 45% to 50% over the past few months."

15. Hedge funds vs. energy (I). "The HF energy long continues to be taken down. This was the largest sell in the sector over the past 10 weeks."

16. Hedge funds vs. energy (II). "In the two weeks through May 26, Energy was the 2nd most sold sector (following industrials) + last week, HFs added more shorts in Integrateds than any other week since March ’20."

17. Consolidated positioning. "Deutsche Bank’s consolidated equity positioning indicator is near neutral levels."

18. Small cap positioning. Asset manager and leverage fund positioning in small cap futures is creeping up to the neutral zone.

19. Sentiment indicator. "For the first time in forever (it felt like) the GS 'Positioning & Sentiment' indicator makes a spike into positive."

20. Euphoriameter. "When this composite indicator of investor sentiment falls like this and then turns up, at least over the past 2 decades where the data was available it has been a positive medium-term signal."

See: ,

21. Put/call ratio. "Euphoria is the dominant emotion in the market. Put/Call ratio is now at the same level that marked the 2022 market top. With most investors long, max pain is to the downside."

22. Bullish options. Investors are boosting bullish options strategies across equities.

23. Call option volume. "Last week, options volume was the 6th highest on record with an average of 47 million contracts traded per day."

24. Tech call options. "The crowd has loaded up on calls in hot tech, almost reaching the post pandemic bonanza.”

25. Tech equity flows. The buzz around AI is fueling record inflows into tech funds.

26. Tech chasing. "According to GS Prime, the recent streak of net buying in Tech stocks is the largest over any 4-week period since Feb ‘21 and ranks in the 99th percentile vs. the past 10 years."

See:

27. Nasdaq 100 breadth. "NASDAQ 100 has gained for 6 straight weeks but, as of Friday’s close, only 5% of member have made new 52w high; participation still unimpressive compared to start of prior bull markets."

28. Small-cap breadth. "Breadth among US small-caps is improving."

29. Narrow leadership. "Narrow leadership often creates its own reality and ends up dragging the rest of the market along with it. That may happen this time too. I looked at all the times the S&P 500 had been driven by as narrow leadership as we have today. As the chart below shows, it’s not an uncommon occurrence."

30. EPS forecasts. And finally, “while leading indicators continue to decline, S&P 500 earnings estimates are rising again, suggesting that the worst is behind us.”

Thanks for reading!