Daily Chartbook #216

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

1. Trucking. "June is normally one of the best months of the year in trucking and sets the tone for the rest of the year. Unfortunately, its not providing much of a relief for struggling carriers. Trucking spot rates (net of fuel) are now lower than 2019."

2. Inventory levels. "Companies are sitting on ~$200 billion of excess inventory."

3. Bank lending. "Bank lending standards are tight and lending volumes are down, but the change since the bank failures looks moderate so far."

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4. Consumer inflation expectations. "One-year ahead median inflation expectations continued to decline in the NY Fed survey to their lowest level since May '21."

5. CPI forecast (I). "Our work indicates that YoY inflation is likely to fall to 4.2% in May, 3.2% in June .. this would represent one of the greatest drops experienced in a 2-month period over the past 70 years."

6. CPI forecast (II). "Core CPI to remain elevated according to Morgan Stanley."

7. 10YR TIPS. "Looking at contributions to 10y TIPS breakevens, headline CPI (y/y) and fed funds rate have had greatest impact ... opposite seen in oil prices, which have been reducing market pricing of forward inflation since start of this."

8. Oil prices. "OPEC+ and Saudi officials have made three attempts to goose oil prices since the end of March, and prices are down 11% since then and within 15 cents of a 52-week closing low."

9. Corporate spreads. "BBB corporate bond spreads relative to IG spreads are below 2010–2019 averages. CCC spreads relative to HY are above 2010–2019 averages but trending lower. Bottom line: neither “coal mine canaries” are signaling worries about an imminent recession."

10. Treasury shorts. "Leveraged investors boosted their net-short two-year Treasury positions for an eleventh straight week in the period to June 6...That’s the longest run on record, according to data going back to 2006."

11. Crypto outflows. "Digital asset investment products saw outflows totalling US$88m, bringing this 8-week run of outflows to US$417m."

12. Tech flows. Tech funds saw their first outflows in 8 weeks.

13. ETF flows. "At $147.5 billion, cash inflows to ETFs are running at their slowest pace since 2019, when the market was significantly smaller."

14. Retail flows. "Retail investors bought single-stocks at a +1.3z level in the past week and +1z in the past 4 weeks."

15. Retail options. "Retail has been loading up on calls. Small trader call buying is at levels last seen in April 2022."

16. Call options demand. "Options trading on US exchanges at one point last week showed the biggest bias toward calls in 14 months."

17. Short covering. Last "week saw massive short covering according to GS PB. This doesn't occur at market lows."

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18. Consolidated positioning. "Aggregate equity positioning turned overweight for the first time in over 16 months."

19. Discretionary vs. systematic positioning. "Discretionary positioning moved above neutral."

20. Hedge fund net leverage. "HF net leverage 4 week increase is +1.3z across all strategies and Equity L/S net leverage now at a 12-month high."

21. Insiders. "The Insider Transactions Ratio is back in the bearish zone."

22. Narrow breadth performance. "Prior episodes of sharply narrowing breadth have been followed by a ‘catch-up’ from a broader valuation re-rating. The potential profit boost from AI has expanded the right tail for equities."

23. NYSE breadth. "8 months past market’s October low and % of NYSE members with new 52-week highs still can’t breach double-digit territory."

24. SPX breadth. "It's not just a few names.  175 stocks are doing better than the index since the Oct 2022 lows."

25. Improving breadth. "The trend in net new highs has turned higher for the first time in 3+ months. Improving breadth + expanding optimism = healthy environment for stocks."

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26. ERP. "Equity risk premium at 15-yr low. Performance of equities vs bonds at new highs."

27. Q2 earnings. S&P 500 earnings and revenue are expected to decline by 6.4% and 0.4% YoY in Q2, respectively.

28. Earnings recession. "Morgan Stanley expects the current earnings recession to bottom around -16% in the second half of 2023."

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29. EPS growth. "Recent earnings trends are working in favor of the biggest stocks in the S&P 500. The largest 5 stocks started outpacing growth in 1Q and could overshoot the rest by an average of 2,300 bps for the rest of the year. YoY EPS growth below."

30. SPX price & earnings target. And finally, “Goldman Sachs forecast for S&P 500 EPS is still $224 in 2023, and its S&P 500 price target is 4,500 [previously 4,000] by the end of 2023.”

Thanks for reading!