Daily Chartbook #223

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

1. Existing home sales. Sales of existing homes rose 0.2% in May (from -3.2% in April) for the first increase since February and just the second since January 2022. YoY sales are down 23%.

2. Median sales price. "The median selling price declined 3.1% from a year earlier, the most since 2011, to $396,100. That’s still historically elevated for the month and reflective of limited supply."

3. Mortgage payments. "The monthly mortgage payment for a new average loan size has doubled to almost $3,000 since the beginning of last year...As households continue to run down their excess savings, these higher mortgage payments will eventually begin to have a negative impact on the housing market and the consumer."

4. Excess savings. JPMorgan estimates household excess savings will run out before the end of the year.

5. Liquid assets. "Rich people and the upper middle class are still sitting on a huge pile of cash."

6. Consumer tailwinds/headwinds. "B of A’s chart work on the US consumer 'shows big tailwinds in May, June, July with the incremental tailwind being the lap of peak gas prices.'...Turning into headwinds in 2H, with “student loan obligations in green below."

7. Economic conditions. "The Chicago Fed Survey of Economic Conditions (CFSEC) Activity Index decreased to –51 in June from –27 in May, suggesting that economic growth was well below trend."

8. National activity. "The Chicago Fed National Activity Index (CFNAI) decreased to –0.15 in May from +0.14 in April, suggesting economic growth declined."

9. Jobless claims. "Claims were unchanged at a revised 264,000 last week, the highest level in over 18 months. The more important 4 week average rose 8,500 to 255,750. Continuing claims, with a one week delay, fell 13,000 to 1.759 million."

10. CB Leading Economic Index. "The US LEI continued to fall in May as a result of deterioration in the gauges of consumer expectations for business conditions, ISM New Orders Index, a negative yield spread, and worsening credit conditions."

11. Kansas City manufacturing. "June Kansas city fed manufacturing disappointed dropping 11pts to -12 (7pts worse than consensus), the lowest level in 3 years."

12. US petroleum inventories. "US total commercial petroleum inventories rose by 1.3 MMbbl last week, while crude stocks specifically fell by 3.8 MMbbl."

See:

13. Strategic Petroleum Reserves. "Despite ongoing chatter about 'refilling' the SPR, the Biden admin drained crude for the 12th straight week (-1.719mm barrels)."

14. BTC vs. altcoins. "Only 4% of altcoins have outperformed BTC over the past month. Traders continue to prefer bitcoin during this rally, which is unusual for risk-on phases."

15. Treasury shorts. "The combined net speculative short position in 2 year, 5 year and 10 year Treasuries has come slightly off its highs, but remains extreme."

16. Risk vs. Defensive sentiment. "In the past 3 sessions, the tone of the market has been more Defensive with risky factors underperforming the market."

17. Bullish clients (I). Last week, BofA "clients bought ETFs across all styles (Blend/Growth/Value) and in large caps but were sellers of SMID cap ETFs."

18. Bullish clients (II). ETFs saw the biggest inflows followed by communication services and consumer discretionary.

19. Retail army. Retail traders "bought $1.5 billion of single stocks in the week ending Tuesday, an all-time high...Flows including exchange-traded funds and individual stocks topped $4.4 billion."

20. Active managers. The NAAIM Exposure Index ticked up to 83.6 from 81.6 last week.

21. Hedge fund rotation. "HFs have net sold US equities in 9 of the past 10 trading sessions...As of Monday, North America underweight vs MSCI AC World index fell to-5.1%, the lowest allocation on our records. On the other hand, the overweight in Europe reached +3.1%, highest on our records."

22. Homebuilders and semis. "Home builders and semiconductors both hitting new highs. This doesn’t happen in bear markets. These industries also are usually among the earliest signals of an emerging economic recovery from recession."

23. SPX valuations. "Since the start of the year, P/Es have jumped from 16.7x to 18.7x [but]...the median stock is trading at just 17.0x, only modestly above its historical average of 16.2x."

24. Sector valuations. "Each sector and subgroup tends to trade at a specific premium/discount to the market over time. Currently, all sectors trade at a discount to this relationship except Technology."

25. SPX vs. EPS revisions. "Earnings revisions turning positive — meaning more earnings forecasts were being revised higher than lower — tends to follow a stock market that has already bottomed out."

26. EPS revisions. "FY estimates for AI stocks have seen strong upward revisions YTD, while the outlook for Tech ex-AI has weakened…YTD returns, however, seem to have run ahead of expectations, with Tech ex-AI up by ~30%, despite negative EPS revisions."

27. Tech EPS. "Reverse engineering this year's rally in Tech indicates to us that the market expects the global Tech sector to deliver c.20% relative earnings growth over the next year."

28. EPS forecast. Societe Generale's top-down EPS model suggests S&P 500 EPS will drop to 196 by the end of 2023 (vs. prev target of 212).

29. Multiples extremes. "We think the current episode will likely resemble 2020 more than 2000, because multiples have not risen to the extremes that were seen during the dot-com bubble and leadership is concentrated in profitable businesses, rather than speculative ones."

30. First half vs. second half. And finally, “when the S&P 500 is up between 10-15% YTD as of the end of June, the rest of the year has been higher 12 out of 12 times and up a median of nearly 11%. Avg yr final 6 mos up median of 5.0%. It is currently up 13.8% YTD.”

Thanks for reading!