Daily Chartbook #250

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

1. Heavy truck sales. "Heavy truck sales were at 582 thousand SAAR in July, up from 538 thousand in June, and up 18% from 491 thousand SAAR in July 2022."

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2. Container throughput. "Global trade recession looks to be over…"

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3. Supply chain vs. inflation. "Changes in the supply index lead core goods inflation by 4 months. This implies additional goods deflation ahead."

4. Real imports. "Imports are falling, and this normally only happens when the economy is in a recession...The weakness in the goods sector is offset by continued strength in the less interest rate-sensitive service sector, which makes up 80% of GDP."

5. Tax receipts. "US state and local governments just experienced the worst decline in income tax revenues ever recorded. This was the second steepest year-over-year percentage decline in history, with only the GFC having a worse outcome."

6. Interest payments. "US interest expenses have surged by about 50% in the past year, to nearly $1 trillion on an annualized basis." 

7. GDP outlook. "We revise our outlook for the US economy in favor of a soft landing, where growth falls below trend in 2024, but remains positive throughout our forecast horizon. We forecast US GDP growth of 2.0% (4Q/4Q) this year, 0.7% in 2024, and 1.8% in 2025."

8. Financial Conditions Index (I). The NFCI "ticked down to –0.34 in the week ending July 28, suggesting financial conditions loosened again."

9. Financial Conditions Index (II). "Financial conditions are back to the same levels (loose) as they were in April 2022. And lo and behold so is the S&P 500."

10. ADP employment change (I). "US firms added 324k jobs in July, a notable upside surprise from the est of 190k...second-largest jobs added number in over a year."

11. ADP employment change (II). "The strongest job growth was seen small businesses with 1-49 employees and mid-sized companies with 50-249 employees."

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12. Wage growth. "Job stayers saw a year-over-year pay increase of 6.2 percent, the slowest pace of gains since November 2021. For job changers, pay growth slowed to 10.2 percent."

13. Commodity market open interest. "The estimated value of global commodity market open interest reached a record high YTD of $1.31 trillion."

14. US petroleum inventories (I). "American commercial crude stockpiles plunged last week by 17 million barrels -- the **largest weekly drop** in data going back more than 40 years."

15. US petroleum inventories (II). US commercial petroleum inventory levels.

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16. Credit spreads vs. VIX. "High-yield credit spreads and equity volatility tend to move closely together for good fundamental reasons...A pop in equity volatility would therefore likely coincide with a widening in credit spreads – and that could be abrupt given the worsening backdrop in credit markets."

17. Treasury shorts. "The bond market seems to be betting on the higher-for-longer narrative given speculators’ record short position in the 2-year note."

18. Stocks vs. bonds. "Bonds haven't been this correlated with stocks since 1996."

19. Investor Intelligence sentiment. "II bulls just shy of Nov 2021 peak. Bull-bear spread at highest since Aug 2021."

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20. Cycle phases. "According to Goldman, the S&P 500 is currently in the optimism phase, which began in October 2022 and could precede a period of relatively low returns in a wide trading range."

21. HF trading flows. Hedge funds unwound risk in Consumer Discretionary and pressed shorts in Staples, while sentiment in Financials appears to have bottomed out in July.

22. HFs vs. regions. "Hedge funds remain U/W North America and O/W Europe at near-record levels vs. MSCI World ACWI."

23. Euro discount. "The valuation gap between US and Europe is now more extreme than ever (33% on 12m fwd PE), even adjusting for sector differences (18%)."

24. Cyclicals vs. Defensives (I). "Cyclical equities are pricing an optimistic US economic growth outlook."

25. Cyclicals vs. Defensives (II). "When equities have reflected a sharp upgrade to the economic growth outlook, less than 1% incremental upside remained for cyclicals during the next 12 months in the median experience."

26. Stocks vs. last hike. "US, European and EM stock markets typically begin to rise at a faster rate after the Federal Reserve has finished hiking rates."

27. SPX vs. economic surprise. "Recently, equities have declined alongside firm economic data."

28. Earnings revisions. "Our Earnings Revision Ratio is at 1.04x on a 3-mo. basis, the highest level since Feb 2022."

29. Semis drop. Every stock on the Philadelphia Semiconductor Index fell today (except IPG Photonics).

30. Highs > lows. And finally, “after 18 days in a row of new highs > new lows and 21 days without a 1% swing in the S&P 500, the market's extended run of quiet strength ended today.”

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