Daily Chartbook #264

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

1. Affordability. Monthly mortgage payment for new homebuyers "based on the median existing home price and the average 30Y fixed-rate mortgage, assuming a 20% down payment."

2. Effective mortgage rates. "Wondering how US households are coping with 23y high in mortgage rates... well they really are not... yet! Only homebuyers are."

3. Existing home sales (I). "Sales tumbled more than expected (down 2.2% MoM), leaving sales down 16.6% YoY. On a SAAR basis, that is the slowest pace of sales for July since 2010."

4. Existing home sales (II). The median sales price rose 1.9% YoY to $407k for the first annual increase since January.

5. Truck tonnage. “Headwinds for freight remained in July, pushing the truck tonnage index lower...Compared with July 2022, the SA index fell 3%, which was the fifth straight year-over-year decrease."

6. Downside risks. "The list of downside risks to the global economy keeps growing."

7. Job-switchers. "'Reservation wage,' which measures average lowest wage someone is willing to accept for a new job, rose in July to another all-time high of $78,645."

8. Redbook. Redbook retail sales jumped 2.9% YoY in the week ending Aug 19.

9. Philly Services (I). The index "fell in August to -13.1 vs. +1.4 in prior month … new orders, sales, workweek, and business activity all rolled over and are in contraction; full- and part-time employment also fell, with latter falling into contraction."

10. Philly Services (II). "Prices paid rose to 46.2, the highest since February. This mirrors what we saw in the Philly Fed manufacturing survey released last week."

11. Richmond Fed Manufacturing. The index improved, "overshooting an expected decline from -9 to -10. Came in at -7."

12. Equity issuance. "Despite the improvement in macroeconomic conditions, the issuance of US equity and equity-linked securities has been relatively weak this year."

13. Copper-to-gold vs. US10Y. "The gap between Treasury yields and the copper-to-gold ratio continues to widen."

14. Stocks vs. yields (I). "Over 45% of the MSCI World market cap prefers bond yields to be going down, not up."

15. Stocks vs. yields (II). "In 2023, US stocks that prefer declining bond yields have been outperforming (quintiles based on US bond correlation)."

16. Stocks vs. yields (III). Rising real rates (blue, inverted) pose a headwind to equity valuations. 

17. MMF vs. SPX. "Total ICI money market fund assets (blue) continue to soar, but important to keep in mind that amount is still muted relative to size of stock market (orange)."

18. Sentiment indicators. "Sentiment right in the middle between where it was 1 month ago (more bullish) and where it was 3 months ago (more bearish)."

19. Margin debt (I). "The rise in margin debt in June and July can be seen as a bullish signal for US equities, indicating increased optimism and risk appetite among investors."

20. Margin debt (II). "Margin debt [as a % of S&P 500 market cap] is at lowest level since 2007."

21. HF exposure. "Funds covered shorts and lifted net exposures in June and July, but these dynamics have reversed in recent weeks...data show hedge funds carrying extremely elevated gross leverage, albeit below recent record highs, and net length in the middle of the range of recent years."

22. HF rotation. Hedge funds "continued their shift toward cyclical industries from defensives, entering 3Q tilted more toward cyclical than they have been since 2014."

23. Client flows. Last week, BofA "clients were net buyers of equities ($4.4B) for a third straight week" for the biggest inflows since June. Stocks in Healthcare and TME led flows with the former seeing the largest inflow in data history. 

24. Investor flows. "Sudden shift in investor flows last week, with nearly $7 billion pulled from U.S. equity ETFs ... on one-month basis, government bond ETFs now hold top spot for inflows."

25. SPX breadth. "Not only have new lows exceeded new highs over the past two weeks, but the rising trendline in net new highs has been broken. Moreover, the July peak in net new highs failed to exceed the February peak."

See:

26. Alternative energy. While Energy stocks have outperformed recently, "the rout in alternative energy shares has accelerated."

27. AI potential. "At the stock level, there is a wide distribution of potential AI-driven earnings gains."

28. Profit margin outlook. "A model from Oxford Economics suggests that profit margins will decline from here...pressuring earnings."

29. EPS projections. "For S&P500 EPS projections for 2023 to be realized, we note earnings growth would need to accelerate from here."

30. Earnings revisions. And finally, “if building a case that August equity mkt weakness is likely to be limited in degree & duration, then you probably like what you see from the earnings revision trend (which is still up and to the right).”

Thanks for reading!