Daily Chartbook #270

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

1. Pending home sales. Sales rose unexpectedly in July, surging 0.9% MoM vs. -1% expected. Year-over-year sales are still down 13.8%.

2. Real estate investors. "Investor home purchases fell 45% from a year earlier in the second quarter...That’s the biggest decline since 2008 with the exception of the quarter before, when they dropped 48%."

3. Rent growth (I). "Our national rent index decreased 0.1 percent in August, flipping negative one month earlier than it did last year."

4. Rent growth (II). "Annual rent growth turned negative last month, for the first time since the beginning of the pandemic."

5. Household interest payments. "Dividing households’ interest payments with households’ interest income shows that debt servicing costs as a share of interest income are at the highest level since 1959."

6. ADP employment change (I). The private sector added 177k jobs in July (prev. 371k), below expectations of 195k and the lowest since March.

7. ADP employment change (II). Breakdown by industry.

8. Wage growth. "Job stayers saw a year-over-year pay increase of 5.9%, the slowest pace of gains since Oct 2021. For job changers, pay growth slowed to 9.5%," the slowest since July 2021.

9. Q2 revisions (I). "2Q23 GDP (blue) revised down from +2.4% (q/q ann.) to +2.1% … consumption (orange) revised up from +1.6% to +1.7% … core PCE Price Index (white) revised down from +3.8% to +3.7%."

10. Q2 revisions (II). "Downward revisions to nonresidential fixed investment and inventory investment were primarily responsible" for the revisions to GDP growth.

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11. GDP vs. GDI. "The difference between GDP and GDI is the biggest in US history."

12. Corporate profits. "US corporate profits are on the rise again following four straight quarters of declines…After-tax profits for nonfinancial firms rose 4.5% in the second quarter."

13. Interest cover. This chart "shows interest cover at the bottom 50% of S&P 1500 companies and the smallest quoted companies (as listed in the Russell 2000 index) falling sharply from low levels."

14. Labor talk. "During Russell 3000 company earnings calls, discussions on labor shortages and job cuts are both moderating. However, mentions of job cuts remain comparatively higher."

15. US petroleum inventories. "US commercial petroleum inventories fell by 8 million barrels last week, which is the largest draw in 4 weeks and the 6th largest draw of the year."

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16. CTAs vs. gold. "Gold CTA positioning is-$30bn ... ~record short... Buying from CTAs in a up-big scenario is $60bn to buy ... near the largest ever."

17. USD seasonality. "Dollar bulls have history on their side going into next month—the currency has strengthened in September for six years in a row."

18. Basis trade (I). "A surge in short sales of US Treasury futures suggests hedge funds are expanding basis trades, a popular strategy that may be injecting leverage into the bond market."

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19. Basis trade (II). "The last time we had so many basis trades on was never: in sept 2019 when the basis trade went LTCM and the Fed restarted QE, aggregate positioning was 80% of where it is now."

20. Retail options. "Retail call option buying slowed in August."

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21. HF positioning.  SocGen's hedge fund positioning indicator (which measures equities, rates, Fx, and commodities) is at its highest (risk-on) since the summer of 2018.

22. CTAs vs. US equities. "Our model currently estimates CTAs to be long $21B in US equities (70th%-ile on a 3y lookback)."

23. China inflows. "China’s largest exchange-traded fund focused on stocks is poised to see its biggest monthly inflow on record."

24. World breadth. "The consolidation in global equity markets has not caused any lasting damage to market breadth."

25. Global ERPs. "The equity risk premium has fallen globally."

26. Global valuations. "US valuation at the top of the range."

27. Factor performance. "The top two performing equity factors year-to-date are Quality and Low Volatility. These two factors tend to be late cycle pals."

28. Risk appetite. "Equities have historically done well for a few more months from current [risk appetite] levels."

29. SPX seasonality. "The third quarter of pre-election years has tended to be weak, but the fourth quarter, still ahead of us, has done well."

30. Contrarian call. And finally, “consensus is now warning that equity markets could be soft in September. But we .. expect the exact opposite .. We see S&P 500 gaining 2%-3% in September, pushing back to July highs of >4,600.”

Thanks for reading!