Daily Chartbook #273

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

1. Vehicle sales. "August US light vehicle sales were up 13.7% YoY on an adjusted basis for a SAAR of 15.0mm, which is above the 12 month moving average."

2. C&I loan demand. "Demand for credit is coming down aggressively, the most since GFC."

3. Recession probability. Goldman Sachs lowered its US recession probability to 15% from 20%.

4. Recession talk. The number of companies citing ‘recession’ during earnings calls fell for the 4th straight month to 62 in Q2, the lowest since Q4 2021.

5. Hike cycle vs. recession. "If the lags between rate hikes and a recession match previous cycles, then we are coming into the range where a recession is most likely."

6. CPI vs. 2%. "Here’s a look at how tough it’s going to be to get back to the Fed’s 2% target rate for inflation anytime soon."

7. Wage growth forecast (I). "We forecast 3.75% wage growth in 2024 on a Q4/Q4 basis—which combined with falling inflation…should keep real wage growth well above 1% through the end of next year."

8. Wage growth forecast (II). "Relative to prior years, we expect that income growth in 2024 will be slightly stronger for lower-income households and slightly weaker for higher-income households than it was in 2023, and much stronger for all households than in 2022."

9. Excess savings. "Consumers are almost out of pandemic savings."

10. Spending plans. "The only categories where consumers are planning to spend more over the next six months are essentials categories - groceries and household supplies."

11. Factory orders. "Factory orders have been going nowhere for the last 12 months. At -2.1% MoM was slightly better than expected (-2.5%). Transportation was a drag: ex Transportation was +0.8% (+0.1% est). X-defense was -2.2%."

12. PMI vs. US10Y. "Falling inflation and the softening in activity is a constraint to a move higher in bond yields."

13. Bear-steepening. "Bear-steepening regimes have generally been ‘risk-on’: equities delivered strong positive returns as higher growth expectations helped them digest the rise in real rates while bonds sold off, especially in the back end."

14. Risk appetite. Goldman's Risk Appetite Indicator is hovering around YTD highs.

15. Sector fund flows. "Inflows to Tech ($5.1bn) accelerated to a three-month high" last week.

16. Retail net purchases. "Retail purchases have slowed recently."

17. Retail participation. "Retail participation is currently at 11.4% of the total market volume, and at 94th%-ile relative to the last 6 years."

18. Equity positioning. Aggregate positioning (58th percentile) ticked up last week. Discretionary positioning (53rd) rebounded back to above neutral while systematic strategies (61st) declined for the second straight week

19. Positioning divergence. There is a clear divergence in US equity futures positioning between asset managers and leveraged funds.

20. CTAs vs. equities. CTA exposure to equities is right around its long-term median.

21. Sector positioning. Tech remains the biggest overweight followed by Staples and Industrials. Utilities is very underweight.

22. HFs vs Banks. Hedge fund aggregate long/short ratio in Banks is in the 28th and 7th percentiles on 1- and 5-year lookbacks, respectively. L/S ratio in Regional Banks is in the 26th and 22nd percentiles on 1- and 5-year lookback, respectively.

23. Capex cycle. "The disparity in capital allocation between technology and resource industries remains historically notable."

24. Operating margins by size. The bigger the company, the bigger the margins.

25. Global NTM EPS. "S&P 500 next 12 month earnings estimates ticked up in August, but MSCI EAFE & MSCI Emerging Markets indices ticked down."

26. PE vs. yields. "US P/Es are high considering the rising levels of real bond yields."

27. VIX seasonality. Current low $VIX levels combined with seasonality suggest a volatility squeeze ahead.

28. SPX vs. Utilities. "The last time [Utilities] lagged this far behind the market, the dot-com bubble was about to burst."

29. SPX vs. equal-weight. “The S&P 500 is outpacing its equal-weighted version by the most since 1998, during the dot com bubble.”

30. Largest company. And finally, “the largest company in the index has historically belonged to the dominant sector at any time...it has also tended to maintain its size...until either regulation (anti-trust) intervenes...or the incumbent company loses out to a more nimble new entrant.”

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