Daily Chartbook #274

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

1. Mortgage demand. "This morning's MBA index dropped -2.9% its 6th drop in the last 7 weeks and the headline and subindices remain at the lowest levels since the early to late '90s."

2. Government debt. "One source of upward pressure on US rates is the $7.6 trillion in US government bonds that will mature over the coming 12 months."

3. Credit management survey. "NACM index and subindices barely held above 50 as most came down.  Filing for bankruptcies came down (deteriorated) 2.1 and stands at 50.2."

4. New businesses. "Business applications remain elevated."

5. IPO drought. "Issuance YTD remains low ($9bn YTD), with dry powder on the sidelines eagerly awaiting a return of deals."

6. Consumer interest expense. "Interest expense as a percent of total wages and salaries has surged to levels that [have] kicked off recession in the past."

7. Employee Motivation & Commitment. An index measuring employee motivation and commitment is at its lowest since June 2022.

8. CPI forecast. "We continue to expect core CPI and especially core services ex. housing inflation to accelerate in the coming months but to slow more quickly next spring."

9. ISM Services PMI. The index jumped unexpectedly in August to 54.5 from 52.7 (vs. 52.5 est). Business activity, new orders, employment, and inventories saw faster increases. Chart shows distance from subindex’s distance from 50.

10. S&P Global Services PMI. The S&P Global's gauge of the services sector, on the other hand, was revised down to 50.5 from 51.

11. Brent forecast. "Goldman expects Brent to hit over $100 as the deficit of supply grows to 3M bpd."

See:

12. Gold ETF flows. "Physically-backed gold ETFs experienced net outflows for the 3rd straight month, losing US$2.5bn in August."

13. USD fair value. "According to the measure of Purchasing Power Parity fair value, the US dollar remains overvalued."

14. USD shorts. "After getting short of USD a year ago, the speculative community has not yet completely revealed that position. Positions won’t prevent further dollar gains."

15. Risk demand. "The Morgan Stanley Global Risk Demand Index is at high level."

16. Investor sentiment. "Pessimism stopped building at an important level (II bull-bear spread > 20). Supports the view that August volatility fueled a healthy reset in sentiment."

See:

17. Investor flows. "Government ETFs have maintained highest % of 1-month ETF inflows while large-cap U.S. Equity ETFs broke a 2-week streak of outflows last week ... high yield saw some interest come back with nearly $2 billion worth of inflows last week."

18. Client flows. Energy and Healthcare saw the largest outflows last week while Industrial flows flipped positive for the first time since early June.

19. Buybacks. "Buybacks accelerated last week."

20. SPX futures positioning. "Large speculators slightly boosted net short S&P futures positions over past week."

21. Asset manager positioning. Asset managers are overweight Tech and underweight Cyclicals.

22. HF rotation. "Hedge funds net sold TMT stocks [in August] and rotated into Defensives led by long buying in Staples."

23. HF trading flows. "After large risk unwinds in July, gross trading activity rebounded in August driven by two-way flows as short sales outpaced long buys."

24. HFs vs. Airlines. "Investors have begun selling travel stocks in anticipation of a possible slowdown and would expect that to continue."

25. HFs vs. Europe. "European Equities saw largest [the] monthly net selling activity in more than 5 years [in August] driven by short selling."

26. US vs. Euro EPS. "5-year realised EPS performance of Europe has moved much closer to US. Chart shows 12m trailing EPS growth (5-year CAGR, USD)."

27. Industrials vs. late-cycle. "Within cyclicals we prefer Industrials, which has a strong track record of late-cycle outperformance."

28. Tech headwinds. "Tech is at significant resistance and entering a period of seasonal weakness."

29. Correlation (I). "One of the key factors behind the decline of S&P volatility YTD has been the stark drop in stock correlation."

30. Correlation (II). And finally, “the S&P is the only major national index where correlation is historically low, suggesting that its drop must be due to US-centric factors.”

Thanks for reading!