Daily Chartbook #281

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

1. Home prices. "The median U.S. home sale price rose 3% year over year to $420,846 in August, the largest annual increase since October 2022."

2. Active listings. "Total number of homes for sales hit a record low in August, falling 1.1% month over month on a seasonally adjusted basis and 20.8% year over year—the largest annual decline since June 2021."

3. Cold feet. "Nearly 60,000 home-purchase agreements were canceled in August, equal to 15.7% of homes that went under contract that month. That’s up from 14.3% a year earlier and marks the highest percentage since October 2022."

4. Empire State Manufacturing. The index topped expectations for a modest improvement and flipped back into positive territory. The 6-month ahead outlook increased to the highest level since March 2022.

5. Industrial & Manufacturing production. Industrial production increased 0.4% MoM in August (vs. +0.1% est) to +0.2% YoY. Manufacturing production rose by 0.1% MoM (in line) to -0.6% YoY (6th consecutive of negative YoY).

6. Survey of consumers. Consumer sentiment fell more than expected, to 67.7 (vs. 69.1 est) from 69.5. Current conditions dropped sharply while expectations ticked up. Consumer expectations for both year-ahead and 5-10 year inflation declined, with the former reaching its lowest since early 2021.

7. Student loan payments. "US student loan payments soar. Even though they are not obligatory before October borrowers are paying at a rate of $9bn a month."

8. New businesses vs. bankruptcies. "Business applications remain high (34k, vs. 25k average in 2019) and commercial bankruptcies remain low (2.3k, vs. 3.3k on average in 2019)."

9. WARN notices. Goldman estimates the layoff rate based on August and September WARN notices is around its pre-pandemic level of 1.2%.

10. Lending standards. "A net 51% of US Banks are now tightening their lending standards, the highest since 2020 and at levels that have coincided with recessionary periods in the past."

11. Recession vs. leading indicators. "Nearly all leading indicators suggest the US should have already entered recession. In fact, it should have entered one long ago back in September-October last year."

12. Macro divergences. "Leading indicators suggest countries are at a very different stage of their respective cycle."

13. Minerals vs. net zero. "To make enough progress to reach net zero emissions by 2050, production of lithium, copper, nickel, and aluminum will need to increase sixfold from 2022 production levels."

14. Commodity market flows. "Cumulative global commodity market inflows remain record strong through 2023 YTD at $236 billion."

15. USD sentiment. "Barclays’ US dollar sentiment indicator is increasingly bullish."

16. UST flows. Treasuries have experienced their "longest inflow streak (31 weeks) since 2010, also on track for record year with $144bn inflows YTD."

17. Saudi Arabia vs. UST. "The Saudis are no longer plowing petrodollars into US Treasuries."

18. Equity-bond correlation. The "equity-bond correlation moved further into positive territory [over the past month], as the market started to see, once again, good (macro) news as bad (monetary policy) news."

19. State Street confidence. "US Equity institutional investors are no longer underweight as soft-landing expectations rise."

20. YTD flows. "Where investors have put their cash this year (hint: not stocks)."

21. Equity fund flows. Equity funds saw their "biggest weekly inflow ($25.3bn) since Mar'22, as confidence in soft landing consensus grows."

22. Private client flows. "Private clients buying Japan, growth & value, bank loan & muni ETFs past 4 weeks, selling TIPS, financials, low vol, gold ETFs."

23. Retail buying. Retail net buying has slowed, especially in AI stocks.

24. Discretionary positioning vs. data. Discretionary investor positioning "is above levels implied by the ISM but in line with data surprises and hard data like growth in manufacturing production, retail sales, and earnings revisions."

25. Sector rotation. "Sector rotation shows Tech and Consumer Discretionary getting weaker. Energy and Financials now leading. And defensive sectors like Utilities and Staples improving."

See:

26. Sector ratings. The percentage of buy- (54.4%) and hold-rated (40%) stocks are above their 5-year averages while the percentage of sell-rated stocks (5.6%) is below its 5-year average.

27. Regional short flows. "Globally, short flows are elevated in the market which could push the squeeze in small caps due to a FED pause, hence a Size factor underperformance."

28. Equal-weight valuation. "It’s nearly impossible to be bullish on the market capitalization weighted S&P 500 on valuation .. But excluding the largest seven companies, or based on the equal weighted S&P 500, PE ratios are roughly at historical average."

29. Q3 earnings. Deutsche Bank expects S&P 500 earnings will reach new highs in Q3, rising 5.3% quarter-to-quarter.

30. Performance vs. earnings. And finally, “stocks that missed their Q2 EPS estimates have sold off (not surprising). More interestingly, though, investors have sold the stocks that BEAT Q2 estimates (e.g. $NVDA). Begs the question: What's priced into the market?”

Have a great weekend!