Daily Chartbook #284

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

1. NIMBY. "Nearly 80% of respondents to a recent Redfin survey support policies that promote homebuilding. But just one-third of them would feel positive about a large new apartment complex built near their home."

2. Landlord purchases. "Landlords with 1,000 properties or more accounted for 0.4% of U.S. home purchases during the second quarter, down from a peak of 2.4% in late 2021."

3. Used car prices. "Wholesale used-vehicle prices increased 1.5% from August in the first 15 days of September...[the Index] was down 3.5% from the full month of September 2022."

4. Truck tonnage. "American Trucking Associations’ advanced seasonally adjusted (SA) For-Hire Truck Tonnage Index increased 0.2% in August after rising 1.1% in July."

5. Ocean freight. "Ocean Carriers Are rejecting ocean bookings at record levels…Ocean vessel capacity hasn't fallen either which leads me to believe the ocean carriers are trying to reduce 'capacity' to drive rates up!"

6. Global debt. "In a higher-rate environment, the global debt stock rose by $10 trillion to a new record high of $307 trillion in H1 2023."

7. Credit spreads. "Credit spreads are not pricing in a recession."

8. Bankruptcy filings. Bankruptcy filings have been on the rise since the Fed began raising rates.

9. Financial conditions. "Confidence is back where it was in the spring of 2022, before the Fed’s hiking campaign even started."

10. Payroll growth vs. soft landing. Payroll growth is decelerating more rapidly than during previous soft landings.

11. Policy drag. "Goldman Sachs suggests that the policy drag on economic growth is mostly behind us."

See:

12. Bonds vs. GDP. "Bond yields imply the highest economic growth rate in the last 20 years!"

13. Financial conditions vs. US10Y. "Bond yields this year have likely risen due to the market’s improved perception of economic growth potential. Bond yields rose last year because of inflation and expected rate hikes."

14. UST yields vs. recession. "10Y UST yields are tracking their pattern around pre 1990 US recessions US 10Y Bond yields are tracking per 1990s average and if they continue to follow this path there seems to be limited room for yields to rise meaningfully."

15. Fed funds rate vs. US10Y. "Steeply inverted yield curves tend to mean that a rate cut is coming, which would again suggest that this is a good time to buy bonds."

16. SPX vs. US10Y. "Spread between S&P 500’s dividend yield and 10y U.S. Treasury yield back to where it was in October 2007."

17. Hawkish skip. New (white) vs. old (blue) dot plot. Twelve officials see one more hike this year while seven are ready to pause. The mediant dot for 2024 is now 5.125%, up from 4.625%.

18. US2Y. Yields on 2-year Treasuries hit their highest since mid-2006.

19. US petroleum inventories. "US commercial petroleum inventories *rose* 3 million barrels last week, but notably the build was driven entirely by 'other oils'."

See:

20. Brent forecast. "We have nudged up our 12-month ahead Brent forecast from $93/bbl to $100/bbl as we now expect modestly sharper inventory draws."

21. OPEC put. "The cuts in October 2022, April and June of 2023, and the September extension of the extra Saudi cut suggest that the OPEC put currently sits at $80 to $90/bbl."

22. Equity sentiment. "After weak seasonality, upbeat economic surprises, and better Earnings, the Market could become Risk On."

23. Equity volatility. "Current US equity market volatility remains well below its long run average. This always happens during bull markets. Importantly, volatility is not so low that a sharp shift back to a bear market is likely."

24. Short interest. "Short interest in financials declined over the past 30 days."

25. HFs vs. Energy. "One trend that has emerged in Sep has been the buying of Energy, an area where net [exposure] sat at multi-year lows entering the month."

26. HFs vs. Consumer Cyclicals. Hedge funds have been shorting Consumer Cyclicals in September.

27. Value vs. Growth. The 6-month change in 10-year yields suggests Value outperformance over Growth ahead.

28. Small-cap earnings. "S&P 600 small-cap stocks continue to exhibit weak earnings relative to the S&P 500."

29. Microcaps. "The Russell microcap index (the bottom 1000 of the Russell 2000) is down 2.5% YTD and is only 5% above its cycle low. The Fed’s tightening campaign is having a predictable effect on most equities, except for the big growers, which are dancing to their own tune."

30. Earnings estimates. And finally, “current estimates suggest that corporate earnings will grow 12% in 2024 and 13% in 2025. For an economy in late cycle, that seems ambitious.”

Thanks for reading!