Daily Chartbook #296

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

1. Food prices. "Global food prices steadied at the lowest in more than two years."

2. Global GDP growth. "Macro growth in Q3 was solid and we see this driving earnings growth into clearly positive territory on a yoy basis (4.9%) and, more importantly in our view, the level of earnings up sequentially for a third straight quarter to a new high."

3. Used car prices. "Wholesale used-vehicle prices ... increased 1.0% in September from August. The Manheim Used Vehicle Value Index (MUVVI) rose to 214.3, down 3.9% from a year ago."

4. Paper losses. "Paper losses on the most opaque part of US banks’ bond portfolios are now close to $400bn — an all-time high, and 10 per cent above the peak at the start of the year that caused the collapse of Silicon Valley Bank."

5. Non-farm payrolls. US employers added 336k jobs in September, smashing estimates of 170k for the largest gain in 8 months. July and August also saw upward revisions totaling 119k.

6. Average hourly earnings (I). "Average hourly earnings rose by 0.2% for a year/year rate of 4.2%. Tame wage gains relative to size of payroll gains."

7. Average hourly earnings (II). "Why were wage gains tame despite the jump in hiring? Much of the hiring was in leisure/hospitality where wages tend to be low. Next biggest gains were education and health services along with trade/transportation - middle wage sectors."

8. Unemployment rate. "The US Unemployment Rate was unchanged at 3.8% in September."

9. Consumer credit change. Total consumer credit unexpectedly dropped by $15.6bn in August. Consensus called for a $11.7bn increase. Revolving credit rose by 13.9% YoY while non-revolving credit declined by 9.8%.

10. Gasoline demand. "Gasoline demand is down 5.0 percent over the last 4 weeks versus the same period in 2022, and was 15.3 pct below prior year levels last week."

11. Rig counts. Total and crude oil rig counts each dropped for the 3rd consecutive week. Both are at their lowest since early February 2022.

12. US bond fund flows. "US bonds attracted $2.3bn in inflows."

13. HY bond flows. Outflows from HY bond funds over the past 5 weeks ($7.0bn) were the largest since March.

14. Bank loan fund flows. Leveraged loan funds saw the largest outflow ($0.7bn) since May.

15. Oversold UST. Bonds are oversold. Previously, "oversold sell-offs all coincided/foreshadowed 'events;': Oct’87 crash, May’94 Tequila crisis, Jun’99 internet bubble, Mar’21 crypto pop, Oct'22 Nasdaq pop."

16. End of New Abnormal. "The velocity of the rate backup has been head-spinning, as it took only three years to fully reverse the decline in the bond yield during the 12 years of the New Abnormal."

17. US10Y vs. ISM. "US 10y yields already discount ISM levels of 55-60."

18. Bull & Bear Indicator. BofA's Bull & Bear Indicator fell to a 5-month low (2.6) "on poor equity breadth, outflows from EM/HY bonds/DM stocks."

19. Equity fund flows. "Small weekly inflow [+$1.17bn] to stocks."

20. Consumer fund flows. Consumer funds saw the largest 2-week outflow ($2.1bn) since February 2014.

21. Private client flows. "Private clients buying bonds past 4 weeks vs small equity outflows; buying bank loan, growth, value, selling TIPS, financials, low-vol ETFs past 4 weeks."

22. Cumulative annual flows. "Investors have sold neither stocks nor bonds in 2023...everyone 'bearish' but nobody 'sold'."

23. Assets vs. rising yields, spreads (I). Historically, the USD and commodities are the only places to hide when bond yields and credit spreads are rising.

24. Assets vs. rising yields, spreads (II). Within equities, there is nowhere to hide.

25. Discretionary vs. Staples. "During a perfectly normal time for S&Ps to correct, healthy sector rotation persists."

26. EU vs. US discount. European stocks are trading at the largest discount vs. US stocks in history.

27. EPS visibility vs. credit spreads. "The signals from EPS estimate dispersion (a fundamental volatility signal) are helping credit spreads to not rise substantially despite the negative signals from lending standards."

28. Financials Q3 earnings. Over 40% of S&P 500 companies reporting in the next 2 weeks are Financials. Sector earnings are expected to grow 8.7% YoY, led by Insurance (+64%). If Insurance were excluded, the estimated earnings growth rate would fall to 2.1%.

29. Q3 EPS & sales growth. S&P 500 estimated YoY earnings growth fell to -0.3% from -0.1% last week while estimates for revenue growth improved to 1.7% from 1.6%.’

30. Q3 margins. And finally, relative to the same quarter a year ago, these are the sectors expected to see improved net profit margins in Q3: Tech, Financials, Utilities, Comm. Services, Industrials, and Discretionary.

Have a great weekend!