Daily Chartbook #308

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1. Truck Tonnage Index. The ATA Truck Tonnage Index dropped 1.1% in September. "While it is likely a bottom has been hit in truck freight tonnage, there could still be choppy waters ahead as the freight market remains volatile.”

2. S&P Global Flash US PMIs. "The latest flash US PMI data revealed growth in private sector output as the headline Index posted a three-month high of 51.0 (Sep: 50.2). The upturn was supported by quicker expansion across the manufacturing and services sectors."

3. Global PMIs. "The US is now the only region not in contraction."

4. US regional PMIs. The Philadelphia Non-Manufacturing Index declined to -20.3 (worst since April), the Richmond Manufacturing declined to 3, and the Richmond Non-Manufacturing Index dropped to -15.

5. Debt maturities. "Nearly half of the debt in the Russell that is maturing over the next few years is in two sectors; real estate and communication services."

6. Household difficulties. "The Census Household Pulse Survey for October shows a jump in the share of consumers saying they are having difficulties paying their household expenses."

7. Student loan effect. "According to an NY Fed survey, "on average, borrowers that experienced pauses in their payments anticipated cutting consumption by about $56/month in the three months starting in October."

8. Federal deficit. "The government ran a $2.02 trillion deficit for the fiscal year through September...The gap is $1.02 trillion more than the prior year."

9. Federal outlays. "While unsustainable relative to the economy’s long-run potential, government outlays are less out-of-kilter than they had been. This means that Treasury supply over the next couple of quarters may be more digestible than previously thought."

10. Recession probabilities. "Markets have swung by more over the past year from overpricing recession risk relative to economic forecasts a year ago to underpricing recession risk currently."

11. Peak fossil fuels. "The IEA now estimates that global demand for coal, oil, and natural gas will peak this decade before declining in their current policy scenario (STEPS)."

12. BTC dominance. “Bitcoin’s market cap relative to the crypto market cap (dominance ratio) is breaking out,” as is Bitcoin.

13. Inflation expectations vs. term premium. "Whether or not Bill Ackman covered, bond yields still likely have more pushing to the upside to go as inflation expectations lead the way higher."

See:

14. UST liquidity. "Treasury market liquidity is worsening again."

15. UST shorts. "Futures traders have never been so overwhelmingly skewed toward betting on declines in bonds."

16. Exposure plans. Among JPMorgan clients, "52% plan to increase equity exposure and 86% to increase bond duration."

17. Client flows. Last week, BofA "clients were net buyers of US equities ($1.0B) for a 12th straight week. Inflows were in ETFs while single stocks saw their first week of outflows since Aug."

18. Mutual fund flows. "401k / 529 / Target date funds typically top up investor allocations in November looking back at the last ~30 years."

19. Staples insiders. Corporate insiders have been buying Staples aggressively.

20. Safe-haven volatility. "Implied vol of 'safe haven' assets has risen alongside equity vol, but it is still very low compared to US 10y rates vol-despite their usual sensitivity to yields."

21. Cyclicals vs. Defensives (I). Cyclicals have been underperforming Defensives since early June…

22. Cyclicals vs. Defensives (II). …and remain significantly more expensive.

23. Sector bear markets. "The number of S&P 500 sectors with greater than 50% of their stocks in a bear market increased to the highest level since the fall of 2022."

24. US vs. International (I). "Over the past 12 months, since the bear market ended, the average international stock has outperformed the average US stock by a wide margin."

25. US vs. International (II). "The S&P 500 trades at about 18 times the value of its expected earnings over the next 12 months, compared with 12 times for the MSCI all-country excluding US stocks."

26. Fund trends. "Three of the biggest trends in one shot: active to passive, mutual fund to ETF and high cost to low cost. Active equity MFs have seen outflows every year for a decade equaling $2.3T."

27. Seasonality. The median returns for $SPX (since 1928) and $NDX (since 1985) during November are +1.5% and 3.9%, respectively. Each was higher in 10 out of the last 11 Novembers.

28. Net profit margins. $SPX net profit margins are on pace to decline YoY for the 7th consecutive quarter.

29. Q4 EPS estimates. Here's a look ahead at the progression of Q4 EPS estimates.

30. Earnings plateau. And finally, “strip [mega-cap earnings] out and expectations for broad equities are…'muted and overly optimistic’.”

Thanks for reading!