Daily Chartbook #34

Welcome back to Daily Chartbook: macro market charts, data, and insights pulled from various sources around the Internet by a solo retail investor.

As a reminder: Daily Chartbook will not be published on Monday, September 5.

1. Construction spending. Slowing demand for housing is reflected in a second consecutive contraction in construction spending (the last time that happened was April-May 2020).

2. Selective price declines ahead. From Goldman: "We are expecting price declines in 39% of U.S. metros in 2023, mostly in the West region".

3. Slowing market. The average home is selling below its list price for the first time since March 2021.

4. Buying conditions. "Consumers rate buying conditions for all major purchases (homes, household durables, and motor vehicles) at-or-near all-time lows."

5. Q3 GDP. AtlantaFed's GPDNow has increased its estimate for Q3 GDP growth to 2.6% from 1.6%.

6. Category effect on core PCE. Here’s how Goldman thinks supply-chain-constrained categories will impact YoY core PCE inflation.

7. Delivery times & prices paid. ISM delivery times and prices paid have dropped considerably which bodes well for lower core PCE numbers.

8. Factory orders surprise down. Factory orders missed expectations for small growth by declining -1% in July. It was the biggest drop since April 2020.

9. Nonfarm payrolls (I). Nonfarm payrolls increased 315k (vs. 298k expected) in August for the “softest monthly gain since April 2021”.

10. Nonfarm payrolls (II). Monthly change in payroll by sector.

11. Unemployment ticks up. "After hitting a 53-year low in July (3.5%), the US Unemployment Rate moved up 0.2% to 3.7% in August, its largest move higher since April 2020."

12. Prime age participation is rebounding. “Fed must be pleased with jump in prime age labor force participation rate.”

13. Average hourly earnings. Wages increased 0.3% (vs. 0.4% expected) in August to 5.2% YoY.

14. Household Survey. The more volatile household survey “rose to 442k in August, strongest gain since March”.

15. Establishment vs. Household surveys. The spread between the two surveys has turned negative for the first time since March.

16. “What do you do?” A record number of workers are holding multiple full-time jobs.

17. Powell talk on FCI. We've seen the second biggest tightening in financial conditions since the pandemic following Powell's speech a week ago.

18. FCI on S&P. This chart shows the relationship between financial conditions (red) and the S&P (blue, inverted).

19. Manufacturing on S&P. “This chart shows the correlation between the ISM Manufacturing Index [orange] and the S&P 500 index [purple] year-over-year percent change, since 2011.”

20. Global bond bear market. "The Bloomberg Global Aggregate Total Return Index of government and investment-grade corporate bonds has fallen more than 20% from its 2021 peak on an unhedged basis, the biggest drawdown since its inception in 1990".

21. S&P & Bitcoin. The rolling 120-day correlation between the S&P 500 (blue) and Bitcoin (orange) is near all-time highs.

22. Sentiment plunge. Nomura's sentiment indicator collapsed this week and "suggests negative excess returns going forward."

23. Sector flows. 3- and 12-month sector ETF flows.

24. Cash is trash? This year has seen the largest money-market outflows since 2010.

25. EPS estimates (I). "During the months of July and August, analysts lowered EPS estimates for the third quarter by a larger margin than average".

26. EPS estimates (II). Changes in EPS estimates for Q3 between July and August by sector.

27. EPS estimates (III). Changes in EPS estimates for CY 2022 between July and August by sector.

28. Growth cheap. On a forward price-to-earnings basis, growth stocks are undervalued.

29. Energy (very) cheap. And finally, according to JPMorgan, energy stocks are trading at their cheapest levels ever (on a forward price-to-earnings basis).

Have a great long weekend and happy Labor Day!