Daily Chartbook #43

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

1. Oil prices. Bernstein sees Brent prices moving back towards $120 a barrel in 2023.

2. Wages vs. mortgage payments. In the US, "the average worker who buys a house today needs to put in almost 100 hours only to cover his monthly mortgage payment".

3. Cash buyers. The share of homebuyers using cash to avoid high-rate mortgages is increasing

4. Negative home price appreciation ahead? "In the 34 instances in which months of supply increased by more than one month over any six-month period, year-on-year home price appreciation was negative 12 months forward 88% of the time".

5. Ocean freight volume down. "Container freight bound for the US (leaving port of origin) have now dropped below summer 2019 levels. It will take a few months before this shows up in US import numbers, but the outlook is very negative (note: this is supposed to be peak season)".

6. Business trips are back. Travel transactions for small businesses are now at the highest levels since Covid began (left) and prices for airfare and lodging appear to have peaked (right).

7. CPI forecasts (I). From BofA: "We revise up our near-term CPI inflation outlook on the back of the stronger-than-expected August inflation report".

8. CPI forecasts (II). Continued: "Core goods inflation should experience a period of disinflation while we expect services inflation to moderate slowly".

9. Front-loading. Economists are expecting a 75 bps hike next week followed by a 50 bps increase in November.

10. Inflation surprise. "Citi U.S. Inflation Surprise Index continues to plunge, eliminating all gains since January 2021 … for what it’s worth, last time we saw current magnitude of 6-month drop (-41) was end of 2006".

11. Q3 GDP. That Atlanta Fed's GDPNow estimate was slashed to 0.5 from 1.3 a week ago.

12. U of Michigan (I). Consumer sentiment improved to a 5-month high in September but fell short of expectations (59.5 vs. 60 expected). Current conditions and consumer expectations both ticked up but remain depressed.

13. U of Michigan (II). Consumer 1- and 5-year inflation expectations have rolled over.

14. U of Michigan (III). "Uncertainty over short-run inflation reached levels last seen in 1982".

15. U of Michigan (IV). There is still a wide gap between Consumer Sentiment (white) vs. Consumer Confidence (orange).

16. Strong DXY. Visualizing the US dollar's dominance.

17. Triple Witching (I). Today saw "$3.2 trillion notional of options expire in the equity markets".

18. Triple Witching (II). Of that $3.2 trillion, "$509bn of single stock options [expired] today, up 30% since the July lows."

19. NAAIM Exposure Index. Active investment managers increased exposure to 33.9 from 27.3

20. Passive inflows. "Passive equity funds have captured all of the inflows since the Covid pandemic".

21. Household equity ownership. Investors' "allocations to equities are at record levels".

22. Rough year for 60/40. The 60/40 portfolio is on pace for its worst performance in at least 25 years. "With household equity exposure coming into this year at the highest level on record, this probably understates the pain felt by the average investor".

23. Yield levels. "All-in yield levels have not been this high since the pre-financial crisis period".

24. S&P overvalued. "Current S&P 500 valuations are still too high given above-trend earnings and high inflation, according to Deutsche Bank Research".

25. Energy vs. crude. "Divergence has formed between YTD performance of S&P 500 Energy (blue) and Brent crude (orange) … former is +44% while latter is +17%; for considerable portion of this year, both were tracking each other".

26. Earnings headwind. A steady decline in new orders poses a headwind for S&P 500 earnings.

27. Analysts ratings (I). "The percentage of Buy ratings is above the 5-year (month-end) average of 53.6%, while the percentages of Hold and Sell ratings are below their 5-year (month-end) averages of 40.4% and 6.0%".

28. Analysts ratings (II). Analysts are most optimistic about Energy, Information Technology, and Real Estate heading into Q4.

29. Rought waters ahead. And finally, as a reminder, "we are entering what is historically the worst week of the calendar year on average for stocks".

Have a great weekend!