Daily Chartbook #45

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

1. Mortgage payments. "Median mortgage payments as % of income higher than during the subprime bubble".

2. New construction. Housing starts saw an unexpected 12.2% jump in August while building permits fell 10% (biggest drop since April 2020) to their lowest level since June 2020.

3. Total starts. Single-family units accounted for 935,000 of 1,575,000 total starts.

4. Record multi-family construction. From Bill McBride: “Currently there are 890 thousand multi-family units under construction. This is the highest level since February 1974!”

5. Hike cheat sheet. Many central banks are lifting rates this week.

6. Global inflation rates. Here's what they are up against.

7. “Fourth wave” of tightening. Goldman’s US Financial Conditions index is hitting fresh highs ahead of the Fed’s interest rate decision tomorrow.

8. Household balance sheets. From Goldman: “Household balance sheets remain strong despite the recent pullback in equity prices, and the household sector has spent less than 10% of excess savings”.

9. Credit card troubles. "Consumers are struggling with longer-term credit-card debt … 60% of debtors say they have been in CC debt for at least a year...up from 50% a year ago … share of those in debt for >2 years has climbed from 32% to 40%".

10. Income relief ahead. Goldman expects real income growth will turn positive for all income groups next year.

11. Q3 GDPNow (I). Atlanta Fed's GDPNow model estimate for Q3 GDP growth moved down to 0.3% from 0.5% on September 15. 

12. Q3 GDPNow (II). "Excluding 0.34% in government spending, Q3 GDP is now negative".

13. Long-duration bonds vs. Nasdaq. With the yield on the 30-year Treasury at its highest since April 2014, here's its correlation with the Nasdaq.

14. Yields: then vs now. The surge in Treasury bond yields this year has been broad based.

15. Foreign outflows. Using a 12-month sum ending July, foreign investors sold the most US equities on record.

16. Cash levels rising. Mutual funds are raising cash at a quick pace.

17. Investor flows. "Investors have piled into lower-risk asset classes (primarily U.S. Treasuries) lately ... over past month, half of all positive fund flows have gone into U.S. government assets, while 30% have gone into equity funds".

18. Bearish gold. Hedge funds and money managers have turned net bearish on gold in September.

19. Bitcoin vs. S&P. "A 60-day correlation coefficient for the digital token and contracts on the US equity benchmark to ~0.72, just shy of a record high set in May".

20. Skew divergence. "Beneath the (broad market) surface, anxiety is building fast about blow-ups in individual names".

21. Stable operating margins. "Market weakness has persisted this year, with S&P 500 (orange) far from its peak, but forward 12m operating profit margin (blue) has stabilized over past couple months".

22. Cheap Euro stocks (I). "Eurozone P/E relative to US has never been this cheap".

23. Cheap Euro stocks (II). Eurozone stocks are also extremely cheap relative to US stocks on a price-to-book basis.

24. Buying the dip. BofA clients were net buyers of US equities during the S&P 500's 4.8% drop last week (2nd consecutive week of net buying).

25. Buybacks slowdown. Corporate buybacks have been below typical seasonal levels over the past few weeks.

26. Buffett Indicator flashing. “Even after the recent fall in markets, the ratio is still one of the highest on record, north of the 2.11 level recorded during the dot-com bubble of 2000, and considerably elevated compared to the average since 1950.”

27. Fed hikes tomorrow. And finally, with the Fed’s interest rate decision due tomorrow at 2 pm EST, probabilities of a 75bps hike are at 84%.