Daily Chartbook #47

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

1. Strategic Petroleum Reserves. "For the first time since 1983, US commercial crude storage is now higher than SPR".

2. US gasoline demand is subdued. "Falling prices at the pump fail to pump up demand".

3. Luxury home sales have plunged. Sales of luxury homes have fallen over 28% YoY, the largest drop on record.

4. Qualifying income requirements. The qualifying income to get a mortgage has skyrocketed.

5. Worsening affordability. “Payments on a median-priced US home require 36% of household income, the biggest chunk since 1985”.

6. TSA throughput. Traveling remains strong as "throughput this year at healthy levels vs. past few years, with recent number even surpassing 2019 level".

7. Federal funds rate forecast. Goldman is expecting hikes of 75bps in November, 50bps in December, and 25bps in February.

8. Tightness. Financial conditions relative to their 5-year average are at Great Financial Crisis levels.

9. History doesn’t bode well for 2% inflation. "In the modern era (dating back to 1980 so as not to include the stagflation of the 1970s), once advanced economies have allowed inflation to exceed 5%, it has invariably taken years to bring it down all the way to 2%".

10. Labor market still tight (I). "This week initial claims rose 5,000 to 213,000 from a revised 3 month low of 208,000, while the 4 week average declined another -6,000 to a new 3 month low of 216,750. Continuing claims, which lag somewhat, declined 22,000 to 1,379,000".

11. Labor market still tight (II). Initial jobless claims by region.

12. LEI declines. The Conference Board Leading Index (LEI) declined 0.3% in August and is down 1% YoY.

13. Kansas Fed. The Kansas Fed Composite Index fell to 1 from 3 last month for the lowest reading since July 2020 as "prices paid moved up, production increased, new orders continued to contract, shipments were flat, and delivery times sank".

14. Risk on/off. According to Goldman Sachs, risk remains mostly off.

15. Midterm years. Will the S&P 500 see a midterm bounce as it did in previous years?

16. Hedge fund shorts. Hedge fund net shorting is much less extreme than it was earlier in the year.

17. Rich cash levels. Wealthy investors' cash levels are still near record lows.

18. Fund managers’ cash levels. For global fund managers, on the other hand, cash as a % of AUM is at the "highest levels seen since 2001".

19. Active managers’ exposure. The NAAIM Exposure Index ticked down to 29.6 from 33.9 a week ago.

20. AAII bears. AAII bears jumped to the highest levels since March 2009 this week, which "joins just 4 others in 35 years with more than 60% of respondents being despondent in the AAII survey".

21. Retail army ditches single stocks. Retail traders "only bought $460MM in cash equities this past week, -1.4 standard deviations below 12M average. They bought $1.7B of ETFs and sold -$1.2B of single stocks".

22. Retail army performance. "Estimated performance of retail investors since Jan-2020".

23. Earnings breadth & recessions. Here's the "weekly breadth of earnings estimate revisions for the 24 industry groups in the S&P 500. Two-thirds are seeing negative earnings revisions. During recessionary bear markets, all of them do, so for now the weakness is consistent with a soft landing".

24. Discretionary pain. "Consumer discretionary stocks are having their worst YTD performance in 30 yrs".

25. Optimistic take. From Stifel: "it is only if the Fed becomes incrementally more hawkish .. that we see 10Y TIPS yield rising further, thus we believe the P/E is bottoming. We see lower inflation, the 10Y TIPS yield pulling back and 4,400 for S&P 500 by 4Q-2022/1Q-2023".

26. Bull market intact. And finally, the secular bull market “that began in 2009 remains intact....for now”.