Daily Chartbook #64

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

1. Utility bills are going up. "US natural gas bills will increase for all regions this winter".

2. Strategic Petroleum Reserves. "The SPR has been drawing at a fast pace this year, currently at levels not seen since the 1980s".

3. Good news is bad news. "Econ Surprise going in the ‘wrong’ direction".

4. Empire State manufacturing. In the New York area, business conditions declined for the third straight month (orange), falling to -9.1 (vs. -4 expected). They are not expected to improve over the next 6 months (blue). Stocks soared.

5. Volatile inflation. “US core inflation volatility is the highest since the 1980s”.

6. Less loans for wealthy. "The rich are cutting back on borrowing".

7. Strong consumer (I). From CEO Brian Moynihan: "First, consumers continue to spend at strong levels. Second, customer average deposit levels for September 2022 remain at multiples of the pre-pandemic levels. You can see that in the lower right. Third, there's plenty of capacity for borrowing".

8. Strong consumer (II). Average FICO scores for consumer credit cards (770), auto loans (789), new mortgages (768), and home equity lines (792) are very strong.

9. Distribution of US equity ownership. The "top 1% of Americans (by wealth) own 53.1% of all stocks in United States; top 10% own almost 89% and bottom 50% own less than 1%".

10. Light positioning. "Stock positioning across retail, institutional, and foreign investors" remains in light territory.

11. Retail investor flows (I). Retail trading has been declining since Q1 2021.

12. Retail investor flows (II). Rolling 20-day retail investor net flows into single stocks have undercut their March 2020 lows.

13. Record relative put buying (again). "Last week, retail traders bought $19.9 billion worth of puts to open. They bought only $6.5 billion in calls to open. This is the first time in history that puts were 3x calls".

14. Massive Treasury ETF flows. "Treasury ETFs have now taken in $111b YTD, which is double the old ann record. They now account for 26% of all ETF flows despite making up 5% of the assets".

15. Streaking 10Y yields. "10-year yields have risen for 11 consecutive weeks, the longest such streak since at least 1978".

16. Hedge fund shorts (I). Hedge funds are net short tech stocks.

17. Hedge fund shorts (II). They are also still heavy sellers of energy stocks.

18. Energy market cap share rising. "S&P 500 Energy sector’s market cap is now 5.1% of S&P 500’s market cap … still low relative to history but an impressive advance relative to its 1.8 share in November 2020".

19. Small cap underperformance. Small-caps are having their worst YTD performance of the century, by far.

20. Low forward P/E. "The forward 12-month P/E ratio for SPX of 15.5 is below the 5-year average (18.5) and below the 10-year average (17.1)".

21. Higher provisions, lower earnings. "SPX banks are reporting $6.0 billion in provisions for loan losses for Q3 2022 compared to -$4.9 billion in Q3 2021".

22. Comparing drawdowns. "Looking at equity drawdown in dollar terms (yes, % is different) … total U.S. equity exchange market cap has erased nearly $15 trillion from peak; worse than GFC in dollar terms, but max % drawdown is less severe (-27% today vs. -58% by March 2009)".

23. Room to fall (I). In the last century, on average, "the benchmark has slid about 38% over a period of 15 to 16 months before reaching a bottom".

24. Room to fall (II). Having fallen 5% from their peak in April/June, 2023 earnings estimates would need to drop another 8% "to come down to the S&P’s current run rate of $220/share".

25. Pre-season cuts. "The pre-season cut to Q3 estimates (-7%) is one of the largest outside the pandemic shock".

26. EPS vs USD. "We estimate that the pure sales translation impact of a stronger USD (not accounting for imports and hedging) is roughly a 3.3% headwind to Q3 EPS y/y growth".

27. Extreme short-term options. "More than 40% of SPX option volume in Q3 has had less than 24 hours to maturity".

28. So you're saying there's a chance... And finally, "there are 15 instances since 1930 where the S&P 500 saw double-digit gains in Q4".

Thanks for reading!