Daily Chartbook #83

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

1. "Peak" season. "Tender rejection rates are on the verge of dropping below 4%, currently at 4.1%. Tender rejections normally increase this time of year due to peak season surges and drivers staying at home for the holidays".

2. Big ease. "Yesterday's US FCI easing was the third-largest on record".

3. Sticky services inflation. BofA expects "CPI inflation to become increasingly driven by services next in 2023".

4. Pivot timeframe. "The median length of time between the peak in inflation and the first rate cut is 22 weeks, according to US hiking cycles going back to 1972".

5. University of Michigan (I). Consumer sentiment declined to 54.7 in November from 59.9. Consumer views on current economic conditions also dropped, as did their expectations.

6. University of Michigan (II). Consumer expectations for 1-year and 5-10-year inflation ticked up to 3.0% (from 2.9%) and 5.1% (from 5.0%), respectively.

7. Inflation expectations matrix. Gauges for 1-year inflation read between 2.5-3.0%.

8. Treasuries purchases pop. "The October CPI number has prompted more buying of Treasuries than did the 9/11 terrorist attacks, or the Greenspan Fed’s surprising inter-meeting rate cut in response to the Long-Term Capital Management meltdown in 1998".

9. Pivot positioning. The drop in yields suggest optimism over a slowdown in interest rate hikes.

10. High-yield bond inflows. “ + took in $2.2b yesterday, biggest combined inflow ever”.

11. Strong inflows. Cumulative inflows into US equities remain strong.

12. Momentum halts (I). This chart shows "just how dramatically growth diverged from momentum and value once the CPI numbers appeared".

13. Momentum halts (II). "Bloomberg's [momentum] 'model' saw readings we have not seen since the vaccine mania day".

14. Rare event. "For only the 18th time since 1928, the percentage of sub-industry groups increasing more than 5% in a single session exceeded 60%".

15. Takeaway = ¯\_(ツ)_/¯. "Previous 1-day rallies in SPX of 5% or more have occurred during wild market environments. Very wide dispersion of returns over the next several days".

16. Hedge fund tech positioning (I). Hedge funds are very short large cap tech and unprofitable/expensive tech.

17. Hedge fund tech positioning (II). "Hedge funds missed yesterday's entire move: according to Goldman PB hedge funds were the most U/W Info Tech stocks vs. the S&P 500 index on record".

18. Wealthy investors (I). "BofA Private Clients: $2.9tn AUM…61.3% stocks, 20% bonds, 11.7% cash; biggest inflow to cash in 8 months".

19. Wealthy investors (II). "BofA private clients leading big charge into bonds".

20. FANG derating. "BofA expects that the derating of Big Tech has just started and is far from over. Sees similarities to Japan '90s, internet '00s, US/EU banks '07, BRICs & resources '11".

21. Crypto crash (I). Bitcoin's descent from its 2021 peak rivals some of the biggest crashes in history.

22. Crypto crash (II). Bitcoin and other asset bubbles since the 1970s.

23. Room to fall? "Based on declining earnings estimates and a fair value of around 14x, it doesn’t look like the stock market is out of the woods yet".

24. Top & bottom line divergence. Forward sales are declining at a faster rate than forward earnings.

25. Trading strategies. Buying the S&P 500 when VIX closes above 30 and selling when it closes below 20 would have been a very profitable trading strategy this year.

26. Q3 GAAP. "With 91% of companies reported, S&P 500 Q3 GAAP earnings are down 8% year-over-year, the 2nd quarter in row of negative YoY growth".

27. Q3 earnings (I). "Companies that have reported positive earnings surprises for Q3 2022 have seen an average price increase of 2.4% two days before the earnings release through two days after the earnings release," much larger than the 5-year average of 0.9% and the largest since Q3 2014.

28. Q3 earnings (II). "Companies that have reported negative earnings surprises for Q3 2022 have seen an average price decrease of -3.5% two days before the earnings release through two days after the earnings release,"which is larger than the 2.2% 5-year average.

29. Q4 EPS outlook. And finally, earnings growth for Q4 is now "seen at -1.7% vs. +3.7% on Sept 30".

Have a great weekend!