Daily Chartbook #93

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

1. Contango is back. Consumers are paying a premium on longer-dated oil contracts relative to near-term ones.

2. Home prices (I). The Case-Shiller 20-city composite index fell 1.24% MoM in September (+10.43% YoY), the third straight monthly decline.

3. Home prices (II). "The 3-month decline of -2.2% is the largest since 2009. When the last housing bubble peaked in Feb 2007, prices fell 26% nationally. The same decline today would only bring home prices back to Sep 2020 levels".

4. Inversion: global edition. "Global yield curve inverts for the first time since 2000".

5. Broad easing. "The nominal GS US Financial Conditions Index eased by 18.6bp to 99.90 over the last week, reflecting higher equity prices, a lower 10-year Treasury yield, lower BBB credit spreads, and a slightly weaker dollar".

6. Fed talk vs. trader action. "While Fed members say again and again they're not going to cut rates next year, traders are still pricing in more than two rate cuts by the end of 2023".

7. FOMC voters. "The distribution of 2022 FOMC voters skews hawkish".

8. Worst hiking cycle. "This is worst Fed hiking cycle for equities: 11 prior hiking cycles, 9 saw equities up (8%-29%), 1 saw them down modestly (-2% in 1994) & 1 saw them down significantly (-13% in 1973). Current hiking cycle has equities down peak-to-trough -25% & peak-to-current -16%".

9. Recession probabilities. "Market-implied US recession probability by indicator".

10. 2023 outlook. "Stagflation is consensus among professional investors and retailers".

11. Conference Board (I). Consumer confidence fell to a 4-month low, dipping “to 100.2 in November from 102.2 in October...For many consumers, a recession seems inevitable”.

12. Conference Board (II). "Tiny uptick in Jobs Hard to Get".

13. Corporate spreads indicator. "US corporate bond spreads are back to mid-August levels. Like the VIX, this says markets have grown overly complacent/confident about future cash flows/earnings".

14. Liquidity vs. S&P. "Lemme sum this up for you: Don't fight the Fed".

15. Credit ETF exodus. "$3 billion pulled from -- biggest outflow ever".

16. Put/call ratio. "Spikes in equity put/call ratio sent 20-day average to highest since COVID bear market last week … current average consistent with prior stress points in 2011 and GFC (also higher than what we saw during tech bust)".

17. Sentiment progressions. "A touch more bullish than both 1 month and 3 months ago".

18. Investor flows. "Still solid inflows for U.S. equity funds, with broad & large-/mid-cap recently commanding ~30% ... corporate bonds also of interest given share is climbing towards 25%".

19. Weekly flows. "Last week, during which the S&P 500 was +1.5%, clients were net buyers of US equities ($1.7B) for the third straight week".

20. Comparing rallies. "Current rally (top pane) has seen Dow (blue) and S&P 500 (orange) outperforming NASDAQ (purple) and Russell 2000 (white), which is opposite of what we saw in June-August rally (bottom pane)".

21. Realized volatility. "The major difference we're seeing in this rally is the persistence of higher realized volatility. During the Q3 summer rally, we saw the market rise as single stock rVol was falling. This time, we're seeing the opposite as single stock rVol remains elevated".

22. Directional risk signal. "Selloff signal triggered... After signaling a near-term selloff in mid-Aug and a tactical rally in Oct, the directional risk signal has turned sharply negative the last week, suggesting that the risk/reward is to the downside into year-end".

23. P/S ratio. "S&P 500’s price/sales ratio has come down significantly from peak … orange circles highlight where ratio was at major market lows in 2020, 2018, 2009, and 2002".

24. Value vs. Growth. "US Value has been outperforming Growth for two years".

25. Buybacks. "We remain in a strong buyback open window, but December is supposed to be a marginally slower buyback month compared to November".

26. 2023 EPS revisions. Current earnings revisions "are down to the equivalent of 93.6 now or down 6.7% which aligns with the ex-COVID & GFC average".

27. 2023 S&P price targets. "In a nutshell, more down, before up, to wind up about where we are. If they are right, it won't be great for indexers, but active managers could do well".

28. Patience is a virtue. And finally, “time is literally on your side for stocks”.

Thanks for reading!