Daily Chartbook #97

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

1. Easing conditions (I). "US financial conditions are now easier than they were BEFORE the Fed deployed four consecutive 75 bps rate hikes".

2. Easing conditions (II). "30-day rate of change for Goldman Sachs US Financial Conditions Index shows easing in conditions at fastest pace since May 2020".

3. Excess savings (I). "One of the reasons we’ve felt confident that the US economy wouldn’t slip into recession in 2022 and early 2023, even though we’ve been convinced that it will by the end of 2023, is the huge pool of excess savings and when they’ll be eroded".

4. Excess savings (II). "What’s left of excess savings are now 'concentrated in the top quartile even if this is the group seeing the largest erosion from the peak'".

5. S&P Global US Service PMI. "The downturn across the #US service sector deepened in November (index at 46.2), owing to inflation and interest rates impeding consumer spending".

6. ISM Services PMI (I). "Pop higher for November ISM Services PMI to 56.5 vs. 53.4 est. & 54.4 in prior month; new orders and prices paid ticked down slightly, supplier deliveries moved lower, and new export orders sank deeper into contraction; employment moved back into expansion".

7. ISM Services PMI (II). "Business activity gauge within November ISM Services PMI surged to highest since December 2021".

8. ISM employment vs. private payrolls. "The ISM services employment index, to 51.5 from 49.1, is at odds with the downward trend in private payroll ... firms are cutting back on new hiring .., and we also see mounting evidence that they are becoming more willing to let go of existing staff".

9. ISM manufacturing & services. "The average of ISM Manufacturing + ISM Services increased slightly in November. The economy continues to slow, has fallen below trend, but is not yet recessionary".

10. Cheatsheet. “If growth deteriorates too quickly or goes too far, then ‘bad news is bad news’ will overtake the narrative. In that scenario, markets likely retest 2022 lows”.

11. Mortgage rates vs. bonds. With the spread between 30-year mortgage rates and Treasuries of the same duration at its widest since the 1980s, “is the housing market foreshadowing what's about to happen in the bond market?”

12. Computers are long. "CTAs have chased the squeeze and are now running biggest net longs (still not huge) since late March".

13. Return to light positioning. "After 2 weeks flirting with positive territory, this Goldman positioning indicator is now back in firm negative territory, which is bullish for equities".

14. Hedge fund leverage. "Global hedge fund leverage for "all strategies" now around 80%-tile for both net and gross (on a 5-year lookback)".

15. Fund exposure. "Fund exposure to the equity market remains low but is stabilizing".

16. Energy exposure. "Net exposure to Energy is elevated relative to recent history, partly a function of the sector’s strong performance".

17. Retail allocations. "Despite the market decline and volatility this year, investors haven't reduced equity allocations that much as they fear they will miss out on the bottom of the market if the Fed pivots".

18. Retail selling. Retail investor flows have roundtripped.

19. Equity outflows. "Despite the sharp surge in the market post Powell speech, equity outflows continued for a second week".

20. Resilient ETF flows. "ETF flows have been robust this year despite the market rout".

21. Funds outperformance. "34% of [active] funds outperformed their benchmark in the last 12-months".

22. Energy vs. recessions. During recessions, "the energy sector historically has been hit hardest in terms of earnings per share".

23. The Street's accuracy. "Industry analysts on average have overestimated the final EPS number by 7.0% one year in advance".

24. Capex tailwind. "Physical capex spending is still growing – actually, accelerating – which suggests it these sectors [industrials, materials, financials, and energy] may see better or even positive revisions in the NT".

25. Beat rates. "While a lower percentage of stocks have beaten expectations than the historical average, the 69% beat rate is still significantly better than feared by many market participants and is certainly among the drivers of the Q4 equity rally".

26. Dividend changes. "There has been an uptick in the percentage of global firms issuing dividend decrease announcements thus far in the back half of the year".

27. Slightly unusual streak. "S&P 500 has gone just over 230 days without returning to its prior high; streak is not even past one we saw in 2016".

28. Very unusual streak. "Over the past 90+ years, there have been 1,184 days when the S&P 500 was down at least 6 / 7 days. It's average loss was -4.3%. If the S&P closes above 4027 today, it will mark only the 3rd time the index has shown a gain".

29. Bear market rallies (I). “History suggests bear-market rallies can be sizable”.

30. Bear market rallies (II). And finally “bear market rallies are frequent and large. Drawn out bear markets see more and bigger bear market rallies”.

Thanks for reading!

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