Daily Chartbook #99

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

1. US petroleum inventory monitor. "Another big US commercial crude inventory draw last week, down 5.2 MMbbl ...But it was actually a total petroleum *build* of 5.9 MMbbl given SUPER heavy refined product inflows".

2. SPR. "The US Strategic Petroleum Reserve moved down for the 65th consecutive week to its lowest level since 1984. The 35% decline in reserves this year is the largest on record by a wide margin".

3. Low open interest. "Elevated volatility driven by multiple and major uncertainties regarding both supply and demand has cut the combined open interest in Brent and WTI futures to 3.2 million lots, a near eight-year low".

4. Inbound container volumes. "Container volumes bound for the US are now below 2019 levels as the round-trip economy plays out".

5. Supply chain metrics. "Key supply chain indicators continue to fall dramatically ... across spectrum of most-watched data, used car prices in particular have tanked and z-score has fallen into negative territory year/year".

6. Used car tailwind. "Used cars were a major headwind to inflation the past two years, but should now continue to be a tailwind in 2023".

7. WFM losing ground. "US office occupancy hit a post-pandemic high last week".

8. Unit labor cost & productivity (I). "Downward revision for 3Q22 unit labor costs (blue) to +2.4% vs. +3.1% est. & +3.5% prior … productivity (orange) revised up to +0.8% vs. +0.6% est. & +0.3% prior".

9. Unit labor cost & productivity (II). "The three consecutive quarters of year-over-year declines in productivity is first such instance since 1982".

10. Financial conditions. "The National Financial Conditions Index (NFCI) ticked down to –0.22 in the week ending December 2, suggesting financial conditions loosened slightly".

11. Earnings remittances. "Below highlights how the Fed has shifted from a profit center, generating on average $2B in monthly profits over the last decade, to a cost center -- currently losing $12.5B a month".

12. Rates forecast. "GS forecasts interest rates will remain high in 2023".

13. Recession probabilities (I). "Morgan Stanley sees 35% chance of no recession until end 24".

14. Recession probabilities (II). "The New York Fed Recession Probability model now puts 38% odds on a US recession in the next 12 months. This understates the real probability which, based on +60 years of history, is now close to 100%".

15. Consumer credit (I). "Total consumer credit rose $27.1 billion, above last month's $25.8 billion if below the $28 billion consensus estimate".

16. Consumer credit (II). "Credit card debt hits a record high just as the personal savings rate hit a 17 year low".

17. DXY vs US10Y yield. "Rolling 60-day correlation between U.S. dollar (blue) and 10-year Treasury yield (orange) has climbed to highest since early 2020".

18. Retail army volumes. "Since start of 2021, share of [retail] investors in US equity market volumes has plunged by 40%. Stocks that were once buoyed by retail crowd are now vastly underperforming market".

19. Outperformance factors. "Low volatility’s resilience has not been limited to just U.S.".

20. Dow comeback. "The Dow clawed back 70% of its losses in 2 months...After other quick retracements of at least 70%, the Dow showed a strong tendency to show above-average 12-month returns, though with a miserable failure in 2001".

21. Valuations. “Valuations have adjusted lower across assets this year, but less so in US equities than in fixed income”.

22. 2023 outlook. "The ‘nominal illusion’ is disappearing and we should enter a severe earnings recession … The Equity Risk Premium is way too low for such a scenario I expect marked new lows for equities during H1 2023".

23. Earnings change vs. price change. "Knowing exactly what earnings will be in 2023 still tells you almost exactly nothing about how the market will do".

24. Beneath the surface. "Value and smaller stocks are leading, right? On a sector-neutral basis (the only way to look at factors), that couldn't be further from the truth. Something is going on beneath the surface that most are missing due to sector and cap-weighting skews".

25. Margins squeeze. "Higher interest and labour costs suggest significant squeeze".

26. Margins to revert. "S&P 500 ex. Energy margin will fall from 12.7% peak (2021) to 11.3% (2023)".

27. Margin risk. "Profit margins are at risk, more so than the topline. Our NFIB margin proxy – corporate intentions to raise prices less intentions to raise wages – has fallen materially".

28. Growth downgrades. And finally, “growth stocks are seeing all the downgrades".

Thanks for reading!