In Case You Missed It: Charts of the Week

By Mark Masterson on January 6, 2023

It has been said “a picture is worth a thousand words.”  With that in mind, below below are a few of the most important or interesting charts from the past week…..

Charts from this past week:

Here is some historical perspective on the negative year in equity markets for 2022…..

“The S&P 500 fell 19.4% in 2022, coming just shy of the -20% mark that only six other years since 1928 have seen. 

Here’s a look at every annual price change for the S&P since 1928 grouped into 10 percentage point intervals.” –

@bespokeinvest

Bespoke.com  1/3/23

Despite the down year – stocks still had positive inflows….

This is highly unusual in my view.  More on this later this week.

Lance Roberts 1/3/23

The big five fell last year….

Yet – they still represent 20% of the entire market.

You can see, this is still higher than any other time in history……

To me, this is no bueno.

Bank of America 1/3/23

While stocks stumbled yesterday – gold rose.

Tis the season for gold to have a tailwind as you can see below…..

Strategas 1/4/23

Just a quick update on the yield curve inversion…..

It appears to have started to bounce off the lows – but still remains deeply inverted.

A yield curve inversion signals a recession.

Interesting to note that the recession usually begins when the inversion begins to reverse and starts to rise. (as it has now.)

Yet – if the Atlanta Fed is correct in its call for 4^th quarter GDP – it is scheduled to come in pretty strong…..

The GDPNow model estimate for US real GDP growth is 3.9% for 2022:Q4

Atlanta Fed 1/5/23

Central banks created one of the biggest perversions of all time with negative yielding debt.  You may recall that I wrote about it many times.  There is zero economic sense for negative yielding bonds – zero profit motive to buy them.  Well – as interest rates have been rising towards more normalized levels, the negative yielding bonds are now all gone……That is progress in my eyes….

The last bond with a yield of below zero percent in the Bloomberg Global Aggregate Index of Negative Yielding Debt moves into positive territory. https://bloomberg.com/news/articles/2023-01-05/world-says-goodbye-to-negative-yielding-debt-as-boj-shift-bites?sref=frV97TwV

Bloomberg 1/5/23

Investors may be getting pessimistic enough for another market bounce to materialize…..

Take a look.

The AAII US investor sentiment bull – bear spread is still very negative.  This means that bearish sentiment is much higher than bullish.  We are not yet at the levels where the last few bear market bounces materialized – but we are close….

Daily Shot 1/5/23

Looks like the small options traders are pretty bearish….

Last week, small options traders spent 32% of their total volume buying put contracts to open. That’s tied for the 3rd-most of any week since the year 2000.

Sentimenttrader.com  1/5/23

Those same small options traders  pulled back on call buying to the greatest extent since May 2019, so the ROBO Put/Call Ratio spiked to 93%.

Over the past 20 years, only the week ending March 13, 2020, exceeded this.

Before that, there were more significant spikes in the ratio near the market lows in April 2001, October 2001, and during the protracted bottoming process in the summer of 2002 through the spring of 2003.

Sentimenttrader.com 1/5/23

The yield curve remains quite inverted – a strong signal a recession is on the horizon, or on our doorstep.

Interesting chart from Tavi Costa showing how much of the yield curve is inverted.  At 91% of the yield curve inverted, that is a strong signal indeed, and often has led to quite difficult market and economic environments.

1/6/22

The Fed is marching on with QT – reducing its balance sheet.

This is being done quietly and behind the scenes, but it happening.

Last night the Fed reported its assets.  Total assets on the Federal Reserve’s balance sheet dropped by $458 billion since the peak in April, to $8.51 trillion, the lowest since October 6, 2021, according to the weekly balance sheet released today, with balances as of January 4.

Compared to a month ago (balance sheet released on December 8), total assets dropped by $75 billion.

Wolfstreet.com 1/6/23