Head of Macro Research and Strategy, Schwab Center for Financial Research Disclosures: aboutschwab.com/social-media
New York, NY
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Stunning. U.S. imports of consumer goods have plunged by 43.9% over the past 3 months ... that is the largest decline in history
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“Saudi Arabia is ready to abandon its unofficial price target of $100 a barrel for crude as it prepares to increase output, in a sign that the kingdom is resigned to a period of lower oil prices, according to people familiar with the country’s thinking.” on.ft.com/3BfPfFg
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This is quite stunning. Look at the revisions for May and June.
May was originally +144k jobs; now +19k. June was originally +147k; now +14k.
There were also huge downward revisions for the trade and transport industry.
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Nobody will remember:
-Your salary
-How "busy" you were
-How many hours you worked
People will remember:
-Whether you were calling for a 25bps or 50bps cut
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The 10 largest stocks in the S&P 500 now represent 39.9% of the index's market cap
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The number of people employed in the semiconductor manufacturing industry is plunging
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Manufacturing payrolls have contracted for 4 straight months. We have not seen that since the beginning of 2020
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Per the @WSJ:
Pre-tariff, cost for Apple to make the iPhone 16 Pro = $550
Post-tariff, cost to make the iPhone 16 Pro = $850
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Unemployment rate in:
January: 4.011%
February: 4.139%
March: 4.152%
April: 4.187%
May: 4.244%
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Oof. 40% of of items in the CPI were based on different cell imputation in September ... that means data collectors had to fill in missing data by using values from a related but different category or geographic area
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The unemployment rate for 16-24-year-olds is up to 10%. Earlier this year, its 2-year change got up to +3% ... first time in history we've seen that much of an increase without the economy being in a recession
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The S&P 500's forward P/E is at the same level today as it was in January 2021.
Today, the effective fed funds rate is 4.09% ... in January 2021, it was 0.09%
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Serious credit card delinquencies continued to spike in the first quarter of 2025 … highest since first quarter of 2011
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The employment component of the Richmond Fed Manufacturing Index just broke thru its 2020 pandemic low ... as of September, it's at its lowest since April 2009
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The selloff in Tech has essentially been all multiple contraction thus far. Forward 12m EPS made a new high yesterday
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With revisions, it's now the case that June's payrolls were negative ... that marks the first decline since December 2020
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Since the February 19th peak, the S&P 500 has lost $9.6 trillion in value ... that is about the equivalent of the German and Japanese economies combined
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Unemployment rate in
March: 4.152%
April: 4.187%
May: 4.244%
June: 4.117%
July: 4.248%
August: 4.324%
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S&P 500's forward profit margin has been rising sharply and is at a new all-time high
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Inflation-adjusted consumer spending fell by an annualized -0.15% in the first six months of the year. Excluding the pandemic, the last time we saw a negative statistic was in early 2010
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Updating the table with Indian imports now facing a 25% tariff starting this Friday
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In June, construction industry saw largest increase in layoff announcements per @ChallengerGray ... hasn't seen a spike that large since September 2007
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Household net worth is growing by 7.1% year/year (as of 2Q2024) which is the strongest growth at the start of a cutting cycle going back >30 years
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"WTI is trading at around the same level as it was 20 years ago, and that’s in today’s money. In real terms, adjusted by the cumulative impact of inflation, oil is today at a similar level as it was in the mid-1980s."
@JavierBlas
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To keep up, I've put together this ✨very sophisticated✨ table.
These new numbers don't look that small
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The 10 largest stocks in the S&P 500 made up 40.1% of the index's market cap thru the end of July ... a new multi-decade high
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U.S. households' allocations to stocks rose to a new record high in the second quarter
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The value of the decline in U.S. stocks today (roughly $2 trillion) is a tad larger than the entire Mexican economy
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Mag 7 -20.6% over the past 60 days ... only two periods that saw that kind of decline (or worse): late-2018 and 2022
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Wow. U.S. goods imports fell by 19.8% in April ... that's the largest drop on record
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The last time the S&P 500 closed at an all-time high was 1 trading day ago ... the last time the Russell 2000 closed at an all-time high was 925 trading days ago.
Longest streak on record where the Russell 2000 has not joined the S&P 500 in seeing a record high.
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Job cut announcements in the pharmaceutical sector jumped in August to financial crisis levels
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Wow. Construction industry job openings rate fell to a new cycle low in July ... 6-month drop now -2.1 percentage points, which is the largest in history
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Going to leave this here:
$10k invested in the S&P 500 in 1948 would have grown to nearly $38 million thru 2023 if one didn't care whether the Oval Office was painted red or blue. Life is simpler when politics is kept out of investment decisions.
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This is fascinating. The ratio of the Leading Economic Index relative to the Coincident Economic Index is at levels that have historically been consistent with the ends of recessions.
In fact the only time it's been lower is during the '81-'82 and '07-'09 recessions.
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71.6% of CPI components rose at an annualized pace greater than 2% in August ... that's the highest share since August 2022
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You have to go back to February 2004 to see the degree of core goods #deflation we just had in May
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Here are the components of PPI that map over to PCE ... suggesting a bit of a firmer print for July
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There might be a lot of "cash on the sidelines" in terms of total money market fund assets, but relative to the size of the equity market, the firepower just isn't what it used to be ... and in fact, cash as a % of S&P 500 market cap has been trending lower for the past year
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U.S. equities looking quite stretched across multiple valuation metrics
@LeutholdGroup
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Wow. The job openings rate for the construction sector has fallen to 2.2%, the lowest since November 2015
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Social security transfer payments -7.3% in June ... largest decline since July 1971
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As of July, we now have 68% of CPI components rising faster than 2% annualized on a month/month basis ... highest share since October 2022
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“Insiders at just 151 S&P 500 companies bought their own stocks last month, the fewest since at least 2018, according to data compiled by the Washington Service.”
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Pretty bad internals for the April Dallas Fed Manufacturing survey ... new orders, employment, shipments all contracting; prices paid up; outlook contracting
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Components of PPI that matter for PCE mostly tame in December, with the exception of airfare (which jumped by 7.2%)
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Ed Hyman at Evercore ISI:
“History and experience say to stick with a hard landing outlook. However, the hard math that our team has reviewed says flip to a soft landing outlook. And that’s what we’re doing.”
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As of the end of last week, the U.S.' share of world market cap hit a new high of 49.1%
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At some point, we have to start considering that we are transitioning from vibecession (h/t to my pal @kylascan) to vibepression
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Across the board, stronger growth in retail sales in August - no matter how you slice it
via Bloomberg
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From what I can see on the chart, these are the announced tariff rates for goods imported from:
China: 34%
EU: 20%
Vietnam: 46%
Taiwan: 32%
Japan: 24%
India: 26%
South Korea: 25%
Thailand: 36%
Switzerland: 31%
Indonesia: 32%
Malaysia: 24%
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From @bespokeinvest:
“On a 12-month average basis…Housing Starts have completely rolled over from their peak nearly three years ago falling from 1.67 million to 1.37 million now…Recessions have always followed a rollover in Housing Starts, and the only question is timing.”
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Going back to the 1950s, the average max drawdown for the S&P 500 a year after the Fed starts a fast cutting cycle is -20.7% ... the average max drawdown a year after the start of a slow cutting cycle is -7.4%
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Foreign-born labor force has contracted by 1.653 million people over the past 4 months ... outside of COVID, it's the largest decline we've ever seen
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The S&P 500 Tech sector has wiped out its entire post-election gain and has gone nowhere since last June
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Great chart from @MichaelKantro showing the incredibly bifurcated earnings backdrop for large, mid, and small caps
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Piper Sandler: “For consumer goods, the U.S. is paying about 90% of the tariffs, with consumers footing
about 30% of the bill and companies (importers) nearly 60%.”
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Global freight container rates still moving higher and year/year increase is now up to +233%
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Right back to new cycle low for equal-weighted S&P 500 relative to cap-weighted S&P 500 ... ratio at lowest since December 2008
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Shelter is clearly putting a lot of downward pressure on CPI ... CPI services ex-shelter is running at +3.75% annualized over the past 3 months
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Wow. Small businesses' economic outlooks improved in July by the most since April 2020 per NFIB
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