The Week in Charts (4/9/24)

By Charlie Bilello

09 Apr 2024


View the video of this post here.


Could your money be working harder for you?


The most important charts and themes in markets and investing

1) Closing the Jobs Gap

303,000 US jobs were added in March, well above the consensus estimate of 200k jobs.

This was the 39th consecutive month of jobs growth.

The top 3 sectors adding jobs: Healthcare (+81k), Government (+71k), and Leisure/Hospitality (+49k).

The US Unemployment Rate moved down to 3.8% in March from 3.9% in February. It remains well below the historical average of 5.7% (note: data since 1948).

The US Unemployment Rate has now been below 4% for 26 straight months, the longest streak since the late 1960s.

Will jobs growth continue in April?

It seems likely that it will.

Why?

While the gap between the actual number of jobs in the US economy and the pre-covid trend continues to narrow, it remains elevated at -3.9 million. Which means that the demand for labor still exceeds supply in many industries, with hiring expected to continue.

This is leading to continued upward pressure in wages, which grew at 4.1% over the past year. That was the 33rd consecutive month above 4%.

The strong jobs report coupled with CPI inflation remaining above 3% is putting the June rate cut in jeopardy, with the odds of a cut moving down to 50% from 73% a month ago.

2) The End of an Uptrend

The Nasdaq 100 closed below its 50-day moving average last week for the first time since last November.

That ended the 8th longest streak for the index above its 50-day at 153 days.

3) Trouble at Tesla

Tesla delivered 386,810 vehicles in Q1, down 8.5% from a year ago. That was its first YoY decline since 2020 and fewest deliveries since Q3 2022.

Tesla’s stock continues to struggle, down 20% over the last year while its major competitors have seen their shares rise.

Tesla’s current drawdown of 879 days is the 2nd longest since its IPO in 2010 and is likely to surpass the 2014-17 downturn in the coming months.

The expectations for Tesla at its peak in November 2021 were extremely high, with the stock trading at 30x trailing sales and 15x forward sales.

While sales have grown significantly since then, they haven’t grown nearly as much as investors had expected, leading to a multiple compression down to 6x trailing sales and 4x forward sales.

4) Others Are Greedy

The % of Bulls in the Investors Intelligence survey has moved up to 62.5%, the highest since April 2021.

Should investors be fearful of this sign of greed, as Warren Buffett once admonished?

To answer that question let’s take a look at the data.

What we find is that when investor bullishness has been this high in the past, forward returns tend to be below average. This is the opposite of what we find after periods of extreme fear (ex: October 2022), which tend to be followed by above-average returns (see video discussion here).

5) The Most Expensive Short Ever?

Trump Media ($DJT) reported its full-year 2023 results last week showing a net loss of $58 million on revenue of just $4.1 million.

The euphoria surrounding the IPO seems to be fading. After hitting a peak of $10.9 billion on March 26, its market cap has quickly declined to $5.1 billion.

The demand for shorting the shares is extremely high, as evidenced by the sky-high rates of borrow. CNBC reported that investors would have to pay annual financing costs of 750% to 900%. At that level, just to break even the stock price would have to decline by over $30.

6) How to Lose $1 Trillion

The Federal Reserve revealed $948 billion in unrealized losses on their Treasury/MBS holdings in their 2023 annual report.

How did that happen?

They purchased trillions of dollars in long-term bonds when interest rates were at record lows in 2020-21. With interest rates rising substantially since then, the value of these securities has declined by nearly $1 trillion. While the Fed intends to holds these securities to maturity and not realize the losses, it begs the question: why do we entrust the Fed with printing money to manipulate the bond market in such a way?

7) Is CPI Understating Food Inflation?

A WSJ analysis found that a commonly purchased basket of supermarket goods has increased in price by 36.5% over the past 4 years (+8.1% per year). This is much higher than the US Government CPI figures which show food price inflation of 25.2% over the last 4 years (+5.8%/year).

Meanwhile, average hourly earnings in the US have increased 21% over the past 4 years (+4.9% per year). This is one reason why many Americans, particularly those with lower incomes, feel like they’re falling behind.

8) New High in Net Worth

US Household Net Worth hit a record high of $147 trillion in 2023, increasing $11.4 trillion during the year. Over the last 5 years, Household Net Worth has grown by an astounding 50%.

9) A Few Interesting Stats…

a) Two revolutionary companies went public twenty years ago.

These are their returns since…

Google: +6,080%

Domino’s Pizza: +8,200%

b) Americans now believe it will take $1.46 million to retire comfortably, up from $1.27 million a year ago and $950k four years ago.

c) Americans spent over $113 billion on lottery tickets last year, more than they spent on movies, books, concerts and sports tickets – combined.

d) The top 1% of income earners in America made 26% of the country’s total income in 2021 and paid 46% of total income taxes (their avg tax rate: 26%). The bottom 50% of income earners made 10% of total income and paid 2% of total income taxes (their avg tax rate: 3%).

e) The S&P 500’s dividend yield has moved down to 1.35%, the lowest since Q4 2021. All-time low was 1.12% in Q1 2000.


And that’s all for this edition. Have a great week!

-Charlie

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Disclaimer: All information provided is for educational purposes only and does not constitute investment, legal or tax advice, or an offer to buy or sell any security. Read our full disclosures here.

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