A bullish signal, and other interesting asides
6 charts on hiring, candy-costume shopping, buybacks and dilution, Europe's shame, and CO2/Capita
There was no wifi on my flight last night, so I needed a little extra time to finish this up for today. Call it a lunchtime post.
Behold, a small handful of random charts and observations, to take or leave:
bullish hiring signals
Halloween bonanza
of buyback concentration and the coming dilution
Europe’s (latest) shame
running on empty (and CO2/capita progress)
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Just a few charts on this and that.
Burning the midnight oil
Here’s an optimistic procyclical signal that I’ve never seen before.
It turns out that temporary help and overtime hours tend to lead broader labor market expansion.
As of this moment, overtime and temp work are trending up:
It looks like OT has been rising for the better part of the year, while temp hours have accelerated more recently.
But, truthfully I’m just squinting at a picture.
It does make sense, though, that expanding firms would try before they buy (and/or give more hours to the workers they already have), so maybe this indicator has some legs.
Sugar high
On a related front, not that there was any particular reason to doubt it, but just a little more evidence that the Almighty Cautious Consumer is a-ok:
Survey says that Halloween spending is going to be a bonanza.
$13.1B in Halloween spending is expected, which will be another all-time-high.
Look, I’ve said it before, and I’ll say it again: people stay gainfully employed, wages are still growing, so people will keep spending.
Margins might be something of a moving target, and eventually, as the growth of the worker-force slows, so too does the shopper-force, but slow n’ steady up-and-to-the-right is what Random Walk expects (and what the data continues to show).
Great concentration to the coming dilution?
Shifting gears, this too was an interesting aside.
Apparently net-issuance of public equity has been consistently negative for almost a decade:
Buybacks have outweighed fresh issuance every single quarter except Q1 of 2021.
That’s pretty remarkable, and I guess maybe says something bullish about management’s perceived value of their equity (and/or lack of better things to do with their cash)? Idk, I just thought it was kind of neat.
Also, perhaps the bullish trend towards concentration is about to go in bearish-reverse:
Free cash flow has been the driver of buybacks, but as FCF contracts (due to margin contraction and Capex), one would expect buybacks to slow, as well.
And when buybacks slow, net-issuance becomes positive, which means dilution increases, which means price-per share tends not to appreciate quite as much.
It’s kind of a funny thing that companies raise equity precisely at the point one would expect stocks to perform relatively poorly, but it also makes sense. Companies should be buying back equity when it’s cheap and selling it when it’s expensive—those are really the only two choices when it comes to the question ‘what should we do with our cash’ (other than invest in the business).
Die-Wall of Shame
Again, I warned you this was just some interesting asides with no unifying theme.
Here’s a ‘wall of shame’ chart of European countries that appear to have massively ramped exports to Russian via Kyrgyzstan *just* after declaring Russia a threat to everything good and pure:1
Germany, the Netherlands, and Italy are all some of the biggest offenders.
Waxing judgmental for a moment, does it get much more pathetic than Europe?
At this point, it’s just a dusty mausoleum of a once-great continent entombed by a culture of scoldy, impotent, hypocrisy.2 Maybe Brussels could order a blue-ribbon panel to devise a working paper with 96 pages of bullet-point recommendations for how to regain a modicum of dignity and self-respect.
In meantime, Europe is best understood as a Cramer-like anti-signal for how to run a civilization: whatever it says or does, just do the opposite.
Running on empty
Well, not technically ‘empty,’ but it turns out that we’re still not consuming as much transportation gas and fuel as we were before the pandemic:
None of gas, distillate or jet fuel have returned to pre-pandemic levels of demand.
It used to be that we just consumed more and more of the stuff as we got bigger and richer. But, I suppose through some combination of EVs, remote work, and less-flying, that no longer appears to be the case.
In general, per/capita CO2 emissions have come wayy down over the past 20 years:
The average reduction in CO2/capita since 2005 is ~30%.
Pretty good.
Previously, on Random Walk
Private Credit and Insurance, two peas in a pod (reprise), and a chart dump on default rates
five charts on the rise of private credit in life insurance
Energy in 1776
It’s July 4th, so Happy Birthday America, and we’re going to keep it light and only semi-topical.
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That may well be a very valid declaration, but that’s not the point at issue, here.
Every time I read some bullcase for (Western) Europe, it comes down to skimming some bps off the new defense spending they’re supposedly going to do, but that’s basically it. As per always, I’m happy to be proven-wrong, and feel free to send me something that makes a more compelling case, but GLP-1s and handbags isn’t compelling enough for an aging, unambitious, continent of hall-monitors.
There seems to be a positive correlation between European feebleness and decrepitude, on the one hand, and its bossiness, on the other, which is perhaps just an unfortunate fact of life, that deserves some more compassion on my part. Idk. In general, I think it’s better to raise expectations than to be resigned to pity. Plus, I’d be a lot more sympathetic, if Europe wasn’t primarily in the business of making rules.
Would the increase in temp hires and OT hours be a result of: A) wealthier consumers are spending B) immigration near zero So not enough workers to meet spending demands? If so, will wages increase?
I don't understand the salt about European sanction dodging. Trade is massively down even with the rerouting and all of this have been known since 2023. Similarly EU states still buy a bunch of Russian oil and gas but only a fraction of the original volumes. How about actually providing a factual analysis of what % we are actually talking? Do you have the same attitude when discussing China dodging the American GPU sanctions?