How close are US households to depleting pandemic-era excess savings?

The Daily Shot: 23-Apr-24
The United States
Canada
The United Kingdom
The Eurozone
Europe
Japan
China
Emerging Markets
Cryptocurrency
Commodities
Energy
Equities
Credit
Global Developments
Food for Thought



 

The United States

1. Let’s begin with some data on the US consumer.
 
How close are US households to depleting their pandemic-era excess savings? Estimates vary significantly.
 
Pantheon Macroeconomics:
 
Source: Pantheon Macroeconomics  
 
Alpine Macro:
 
Source: Alpine Macro  
 
There are downside risks to consumer spending, …
 
Source: BCA Research  
 
… which could deteriorate rapidly.
 
Source: Pantheon Macroeconomics  
 
Consumer loan delinquency rates have risen, especially for lower-income households.
 
Source: Reuters   Read full article  
 
Goldman’s Twitter Economic Sentiment Index points to improvements in consumer confidence.
 
Source: Goldman Sachs; @WallStJesus  

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2. Next, let’s look at some trends in wages and inflation.
 
This chart shows wage growth by income tier.
 
Source: Arcano Economics  
 
Leading indicators continue to signal slower wage growth ahead.
 
Source: Deutsche Bank Research  
 
This bridge diagram shows the transition from nominal to real wage growth.
 
Source: Arcano Economics  
 
Housing inflation has been running hotter than leading indicators suggest.
 
Source: Alpine Macro  

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3. Finally, we have some updates on the labor market.
 
This year’s increase in the unemployment rate was driven by a rise in labor supply rather than a decrease in demand.
 
Source: Fidelity International  
 
The work-from-home phenomenon has expanded the labor supply.
 
Source: Alpine Macro  
 
Revisions to payrolls have been negative in recent months.
 
Source: Longview Economics  
 
Healthcare workers have accounted for a small but steadily rising share of total employment.
 
Source: BCA Research  


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Canada

1. Economists have been upgrading their forecasts for Canada’s 2024 GDP growth.
 

 
2. Consumer confidence has turned lower again.
 

 
3. Hedge funds have been boosting their bets against the Canadian dollar.
 


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The United Kingdom

1. The labor supply has been shrinking as inactivity climbs.
 
Source: Pantheon Macroeconomics  
 
2. Morgan Stanley revised its projected rate paths upward for both the BoE and the ECB.
 
Source: Morgan Stanley Research  
 
3. This chart shows Britons’ views on various security measures.
 
Source: @YouGov  


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The Eurozone

1. Germany’s composite PMI is back in growth mode, topping expectations. The improvement was driven by services, with the manufacturing slump persisting this month. We will have more on the Eurozone PMI report tomorrow.
 

 
Germany’s economy has been underperforming the US.
 
Source: Alpine Macro  

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2. French retail sales improved again in February.
 

 
3. Euro-area consumer confidence improved marginally this month.
 

 
4. Productivity has dropped below trend.
 
Source: Arcano Economics  
 
5. ECB rate cut expectations have filtered into lending rates.
 
Source: TS Lombard  
 
6. This chart compares the US and Eurozone real wage trajectories.
 
Source: Fidelity International  
 
7. Corporate margins could come under pressure.
 
Source: BCA Research  


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Europe

1. Poland’s industrial and construction output deteriorated in March relative to 2023.
 

 

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2. It’s been a good run for European defense companies.
 
Source: Alpine Macro  


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Japan

1. The manufacturing PMI has nearly stabilized, …
 

 
… as factory hiring accelerates.
 

 
Services growth remains robust, …
 

 
… but service-sector inflation is gaining momentum.
 

 
2. Services CPI could climb further, forcing the BoJ to deliver another rate hike.
 
Source: Capital Economics  
 
Source: @WSJ   Read full article  
 
3. The yen continues to sink, which could exacerbate inflationary pressures.
 

 
4. JGB yields are climbing across the curve.
 

 


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China

1. Corporate borrowing remains weak.
 
Source: China Beige Book  
 
Services borrowing expanded the most while manufacturing pulled back.
 
Source: China Beige Book  

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2. Disposable income growth remains soft.
 
Source: Capital Economics  
 
3. Mainland investors have been buying Hong Kong-listed stocks.
 
Source: @DavidInglesTV  
 
4. New home sales have been trending lower.
 
Source: @WSJ   Read full article  


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Emerging Markets

1. India’s business activity remained exceptinally strong this month.
 
Manufacturing PMI:
 

 
Services PMI:
 

 
Separately, this chart illustrates India’s thematic focus in party discourse: a comparison of BJP and INC.
 
Source: Abhishek Gupta, Bloomberg Economics   Read full article  

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2. Mexico’s economic activity jumped in February.
 


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Cryptocurrency

1. BTC/USD has closely tracked the 1970s gold price analog.
 
Source: Alpine Macro  
 
2. The production cost per bitcoin among listed mining companies is now approximately $53K, according to CoinShares.
 
Source: CoinShares   Read full article  
 
CoinShares expects mining hardware efficiency to follow a downward trend over the next few years, which could make mining more competitive and boost hash rates.
 
Source: CoinShares   Read full article  
 
Bitcoin transaction fees (also used to quantify miner earnings) experienced a sharp spike and fall around the halving event.
 
Source: CoinShares   Read full article  
 
Source: Hashrate Index  
 
Bitcoin’s halving process will conclude once the number of BTC in circulation reaches its programmed limit of 21 million. The last halving took place in May 2020, which significantly reduced miner rewards and negatively impacted profits. (2 charts)
 
Source: Deutsche Bank Research  
 
Source: Deutsche Bank Research  
 
Miners are focused on increasing efficiency and reducing cost.
 
Source: CNBC   Read full article  

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3. Crypto funds saw another week of outflows led by Ethereum and Bitcoin-focused products. (2 charts)
 
Source: CoinShares   Read full article  
 
Source: CoinShares   Read full article  


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Commodities

1. Gold declined sharply on Monday as geopolitical tensions appear to have eased.
 

 
Gold mining shares have lagged the recent gains in gold prices.
 

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2. US wheat futures are rebounding amid extremely bearish sentiment.
 


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Energy

1. So far, higher oil prices have not boosted the expected earnings of global energy firms.
 
Source: Capital Economics  
 
Global energy stocks are trading at historically low valuations.
 
Source: Capital Economics  
 
Short interest in energy stocks and ETFs has been rising.
 
Source: Deutsche Bank Research  

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2. Crack spreads have fallen.
 
Source: Capital Economics  


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Equities

1. Asset managers’ equity futures positioning has been very bullish.
 
Source: JP Morgan Research; @WallStJesus  
 
This chart shows equity futures positioning for asset managers and leveraged funds.
 
Source: Deutsche Bank Research  
 
CTAs have also been sticking with their bullish positioning.
 
Source: Deutsche Bank Research  

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2. Does the market pullback have further to go? The Oxford Economics Risk Sentiment Indicator signals more pain.
 
Source: Oxford Economics  
 
3. Smaller firms outperformed in recent days, …
 

 
… as tech mega-caps struggled (2 charts).
 

 
Source: Deutsche Bank Research  

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4. Here is a look at Goldman’s CapEx growth estimate for this year.
 
Source: Goldman Sachs; @AyeshaTariq  
 
5. Previous election years that started off strong tended to weaken into early June.
 
Source: @RyanDetrick  
 
6. Higher yields have partly offset stronger earnings in the S&P 500.
 
Source: MRB Partners  
 
7. A rebound in liquidity could support a turnaround in tech pandemic winners.
 
Source: Alpine Macro  
 
8. Equity risk premium remains very low.
 
Source: @markets   Read full article  
 
9. Options volume surged in the latest market selloff.
 
Source: Deutsche Bank Research  
 
10. This chart shows the 12-month return attribution across global markets.
 
Source: Goldman Sachs; @MikeZaccardi  


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Credit

1. Active bond funds have been attracting more capital.
 
Source: @wealth   Read full article  
 
2. US fund managers’ ability to provide capital is rapidly outpacing that of banks.
 
Source: @WSJ   Read full article  


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Global Developments

1. Here is a look at the IMF’s growth projections for 2024 and 2025.
 
Source: @economics   Read full article  
 
2. Leading indicators point to further strength in global manufacturing activity.
 
Source: Deutsche Bank Research  
 
3. Businesses are embracing disruptive technology, which could boost productivity.
 
Source: HSBC Global Research  


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Food for Thought

1. Freelancing in the US:
 
Source: Upwork   Read full article  
 
2. Highest-paying law careers:
 
Source: Hennessey.com  
 
3. Data centers’ power demand projection:
 
Source: BofA Global Research  
 
4. Homelessness rates:
 
Source: USAFacts  
 
5. Changes in the year-to-date homicide numbers relative to 2023:
 
Source: @axios   Read full article  
 
6. Inflation-adjusted median income by generation and age:
 
Source: The Economist   Read full article  
 
7. Most popular wonders of the world:
 
Source: Rustic Pathways  

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