The Daily Shot: 06-Oct-22
• The United States
• Canada
• The United Kingdom
• The Eurozone
• China
• Emerging Markets
• Cryptocurrency
• Commodities
• Energy
• Equities
• Credit
• Rates
• Global Developments
• Food for Thought
The United States
1. The September ISM Services PMI report suggests that US service-sector business activity remains robust (PMI > 50 means growth).
Source: @TheTerminal, Bloomberg Finance L.P.
• New orders continue to show strength.
• The employment index jumped, …
… which points to stronger payroll gains in September.
Source: LPL Research
• Supply pressures continue to ease.
• Price gains are moderating, …
… signaling lower inflation ahead.
Source: Oxford Economics
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2. The September ADP private payrolls report showed solid job gains.
Source: CNBC Read full article
• What should we expect from the nonfarm payrolls report on Friday? Oxford Economics sees 280k new jobs created last month.
Source: Oxford Economics
• One of the drivers of the labor market imbalance has been the COVID-related dip in immigration.
Source: @gutavsaraiva, @Jonnelle, @bpolitics Read full article
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3. The Atlanta Fed’s GDPNow model Q3 growth estimate climbed to 2.7% (annualized).
Source: @AtlantaFed
Consumer spending on services and a lower trade deficit have been the key drivers of the upward move.
Source: @TheTerminal, Bloomberg Finance L.P.
The trade deficit continues to narrow as demand slows.
Source: Oxford Economics
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4. Next, we have some updates on the housing market.
• Mortgage applications are crashing, …
… now down almost 40% from a year ago.
• Worsening affordability is keeping buyers away.
Source: Black Knight
• Home sales are dropping, …
Source: Redfin
… and there are further declines ahead.
Source: Pantheon Macroeconomics
• Inventories are higher, but new listings are down.
Source: Redfin
Source: Realtor.com
• Home prices are down for two months in a row (July and August).
Source: Black Knight
The year-over-year home price appreciation is expected to reach zero in a few months.
Source: AEI Center on Housing Markets and Finance
• Housing-related online search activity slumped in recent months.
Source: @LizAnnSonders, @GoogleTrends, @DataArbor
• Homebuilder sentiment continues to deteriorate.
Source: Evercore ISI Research
• Apartment demand was down again last quarter.
Source: @jayparsons
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5. US gasoline prices continue to rebound, …
… which will push consumer inflation expectations higher.
Source: BCA Research
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Canada
1. The trade surplus was much lower than expected.
2. Housing permits jumped in August.
3. Condo sales are at multi-year lows in the Greater Toronto Area.
Source: @BenRabidoux
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The United Kingdom
1. New car registrations finally climbed above last year’s level.
2. Households are holding on to excess savings.
Source: Pantheon Macroeconomics
3. Capital Economics is forecasting a deeper recession ahead as higher rates and energy prices take a toll.
Source: Capital Economics
4. Here are the latest voting intentions polls.
Source: Statista
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The Eurozone
1. Services PMI reports point to falling business activity in the euro area.
• Italy:
Source: S&P Global PMI
• Spain:
Source: S&P Global PMI
• Germany:
Source: S&P Global PMI
• Eurozone Composite PMI:
Source: S&P Global PMI
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2. French manufacturing output jumped in August.
3. Germany’s factory orders continue to sink.
Germany’s trade surplus is almost gone.
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4. The broad euro index is relatively strong despite the EUR/USD crash.
Source: @RobinBrooksIIF
5. European bond yields have risen enough to offer attractive spreads over duration-matched government bonds, according to BCA Research.
Source: BCA Research
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China
1. Shadow financing is recovering as bailout funds ramp up.
Source: Pantheon Macroeconomics
2. Will the property market follow the trend we saw in Japan in the 1990s?
Source: @ANZ_Research
3. Crude oil refining activity has slowed.
Source: @EIAgov Read full article
4. Hong Kong’s business activity is back in contraction mode.
Source: S&P Global PMI
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Emerging Markets
1. Brazil’s services growth is slowing.
• Price pressures are rapidly easing.
• Industrial production declined in August.
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2. Colombia’s inflation has been surging.
3. Mexican consumer confidence remains robust.
4. South Africa’s business activity is contracting.
Source: S&P Global PMI
5. Romania’s central bank hiked rates again.
6. Iran’s currency continues to weaken.
Source: Bonbast.com
Inflation has been surging.
Source: @WSJ Read full article
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Cryptocurrency
1. Bitcoin is testing downtrend resistance.
2. Open interest in bitcoin futures is ticking higher, especially at Binance (2 charts).
Source: Coinglass
Source: Coinglass
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3. There are more users on gaming decentralized applications (dApps) than on decentralized finance applications (DeFi).
Source: @Delphi_Digital
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Commodities
1. Copper has been rebounding as the US dollar softens.
Source: @TheTerminal, Bloomberg Finance L.P.
2. Gold positioning has been very bearish.
Source: Longview Economics
The gold/S&P 500 price ratio broke above its 200-day moving average.
Source: Aazan Habib, Paradigm Capital
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3. This chart shows metals demand from vehicles and power generation.
Source: Fitch Ratings
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Energy
1. OPEC is cutting production, …
Source: @WSJ Read full article
… sending oil prices higher.
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2. US oil inventories declined last week.
• Days of supply:
• Barrels:
3. US refined product demand surged recently.
• Gasoline:
• Distillates:
• Refinery utilization:
As a result, inventories are sharply lower.
• Gasoline:
• Distillates:
Below are refined product inventories in terms of barrels.
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4. Gazprom, Russia’s majority state-owned energy company, daily gas output edged up in September to meet seasonally higher domestic demand. As in previous months, exports to Europe declined.
Source: Nadia Kazakova; Renaissance Energy Advisors
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Equities
1. How does the market perform following yield curve inversions?
Source: MarketDesk Research
2. Earnings projections for 2023 and 2024 continue to move lower.
Source: Yardeni Research
3. More firms issued positive EPS guidance last quarter, but the negative guidance count was still higher.
Source: @FactSet
• Here is the breakdown in select sectors.
Source: S&P Global Market Intelligence
• How has the market been responding to positive and negative guidance?
Source: @FactSet
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4. Retail buying has been subdued.
Source: Vanda Research
5. Here is the US market performance under different partisan control.
Source: Truist Advisory Services
6. Below is Goldman’s forecast for the S&P 500 in the soft- and hard-landing (recession) scenarios.
Source: Goldman Sachs; @MikeZaccardi
7. S&P 500 stocks with high international revenue exposure have underperformed domestic-focused peers during the dollar rally.
Source: Global X ETFs Read full article
8. Short-term equity options have been increasingly popular.
Source: @WSJ Read full article
9. 27% of active large-cap managers outperformed their benchmark over the past 12 months.
Source: BofA Global Research
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Credit
1. High-yield bond issuance deteriorated in recent quarters.
Source: @lcdnews
2. High-yield spreads need to widen to make the projected bond returns attractive.
Source: MarketDesk Research
3. The Credit Suisse situation shows no signs of improvement.
• CDS spread:
• Perpetual bond price:
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Rates
1. Demand for T-bills remains extreme as spooked investors move into cash.
2. The market is still pricing a Fed rate cut in the second half of next year.
3. There is a great deal of uncertainty around the real neutral rate (r*).
Source: UBS Research
The market pricing for the nominal long-run rate is around 3%.
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Global Developments
1. PMI reports show global export orders contacting.
Source: @WSJ Read full article
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2. Is the global rate hike cycle near the peak?
Source: Truist Advisory Services
3. Next, we have the changes in mortgage debt-to-income ratios since 2007.
Source: Oxford Economics
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Food for Thought
1. Production and processing of clean energy metals:
Source: The New York Times Read full article
2. Marriages before the age of 18 in Latin America:
Source: UN Read full article
3. Suicide rates in US prisons:
Source: Statista
4. Camera shipments:
Source: Statista
5. Electric and hybrid vehicles on the road in the US:
Source: USAFacts
6. Industrial-robot installations:
Source: @WSJ Read full article
7. Where is the best fall color?
Source: Erin Davis
Westmore, Vermont:
Source: @mark_tarello Read full article
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