The Daily Shot: 23-Nov-22
• Administrative Update
• The United States
• Canada
• The United Kingdom
• The Eurozone
• Europe
• Asia – Pacific
• China
• Emerging Markets
• Cryptocurrency
• Commodities
• Energy
• Equities
• Credit
• Global Developments
• Food for Thought
Administrative Update
1. As a reminder, the next Daily Shot will be out on Monday, November 28th.
2. Please note that the Daily Shot search tool can locate individual images, not just posts. To view the chart results, click on the “Image” tab. For example, here are the search results for “Brazil.”
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The United States
1. The Richmond Fed’s manufacturing index remains in contraction territory.
But it is holding in the upper range of US regional surveys.
Source: Simon White, Bloomberg Markets Live Blog
• Capacity utilization is deteriorating.
• Hiring has stopped.
• Raw materials inventory growth is back at pre-COVID levels.
But price pressures persist.
• Wage growth has been moderating.
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2. The Conference Board’s leading index points to manufacturing weakness ahead (2 charts).
Source: Hugo Ste-Marie, Portfolio & Quantitative Strategy Global Equity Research, Scotia Capital
Source: BofA Global Research
3. Over the long run, US manufacturers will increasingly face labor shortages.
Source: Goldman Sachs
4. Homebuilders have been rapidly cutting prices.
Source: Quill Intelligence
• Home purchases by investors declined sharply last quarter.
Source: @WSJ Read full article
Source: Redfin
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5. The looming recession has been highly anticipated.
Source: Torsten Slok, Apollo
The yield curve inversion continues to hit multi-decade extremes.
The recession typically starts shortly after the yield curve begins to steepen again.
Source: BofA Global Research
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6. The terminal rate is back above 5%. Here is the market pricing for the maximum fed funds rate in the current cycle.
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Canada
1. Retail sales declined in September, …
… but they probably rebounded last month. Real retail sales have been relatively flat.
Source: Scotiabank Economics
Weak consumer confidence points to a deterioration in retail sales in the months ahead.
Source: Capital Economics
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2. Mobility indicators have recovered.
Source: Scotiabank Economics
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The United Kingdom
1. Government borrowing was lower than expected last month, but it will accelerate soon.
Source: Reuters Read full article
Here is a long-term forecast from Pantheon Macroeconomics.
Source: Pantheon Macroeconomics
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2. Corporate insolvencies have been rising.
Source: Longview Economics
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The Eurozone
1. Euro-area consumer confidence bounced from the lows this month.
Nonetheless, household spending is headed lower.
Source: Pantheon Macroeconomics
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2. French retail sales have been softer (on a year-over-year basis).
3. Germany’s November composite PMI surprised to the upside. We will have more on the euro-area PMI reports next week.
4. The TLTRO repayments are a form of quantitative tightening.
Source: Simon White, Bloomberg Markets Live Blog
5. How much are governments spending on energy support?
Source: Capital Economics
6. Are European stocks about to outperform?
Source: Simon White, Bloomberg Markets Live Blog
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Europe
1. Is Poland’s industrial production turning lower?
2. Euro-area weakness will be a drag on Swiss economic growth.
Source: Pantheon Macroeconomics
3. Europeans are paying attention to governments’ energy-saving campaigns (except in the UK).
Source: @YouGov Read full article
• This chart shows total gas flows to the EU.
Source: BIS Read full article
• Europe still faces energy risks this winter.
Source: Barclays Research
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Asia – Pacific
1. Japan has been reducing its dependency on fossil fuels.
Source: Alpine Macro
2. The RBNZ delivered a jumbo rate hike amid robust employment trends and elevated inflation.
Source: @WSJ Read full article
The New Zealand dollar has been strengthening against AUD.
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3. Australia’s PMI report showed a contraction in business output this month.
Source: S&P Global PMI
While manufacturing is still in growth territory, …
Source: S&P Global PMI
… service firms are struggling.
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China
1. New COVID cases are nearing the Shanghai lockdown peak.
Source: Our World in Data
Source: Reuters Read full article
The number of cities in lockdown is surging.
Source: Gavekal Research
Here is Gavekal’s lockdown intensity index.
Source: Gavekal Research
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2. Households remain risk-averse.
Source: Alpine Macro
3. State-owned companies increasingly dominate the housing market.
Source: Fitch Ratings
4. Demand for call options on the largest US-based equity ETF has been surging.
Source: @financialtimes Read full article
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Emerging Markets
1. Mexico’s retail sales are holding up for now.
2. Argentina’s exports jumped in October.
3. Many EM rate hike cycles are well ahead of the Fed.
Source: @WSJ Read full article
Policy rates are peaking.
Source: Capital Economics
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4. Is EM equity underperformance vs. the US about to end?
Source: BofA Global Research
5. There is a lot of EM debt getting refinanced.
Source: IIF
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Cryptocurrency
1. Litecoin (LTC) continues to outperform top crypto peers.
Source: FinViz
LTC broke above its 40-week moving average.
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2. Bitcoin has been trading with a beta of 3 to the S&P 500.
Source: @WSJ Read full article
3. Decentralized exchange tokens (DEX) have outperformed centralized exchange tokens (CEX) this month.
Source: @Delphi_Digital
4. Here is a look at crypto performance following the FTX implosion.
Source: @Delphi_Digital
5. Outstanding crypto loans on decentralized finance (DeFi) platforms are down more than 70% from peak levels.
Source: Morgan Stanley Research
6. The estimated breakeven price for short-term BTC holders is around $23K.
Source: Morgan Stanley Research
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Commodities
1. The gap between gold and real yields persists.
Source: PGM Global
2. Gold production costs have been rising.
Source: PGM Global
3. Metals & Mining companies look cheap.
Source: @TaviCosta, @CrescatMax
4. Graphite prices are climbing.
Source: @financialtimes Read full article
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Energy
1. Gazprom is threatening to cut the remaining natural gas deliveries to Europe via Ukraine.
Source: @TheTerminal, Bloomberg Finance L.P.
Source: @markets, @a_shiryaevskaya, @MaznevaElena Read full article
European natural gas prices jumped.
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2. Europe’s diesel inventories remain depressed.
Source: Oxford Institute for Energy Studies
3. US natural gas prices climbed in recent days as the Northwest is about to get some cold weather.
Source: NOAA
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4. Oil markets are vulnerable to a global economic slump.
Source: BCA Research
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Equities
1. Is the S&P 500 about to test resistance at the 200-day moving average?
S&P 500 futures:
Source: @TheTerminal, Bloomberg Finance L.P.
The S&P 500 also faces a downtrend resistance, while VIX is at support.
Source: @FrankCappelleri
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2. Consumer discretionary stocks are widening their underperformance vs. consumer staples. The market is increasingly concerned about US households cutting back on discretionary spending. And Tesla’s losses exacerbated the index declines.
The put option volume on consumer discretionary stocks has been rising.
Source: @markets, @katrinamlewis, @JPBarnert Read full article
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3. Share buybacks have been robust.
Source: EPFR Navigator
4. Stocks typically perform well after midterm election years.
Source: BCA Research
However, at times, US stocks have lagged international peers after midterm elections.
Source: BCA Research
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5. JP Morgan’s clients are not in a hurry to increase their equity exposure.
Source: JP Morgan Research; @WallStJesus
6. Long/short hedge funds’ equity exposure remains at multi-year lows.
Source: Deutsche Bank Research
7. Short interest in S&P 500 stocks is still very low.
Source: Goldman Sachs; @MikeZaccardi
8. The low-vol equity factor has outperformed this year.
9. VIX has not been an effective hedge for stocks in 2022.
Source: Variant Perception
• VIX has diverged from its Treasury market equivalent (MOVE).
Source: @themarketear
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Credit
1. Capital markets activity has slowed, particularly in leveraged loans (2 charts).
Source: Quill Intelligence
Source: The Economist Read full article
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2. Despite price declines, leveraged loans’ total returns have held up because the coupon increased sharply due to the Fed’s rate hikes.
h/t @tatianadariee
3. US and European junk-rated firms have meaningful exposure to central bank rate hikes. One reason is leveraged loans (floating-rate coupon).
Source: Deutsche Bank Research
4. Credit downgrades point to wider HY spreads.
Source: Hugo Ste-Marie, Portfolio & Quantitative Strategy Global Equity Research, Scotia Capital
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Global Developments
1. G7 10-year sovereign bonds have wiped out a decade of returns.
Source: MRB Partners
2. Goldman’s risk appetite index is back in positive territory.
3. The dollar’s uptrend is starting to weaken as speculators cut their net long positions. A break below the 100-105 support zone could signal a major trend reversal. (2 charts)
Source: Aazan Habib, Paradigm Capital
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4. Countries with high household debt, such as Australia and Canada, remain vulnerable amid rising interest rates. (2 charts)
Source: MRB Partners
Source: MRB Partners
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5. Finally, we have the OECD forecasts for growth and inflation.
Source: Scotiabank Economics
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Food for Thought
1. Births and deaths in China:
Source: @simongerman600
2. Trade as a share of GDP vs. income inequality:
Source: @financialtimes Read full article
3. Tropical rainforest loss in 2021:
Source: Statista
4. The secret cabal:
Source: @axios Read full article
5. Teens’ favorite social media platforms:
Source: @chartrdaily
6. Holiday spending plans (survey):
Source: S&P Global Market Intelligence
• Black Friday shopping preferences this year:
Source: @CivicScience Read full article
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7. Average cost of a Thanksgiving dinner (2 charts):
Source: Statista
Source: The Economist Read full article
8. Average time spent on various activities:
Source: USDA Read full article
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Happy Thanksgiving to our readers in the United States.
The next Daily Shot will be out on Monday, November 28th.
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