The Daily Shot: 24-Jan-23
• The United States
• Canada
• The United Kingdom
• The Eurozone
• Europe
• Japan
• China
• Emerging Markets
• Cryptocurrency
• Commodities
• Energy
• Equities
• Alternatives
• Rates
• Global Developments
• Food for Thought
The United States
1. The Conference Board’s index of leading indicators worsened again last month.
This index has never declined this much in six months without a recession (the index goes back to the late 1950s).
Source: @TheTerminal, Bloomberg Finance L.P.
——————–
2. US financial conditions continue to ease.
3. The World Economics SMI report shows this month’s US business activity in contraction territory.
Source: World Economics
4. Next, we have some updates on inflation.
• Will the CPI approach 2% this year? This chart shows MarketDesk’s CPI leading index.
Source: MarketDesk Research
• The broad money supply signals weaker inflation ahead.
Source: BCA Research
• Healthcare inflation is about to surge as wage growth in the sector accelerates.
Source: Deutsche Bank Research
• According to Nomura, housing-related inflation is expected to remain stubbornly high.
Source: Nomura Securities
– Single-family rent inflation continues to ease.
Source: CoreLogic
• The Phillips Curve “kink” is back.
Source: BCA Research
——————–
5. Next, let’s take a look at some labor market trends.
• The declining trend in total job openings is similar to what occurred in 2001 and 2008, albeit from a higher level.
Source: Alpine Macro
– This chart shows year-over-year growth in job openings on Indeed, by sector.
Source: @WSJ Read full article
• Tech sector layoffs have been rising (2 charts).
Source: @roger_lee
Source: @lcrupp, @technology Read full article
• Here is an estimate of layoffs and hires in December (a “rotation” from tech to other industries).
Source: Macrobond
——————–
6. Business closings are on the rise.
Source: Quill Intelligence
Back to Index
Canada
1. Retail sales saw a smaller decrease than anticipated in November due to stronger car sales.
2. Canadians’ restaurant visits are well above pre-COVID levels.
Source: Capital Economics
Back to Index
The United Kingdom
1. Housing market valuations have been stretched.
Source: Longview Economics
2. Housing starts climbed sharply last year.
Source: Torsten Slok,Ā Apollo
3. Rent inflation has been surging.
Source: Torsten Slok,Ā Apollo
4. Marketing budgets keep growing despite recession risks.
Source: S&P GlobalĀ PMI
Back to Index
The Eurozone
1. Consumer confidence has been recovering from extreme lows.
2. Here are the contributions to the euro-area current account balance.
Source: Arcano Economics
3. Where do investors see the ECB’s terminal rate?
Source: Goldman Sachs
4. This chart shows euro-area fund issuance minus redemptions.
Source: Arcano Economics
5. Asset managers have been boosting their bets on the euro (via CME futures).
Back to Index
Europe
1. EUR/CHF is holding near parity.
Source: @TheTerminal, Bloomberg Finance L.P.
2. Europe continues to buy a lot of LNG.
Source: @ANZ_Research
There is still potential for a supply/demand gap in European energy markets this year, according to the IEA.
Source: IEA
——————–
3. European housing valuations have been climbing over the past decade.
Source: S&P Global Ratings
4. Poland’s economy is cooling.
• Industrial production (year-over-year):
• Retail sales:
• Real wages:
Source: ING
Back to Index
Japan
1. Manufacturing activity continues to contract, …
… as export orders sink.
Manufacturers continue to face price pressures.
2. Service sector activity remains in growth territory.
3. Asset managers have covered their short bets (or carry trades) against the yen.
Back to Index
China
1. The yuan has recovered from some of its steep undervaluation versus the dollar.
Source: MRB Partners
2. Steel production has increased, keeping up with rising infrastructure spending.
Source: Numera Analytics (@NumeraAnalytics)
3. The World Economics SMI report shows slower declines in China’s business activity this month. Sales growth gained momentum.
Source: World Economics
4. Next, let’s take a look at the property markets.
• New home sales by year:
Source: @WSJ Read full article
• Mortgage rates:
Source: Gavekal Research
• Households’ property losses vs. higher savings:
Source: TS Lombard
• Property developer funding (still depressed):
Source: @ANZ_Research
Developers are looking to Beijing for financing support to restart construction.
Source: Gavekal Research
——————–
5. Hong Kong stocks continue to outperform.
Back to Index
Emerging Markets
1. Inflation will surprise to the downside, according to Variant Perception.
Source: Variant Perception
2. This chart shows Scotiabank’s forecasts for LatAm inflation.
Source: Scotiabank Economics
3. Next, we have India’s rural and urban unemployment rates and labor force participation rates.
Source: Reuters Read full article
4. The Indonesian rupiah is rebounding rapidly.
Back to Index
Cryptocurrency
1. Cryptos continue to rally as bitcoin climbs above $23k.
Here is the performance over the past seven days.
——————–
2. Crypto funds saw minor inflows last week, primarily in short-bitcoin products.
Source: CoinShares Read full article
3. The recent rise in BTC’s price placed a majority of short-term holders in profit.
Source: Glassnode Read full article
Meanwhile, bitcoin miners have been selling into the rally.
Source: Glassnode Read full article
——————–
4. Bitcoin’s market cap relative to the total crypto market cap (dominance ratio) continued to tick higher. A sustained rise in the dominance ratio signals risk-off conditions. Could the crypto rally stall?
Source: @StocktonKatie
Back to Index
Commodities
1. Copper prices have exceeded forecasts.
Source: Hugo Ste-Marie, Portfolio & Quantitative Strategy Global Equity Research, Scotia Capital
2. What are the drivers of silver demand?
Source: PGM Global
Back to Index
Energy
1. Brent oil is back to fair value, increasing the likelihood of higher prices this year, according to Numera Analytics.
Source: Numera Analytics (@NumeraAnalytics)
Brent has been rebounding from recent lows.
——————–
2. Crack spreads are rising again.
3. US refined product exports hit a multi-year high.
Source: Princeton Energy Advisors
4. Peak gasoline demand in the US?
Source: @business Read full article
5. European firms are importing a lot of Russian diesel ahead of the upcoming restrictions next month.
Source: @ANZ_Research
Back to Index
Equities
1. All eyes are on this chart of the S&P 500.
2. One final bounce before the recession?
Source: @JonathanJLevin, @opinion Read full article
2. Tech/semiconductor shares led the rally on Monday.
3. There has been some short-covering in recent days.
4. As market attention shifts from inflation, stocks and bonds are becoming negatively correlated (2 charts).
Source: @TheTerminal, Bloomberg Finance L.P.
5. Positioning remains cautious, according to Deutsche Bank’s consolidated equity positioning indicator.
Source: Deutsche Bank Research
6. Profit margins continue to trend lower.
Source: @FactSet Read full article
7. Low valuations and a weaker dollar benefit equities outside the US. (2 charts)
Source: BCA Research
Source: BCA Research
——————–
8. Volatility traders are focused on the first few days of February.
Source: @TheTerminal, Bloomberg Finance L.P.
Back to Index
Alternatives
1. Let’s start with the top hedge fund managers.
Source: @financialtimes Read full article
Large hedge funds outperformed last year.
Source: @WSJ Read full article
——————–
2. How do hedge funds perform in different volatility regimes?
Source: J.P. Morgan Asset Management
3. Endowments like alternatives.
Source: J.P. Morgan Asset Management
4. The value of deals involving taking companies private reached an all-time high last year.
Source: Opto Read full article
5. More capital has been raised in private infrastructure funds in the past few years than at any other point in history, according to PitchBook. This has been driven by energy security, climate change, and digital infrastructure.
Source: PitchBook
6. Private equity deal-making remained healthy in Europe last year.
Source: PitchBook
7. Working with placement agents does not necessarily mean a shorter time to close.
Source: PitchBook
Back to Index
Rates
1. The 10-year Treasury yield is holding short-term support, although there is strong resistance ahead.
2. Bond funds continue to see inflows …
Source: Deutsche Bank Research
… driven by government debt and IG corporates.
Source: Deutsche Bank Research
——————–
3. The Fed’s balance sheet is down nearly half a trillion dollars from the peak (2 charts).
Quantitative tightening will continue for another couple of years, according to Wells Fargo.
Source: Wells Fargo Securities
——————–
4. Net speculative bearish positioning in Treasuries appears stretched.
Source: Deutsche Bank Research
Traders are positioning for a steeper yield curve.
Back to Index
Global Developments
1. China’s pent-up consumer demand will be a tailwind for global growth (2 charts).
Source: Nordea Markets
Source: @acemaxx, @markets Read full article
——————–
2. Income inequality between countries has fallen (left), while inequality within most economies has risen since the late 1970s (right).
Source: Goldman Sachs
3. Luxury secondhand watch prices continue to trend lower.
Source: WatchEnthusiasts
——————–
Food for Thought
1. Rising populism around the world:
Source: BCA Research
Populism tends to depress economic growth.
Source: BCA Research
——————–
2. The Mediterranean Sea warming trend:
Source: @CEAM_Meteo
3. Cuban refugees in the US:
Source: @WSJ Read full article
4. Most common causes of death by age group:
Source: Statista
• Changes in US death rates by cause in 2021:
Source: @axios Read full article
——————–
5. Government healthcare spending in select countries:
Source: The Economist Read full article
6. Maximum speed limit in Europe (100 km = 62 miles):
Source: Datawrapper
——————–
Back to Index