The Daily Shot: 17-Feb-23
• Administrative Update
• The United States
• Asia – Pacific
• China
• Emerging Markets
• Cryptocurrency
• Commodities
• Energy
• Equities
• Credit
• Global Developments
• Food for Thought
Administrative Update
The Daily Shot will not be published on Monday, February 20th.
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The United States
1. The January report on producer prices topped expectations in both the headline and core PPI. Upstream price pressures persist.
Here are the contributions.
Source: @TheTerminal, Bloomberg Finance L.P.
Trade services inflation has slowed, suggesting softer profit margin growth.
Weaker profit margins mean less hiring.
Source: @katiadmi, @business Read full article
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2. Initial jobless claims remain very low for this time of the year, …
… running below the average of 2018, 2019, and 2022.
However, continuing claims are starting to show an upward trend.
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3. Given the stubbornly high inflation and the ongoing tightness in the labor markets, some Fed officials have indicated a willingness to consider a 50 bps rate hike.
Source: @Jonnelle, @economics Read full article
Source: @SteveMatthews12, @economics Read full article
The market-based rate hike expectation for March climbed above 25 bps, signaling a nonzero probability of a half-point increase.
Markets took notice of the PPI beat and hawkish Fed comments, with stocks and bonds selling off.
Short-term inflation expectations continue to rebound.
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4. The Philly Fed’s regional manufacturing report was a disaster, showing rapidly deteriorating conditions this month (diverging from the NY Fed’s report).
• It doesn’t bode well for manufacturing activity at the national level.
Source: @TheTerminal, Bloomberg Finance L.P.
• Inventories have been rising, …
… outpacing orders and signaling further production weakness ahead.
Source: @MikaelSarwe
• The region’s manufacturers are cutting workers’ hours.
• Fewer firms have been boosting prices as demand softens.
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5. Next, we have some updates on the housing market.
• Housing starts and building permits are down substantially from last year but remain above pre-COVID levels.
– The weakness has been in single-family housing (3 charts).
– On the other hand, multifamily housing activity remains robust.
The backlog of multifamily housing projects is becoming massive.
Source: Wells Fargo Securities
• Builders expect an uptick in demand if they lower prices.
Source: @AliWolfEcon
• Mortgage rates have been grinding higher.
• Mortgage originations have fallen to more typical levels but have not collapsed.
Source: Federal Reserve Bank of New York
• Mortgage delinquencies remain low.
Source: Federal Reserve Bank of New York
• This chart shows real house prices vs. mortgage demand.
Source: Oxford Economics
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6. The latest Penta-CS report shows an improvement in consumer sentiment.
Source: @PentaGRP, @CivicScience
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Asia – Pacific
1. Japan’s trade deficit was narrower than expected in January.
2. Singapore’s exports are down sharply on a year-over-year basis.
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China
1. After months of declines, new home prices were flat in January.
Prices are well below trend.
Source: Pantheon Macroeconomics
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2. Activity is picking up as the economy reopens.
Source: Pantheon Macroeconomics
3. China-focused funds are seeing some outflows.
Source: BofA Global Research
4. Local government debt levels continue to rise. Spreads have been elevated.
Source: Gavekal Research
6. Protests have become more commonplace. Elderly retirees are protesting cuts to healthcare benefits amid soaring medical costs.
Source: BBC Read full article
7. Hong Kong’s unemployment rate continues to fall.
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Emerging Markets
1. The Philippine central bank hiked rates again.
2. Thai GDP unexpectedly contracted last quarter.
Source: @Ton_Asean, @markets Read full article
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3. Adani shares remain under pressure.
4. Brazil’s economic activity edged higher in December.
5. EM debt funds saw some outflows in recent days.
Source: BofA Global Research
6. EM core inflation continues to climb.
Source: Capital Economics
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Cryptocurrency
1. Cryptos rallied over the past week, with bitcoin outperforming large-cap peers.
Source: FinViz
2. Bitcoin’s market cap relative to the total crypto market cap (dominance ratio) continues to hold support. A sustained rise in the dominance ratio typically signals risk-off conditions.
Similarly, the ETH/BTC price ratio faces strong resistance, suggesting a lower appetite for risk among crypto traders despite bear market rallies.
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3. The Crypto Fear & Greed Index returned to “greed” territory.
Source: Alternative.me
4. Litecoin (LTC) has been a standout, rallying off long-term support.
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Commodities
1. Rising copper demand has been all about China.
Source: Macquarie; @Scutty
2. Lithium prices have been rolling over.
3. The Global X Uranium ETF (URA) is stabilizing relative to the Global X Lithium ETF (LIT).
Source: Aazan Habib, Paradigm Capital
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Energy
1. US jet fuel inventories remain very low.
Source: @JKempEnergy
Source: Reuters Read full article
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2. US natural gas in storage is holding above the five-year average.
3. European natural gas prices continue to sink.
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Equities
1. Deteriorating global liquidity conditions will remain a headwind for stocks.
Source: Simon White, Bloomberg Markets Live Blog
2. Are stock investors finally taking notice of persistent inflationary pressures, a hawkish Fed, and rising yields?
Source: @themarketear
3. After declining further, profit margins are expected to rebound later this year and into 2024.
Source: @katiadmi, @business Read full article
4. What are the drivers of nearterm returns? This chart is based on a survey of investment managers by S&P Global.
Source: S&P Global Market Intelligence
5. Margin debt and stock prices have diverged.
Source: @t1alpha
6. Retail investors have been very active lately, …
Source: Vanda Research
… buying the dip.
Source: Vanda Research
Retail favorites have seen substantial net purchases lately.
Source: Vanda Research
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7. Demand for tech stocks (including from retail investors) forced substantial short-covering by hedge funds.
Source: Goldman Sachs
Source: Reuters Read full article
But tech mutual funds and ETFs are now seeing outflows.
Source: BofA Global Research
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8. With a large share of options transactions expiring within a day, the recorded options open interest has been relatively low.
Source: Chris Murphy, Susquehanna International Group
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Credit
1. High-yield funds registered some outflows lately.
Source: BofA Global Research
2. January was a big month for large-company bankruptcies, as earnings weakened and access to cheap credit was shut off.
Source: @ncallanan, @abhinavvr, @markets Read full article
3. Commercial banks are sitting on substantial unrealized securities losses.
Source: Longview Economics
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Global Developments
1. Commodity super cycles typically correspond to rising capital expenditures.
Source: Goldman Sachs
2. Corporate earnings beats have been strong in Europe, while Japan and EM have missed.
Source: Deutsche Bank Research
3. Loan demand in advanced economies has deteriorated.
Source: Oxford Economics
4. Global stock/bond ratios are on the rise, although Japan and the US are lagging.
Source: MRB Partners
5. The US dollar trade-weighted index is breaking above its 50-day moving average.
Source: @TheTerminal, Bloomberg Finance L.P.
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Food for Thought
1. Financial resolutions for 2023:
Source: LendingTree
Financial regrets:
Source: LendingTree
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2. What influences your purchase decisions?
Source: @CivicScience
3. Revenue per restaurant unit vs. total US stores:
Source: @chartrdaily
4. US auto sales:
Source: MarketDesk Research
5. Countries with the highest concentration of earthquakes:
Source: @OpenAxisHQ
6. 1.5 billion grandparents in the world:
Source: The Economist Read full article
7. Top fleets of combat tanks:
Source: Visual Capitalist Read full article
8. Lake Mead water level:
Source: Lakes Online
9. Towns and counties matching last names of US presidents:
Source: US Census Bureau Read full article
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The next Daily Shot will be out on Tuesday, February 21st.
Have a great weekend!
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