The Daily Shot: 04-Apr-23
• The United States
• Canada
• The United Kingdom
• Europe
• China
• Emerging Markets
• Cryptocurrency
• Commodities
• Energy
• Equities
• Credit
• Global Developments
• Food for Thought
The United States
1. The ISM PMI report indicates a faster drop in US manufacturing activity in March.
Source: Reuters Read full article
• Treasury yields declined in response.
• The new orders index shows deteriorating demand.
• Factories downsized their workforce.
• Manufacturers are now cutting their inventories, …
… and no longer see customers’ inventories as too tight.
• The ISM Supplier Deliveries subindex dropped to 44.8, its lowest level since 2009, indicating that suppliers are responding rapidly to manufacturers’ needs as a result of deteriorating demand.
• Input prices unexpectedly declined.
• Here are the contributions to the headline ISM index.
Source: @TheTerminal, Bloomberg Finance L.P.
• The ISM report points to slower GDP growth.
Source: Morgan Stanley Research
The March ISM PMI and soft consumer spending in February sent the Atlanta Fed’s GDPNow Q1 growth projection below 2%.
Source: @AtlantaFed
• The ISM report indicates a further moderation in core goods inflation.
Source: Pantheon Macroeconomics
Leading indicators signal further declines ahead for the ISM PMI.
– Global central banks’ policy tightening:
Source: Industrial Alliance Investment Management
– MarketDesk’s leading index:
Source: MarketDesk Research
However, Morgan Stanley sees the ISM PMI bottoming.
Source: Morgan Stanley Research
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2. Deutsche Bank’s recession probability indicator remains elevated.
Source: Deutsche Bank Research
3. Commercial property prices are experiencing a sharp decline.
This chart shows available sublease office space.
Source: Bloomberg Tax Read full article
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4. Next, we have residential and non-residential private construction spending trends.
Source: Chart and data provided by Macrobond
Architecture billings continue to contract.
Source: Wells Fargo Securities
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5. Finally, we have real consumer spending trends for goods and services.
Source: Chart and data provided by Macrobond
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Canada
1. Factory activity is back in contraction mode.
Source: S&P Global PMI
2. The BoC business survey outlook worsened last quarter.
Here are some additional trends from the report.
• Future sales growth:
• Input price deflation:
• No significant difficulties meeting demand:
• The end of labor shortages:
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3. Air travel is back to pre-COVID levels.
Source: Scotiabank Economics
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The United Kingdom
1. Among major economies besides Switzerland, UK banks have the highest total asset-to-GDP ratio.
Source: Merrill Lynch
2. GBP/USD is testing resistance.
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Europe
1. Here are some manufacturing PMI trends in the Eurozone.
• Italy and Spain (modest growth):
Source: S&P Global PMI
Source: S&P Global PMI
• The Netherlands (ongoing contraction):
Source: S&P Global PMI
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2. Sweden’s manufacturing contraction worsened last month.
3. Central Europe’s factory PMIs are also in contraction territory.
• Poland:
Source: S&P Global PMI
• Czech Republic
Source: S&P Global PMI
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4. Is Swiss core inflation finally peaking?
Separately, Swiss sight deposits increased last month, …
… as the authorities borrowed dollars from the Fed to deal with the UBS/CS merger.
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China
1. Chinese onshore stocks have underperformed during previous global market downturns.
Source: BCA Research
2. Commercial and residential property sales volume snapped back in Q1.
Source: China Beige Book
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Emerging Markets
1. Let’s run through some manufacturing PMI trends.
• Brazil (still shrinking):
Source: S&P Global PMI
• Colombia (back in growth mode):
Source: S&P Global PMI
• Mexico (modest expansion):
• Turkey (growing again):
• South Africa (headwinds):
• Nigeria (awful):
Source: S&P Global PMI
• Russia (ramped-up weapons production):
Source: S&P Global PMI
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2. The ruble continues to soften.
3. Turkey’s inflation has peaked.
4. Last quarter saw robust inflows into EM equity funds.
Source: BofA Global Research
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Cryptocurrency
1. The Crypto Fear & Greed Index remains in “greed” territory after spending most of last year in the “fear” zone.
Source: Alternative.me
2. Crypto investment products had minor inflows last week on low trading volume. Long-bitcoin funds accounted for most of the inflows.
Source: CoinShares Read full article
3. Similar to BTC, ETH’s liquidity has declined since the FTX collapse.
Source: @KaikoData
4. Dogecoin rallied after its dog logo appeared on Twitter’s main page.
Source: CoinDesk Read full article
Source: @elonmusk
Source: Google
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Commodities
Iron ore and steel futures are rolling over.
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Energy
1. Crude oil rallied strongly after the OPEC news.
Source: Reuters Read full article
The Brent curve moved deeper into backwardation.
2. Oil market surplus will end in Q4, according to the updated forecast from Longview Economics.
Source: Longview Economics
But the research firm still expects oil prices to decline by the end of the year.
Source: Longview Economics
Back to Index
Equities
1. Let’s start with some performance data.
• The S&P 500 Q1 return attribution by member:
Source: S&P Dow Jones Indices
• Dividend strategies’ Q1 performance:
Source: Hugo Ste-Marie, Portfolio & Quantitative Strategy Global Equity Research, Scotia Capital
• Equity factor performance in March and year-to-date:
Source: CornerCap Institutional
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2. Historically, the S&P 500 ended the year higher after a positive Q1.
Source: @Optuma
3. How do stocks perform in different ISM Manufacturing PMI regimes?
Source: MarketDesk Research
The ISM index signals further revenue weakness for growth companies.
Source: @FrancoisTrahan
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4. This chart shows the percentage of US stocks that are overbought (based on RSI):
Source: Longview Economics
5. Short interest remains near multi-year lows.
Source: Deutsche Bank Research
6. Operating margins continue to shrink.
Source: Alpine Macro
7. Share buybacks could decrease further as corporate cash balances decline.
Source: Oxford Economics
8. The ARK Innovation ETF continues to follow the dot-com analog.
Source: @TheTerminal, Bloomberg Finance L.P.
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Credit
1. Loan balances at US banks declined last week as companies paid down their revolving debt.
2. Capital markets activity shows signs of life.
Source: Torsten Slok, Apollo
3. Credit investor positioning has been cautious.
Source: BofA Global Research; @MikeZaccardi
4. This chart shows commercial real estate debt in perspective.
Source: Alpine Macro
5. There are a lot of highly-leveraged syndicated loans.
Source: Oxford Economics
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Global Developments
1. The US dollar index (DXY) is at support.
2. This chart shows semiconductor supply shortages and price pressures over time.
Source: S&P Global PMI
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Food for Thought
1. Tax return surprises:
Source: @CivicScience Read full article
• Spending tax refunds:
Source: @CivicScience Read full article
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2. US child labor violations:
Source: @financialtimes Read full article
3. Job cuts since October:
Source: @BBGVisualData Read full article
4. The NASA budget’s biggest beneficiaries:
Source: Statista
5. EV share of global auto sales:
Source: @DrSimEvans, @IEA
6. US population growth:
Source: @sffed Read full article
7. Waiting for your fast-food order:
Source: @CivicScience Read full article
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