The Daily Shot: 12-Apr-23
• The United States
• Europe
• Japan
• Asia – Pacific
• China
• Emerging Markets
• Commodities
• Energy
• Equities
• Alternatives
• Credit
• Global Developments
• Food for Thought
The United States
1. The NFIB small business sentiment index edged lower last month.
• Sales expectations remain depressed.
• The compensation plans index ticked down, …
… signaling slower wage growth ahead.
Source: Oxford Economics
• Small businesses’ weakening hiring plans are a sign of declining national payrolls growth.
Source: Pantheon Macroeconomics
• However, many firms still can’t fill their job openings.
Source: Arcano Economics
• The price plans indicator points to softer inflation ahead.
Source: Chart and data provided by Macrobond
• Small firms’ CapEx plans signal sharp declines in business investment going forward.
Source: Oxford Economics
• The most striking change in the NFIB report was the deterioration in credit conditions in March.
Small firms are increasingly paying above-market rates on loans.
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2. Next, we have some updates on the labor market.
• Here are the changes in US payrolls by sector (2 charts).
Source: @TheTerminal, Bloomberg Finance L.P.
Source: @WSJ Read full article
• Real estate and related sectors are seeing a pullback in hiring (3 charts).
• The number of Americans on the sidelines who would like a job is near pre-COVID lows.
• The number of multiple jobholders continues to climb.
Source: Deutsche Bank Research
Source: MarketWatch Read full article
• Here are some additional trends from the jobs report.
– Rising labor force participation among Americans with disabilities:
– Full- vs. part-time employment:
Source: ING
– Employment by earnings tier:
Source: Mizuho Securities USA
– The geographic labor market mismatch:
Source: Deutsche Bank Research
– The jobs/workers gap has been shrinking. Here are the contributions.
Source: Goldman Sachs
– The Phillipps Curve:
Source: Pantheon Macroeconomics
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3. The inversion in the 10-year/3-month portion of the Treasury curve has been hitting multi-decade extremes.
Here are the yield curve changes over the past five business days.
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Europe
1. The Eurozone Sentix investor sentiment indicator improved this month.
2. Euro-area real retail sales declined again in February.
3. Norway’s underlying inflation remains elevated.
4. A significant number of young people in the EU are at risk of poverty.
Source: Eurostat Read full article
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Japan
1. Machinery orders declined in February.
Machine tool orders are down 15% from a year ago.
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2. Japanese firms expect higher inflation despite the recent softness in sales prices.
Source: Deutsche Bank Research
3. Next, we have some updates on the equity market.
• The TOPIX Index is holding support above its 40-week moving average, albeit confined to a two-year long range.
• The Invesco Japanese Yen ETF (FXY) is testing resistance, but long-term momentum has improved since the October 2022 low.
• High dividend yield stocks have outperformed in recent years.
Source: MSCI Read full article
• The BoJ is collecting rich dividends from ETFs it owns.
Source: Hideyuki Sano, @TakingStock Read full article
• Buffett plans to increase his investments in Japan’s biggest trading houses.
Source: Barron’s Read full article
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Asia – Pacific
1. South Korea’s unemployment remains near multi-decade lows.
2. Taiwan’s exports were softer than expected in March.
Taiwan’s core CPI held steady last month.
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China
1. Credit growth topped expectations, signaling increased investment.
Source: @markets Read full article
• CNY loans:
• Aggregate financing:
2. The money supply growth slowed.
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Emerging Markets
1. Brazil’s inflation declined again last month.
Source: @andrewrosati, @economics Read full article
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2. Mexico’s manufacturing output inched lower in February.
3. South Africa’s manufacturing production remains at multi-year lows.
4. Turkey’s industrial production dropped sharply in February.
Source: @berilakman, @economics Read full article
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5. Tighter liquidity signals a deeper corporate profit contraction across emerging markets.
Source: BCA Research
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Commodities
1. Gold mining shares have lagged gold prices, but the rally continues.
Source: @TheTerminal, Bloomberg Finance L.P.
2. Softs have been on fire.
• Coffee futures are surging amid concerns over short-term supply tightness. Brazilian and Colombian farmers are in no rush to sell.
• Sugar prices are hitting multi-year highs.
Source: @MumbiGitau, @markets Read full article
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Energy
1. Asset managers were squeezed by OPEC’s surprise production cut (2 charts).
Source: @JKempEnergy
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2. Shares of oil & gas services firms have been underperforming.
3. This chart shows US power generation from renewables.
Source: Canary Media Read full article
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Equities
1. Financials have been rebounding.
2. The calm before the storm?
3. The market is signaling an economic slowdown.
Source: @WSJ Read full article
4. Analysts continue to downgrade their S&P 500 earnings estimates for 2023 and 2024.
Source: Yardeni Research
Here are the estimates by quarter.
Source: Yardeni Research
Are the Q1 downgrades overdone? There is a great deal of uncertainty associated with last quarter’s earnings.
Source: Deutsche Bank Research
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5. Here is a look at recent QQQ (Nasdaq 100) returns: morning vs. afternoon and overnight vs. day.
Source: Chris Murphy, Susquehanna International Group
6. The S&P 500 tends to rise 12 months after a trough in the 10s/2s Treasury curve. The yield curve leads cycle recoveries by roughly four to eight quarters, while equities lead by two to three quarters, according to Deutsche Bank.
Source: Deutsche Bank Research
7. Equity market implied volatility remains very low relative to rates vol.
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Alternatives
1. Let’s start with some data on private credit funds.
Source: IMF Read full article
2. March saw a pickup in private equity activity.
Source: S&P Global Market Intelligence
3. State and local pension plans expect higher allocations to alternatives.
Source: @WSJ Read full article
4. Information technology and healthcare have driven median buyout multiples higher in Europe and the US.
Source: PitchBook
5. There has been a significant drop in venture capital exits. Companies are finding it difficult to raise money at the multiples they hoped for, leading to smaller valuation step-ups and increased dilution, according to PitchBook.
Source: PitchBook
The one-year horizon performance for $1 billion+ venture capital funds is negative.
Source: PitchBook
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6. Globally, only 18 unicorns (startups valued at over $1 billion) were minted in Q1 at a combined valuation of $27.1 billion, according to PitchBook. This is the lowest quarterly new unicorn count since 2017.
Source: PitchBook Read full article
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Credit
1. This chart shows retail deposits, by bank.
Source: Goldman Sachs
2. Community banks see a recession ahead.
Source: Reuters Read full article
3. The St. Louis Fed Financial Stress Index is back at pre-SVB levels.
4. Here is a look at Fed liquidity usage compared to past financial shocks. (2 charts)
Source: Deutsche Bank Research
Source: Deutsche Bank Research
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5. Investment-grade downgrades increased in February.
Source: S&P Global Ratings
6. Higher interest rates, wider credit spreads, and tightening lending standards will make it difficult for commercial real estate borrowers to obtain new loans.
Source: Alpine Macro
7. Corporate bond settlement fails have been very high.
Source: Federal Reserve Bank of New York Read full article
8. Munis appear to be richly priced.
Source: Truist Advisory Services
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Global Developments
1. Let’s start with the IMF’s GDP and inflation forecasts for selected economies.
Source: Codera Analytics
Oxford Economics has a more pessimistic outlook for G7 growth than the IMF.
Source: Oxford Economics
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2. This chart shows global equity valuations relative to the historical average and range.
Source: Truist Advisory Services
3. Global sovereign bonds became undervalued a decade ago, which preceded a bull market. Equities reached peak valuation after the post-COVID rally.
Source: MRB Partners
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Food for Thought
1. Mall visits:
Source: Placer.ai
2. Central banks’ gold purchases:
Source: Oxford Economics
3. CEO compensation in the US and UK:
Source: @WSJ Read full article
4. US households’ prioritization of payments:
Source: LendingTree Read full article
5. Space program expenditures as a share of government spending:
Source: @TheDailyShot
6. US hourly electricity generation by source:
Source: Visual Capitalist Read full article
7. Political ad spending on Facebook and Google:
Source: @axios Read full article
8. Big chickens:
Source: @WSJ Read full article
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