Reliance on credit cards hasn’t increased much

The Daily Shot: 25-Apr-23
The United States
The Eurozone
Europe
Asia -Pacific
China
Emerging Markets
Cryptocurrency
Commodities
Equities
Credit
Rates
Global Developments
Food for Thought



 

The United States

1. The Dallas Fed’s regional manufacturing index moved deeper into contraction territory this month.
 

 
Factories are once again reducing workers’ hours.
 

 
Fewer companies expect to be raising wages.
 

 
Very few firms expect an increase in capacity utilization.
 

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2. Next, we have some updates on the US consumer.
 
Consumer deposit balances remain elevated, according to BofA data.
 
Source: BofA Global Research  
 
BofA bank deposits signal slower wage growth.
 
Source: BofA Global Research  
 
Reliance on credit cards hasn’t increased much (despite the media hype).
 
Source: BofA Global Research  
 
But credit card delinquencies are rising.
 
Source: Goldman Sachs; @MikeZaccardi  
 
Disposable incomes are outpacing inflation.
 
Source: Goldman Sachs; @MikeZaccardi  
 
Here are a couple of updates on excess savings.
 
Source: The Real Economy Blog  
 
Source: Goldman Sachs  

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3. Inflationary pressures continue to ease. (2 charts)
 
Source: Alpine Macro  
 
Source: Alpine Macro  

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4. Pantheon Macroeconomics sees slower declines in residential investment.
 
Source: Pantheon Macroeconomics  
 
5. Investors are becoming increasingly uneasy with the debt ceiling impasse.
 
Source: @WSJ   Read full article  
 
The 1-year US sovereign credit default swap spread hit another record high.
 

 
The Treasury bill curve is highly distorted.
 

 
Here is the spread between the 3-month and the 1-month bills.
 


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The Eurozone

1. Germany’s Ifo Business Expectations index showed further improvement.
 

 
Here is the breakdown by sector.
 
Source: ifo Institute  

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2. Another 50 bps rate hike from the ECB?
 
Source: ForexLive   Read full article  
 
The market is pricing in a 60-65% probability of such an outcome.
 

 
Here is the Governing Council’s dove/hawk spectrum from Bloomberg Economics.
 
Source: @WeberAlexander, @economics   Read full article  

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3. This chart illustrates the manufacturing/services PMI divergence in the Eurozone.
 
Source: Arcano Economics  
 
4. Housing prices have peaked, which could cool inflationary forces.
 
Source: BCA Research  
 
Dutch home prices are now down on a year-over-year basis.
 


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Europe

1. Czech Republic’s economic confidence is rebounding.
 

 
2. Poland’s industrial production dipped below last year’s levels.
 

 
Poland’s real retail sales are down sharply year-over-year.
 

 
The core CPI continues to climb.
 

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3. European stocks keep outperforming.
 
Source: TS Lombard  


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Asia -Pacific

1. Japan’s services PPI declined in March.
 

 
2. Singapore’s core inflation has finally peaked.
 

 
3. South Korea’s Q1 GDP growth was higher than expected.
 

 
Source: @markets   Read full article  

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4. Taiwan’s industrial production remains depressed relative to last year.
 


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China

1. Unlike the US and Europe, China’s core CPI remains low while the PPI is deflating.
 
Source: Alpine Macro  
 
2. Rate cuts ahead?
 
Source: Scotiabank Economics  
 
Mortgage rates continue to trend lower.
 
Source: Gavekal Research  

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3. Hong Kong’s unemployment keeps falling.
 


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Emerging Markets

1. Inflation expectations are easing across EM economies.
 
Source: Capital Economics  
 
2. Mexico’s core inflation is finally slowing.
 

 
3. Turkey’s manufacturing confidence is rebounding.
 

 
4. This chart shows year-to-date EM fund flows from retail investors.
 
Source: EPFR   


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Cryptocurrency

1. Here is the month-to-date performance of selected cryptocurrencies.
 

 
2. Bitcoin’s long-term momentum has improved, which could solidify its broad uptrend this year.
 

 
For now, a pullback is likely given strong resistance at the 100-week moving average.
 

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3. The BTC/ETH price ratio is holding support, favoring bitcoin in the months ahead.
 
Source: @StocktonKatie  
 
4. Crypto funds saw minor outflows last week, ending a six-week run of inflows.
 
Source: CoinShares   Read full article  
 
Bitcoin funds accounted for most inflows last week, while Ethereum-focused funds saw inflows.
 
Source: CoinShares   Read full article  

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5. Bitcoin halvings tend to boost prices.
 
Source: @sidcoins, @markets   Read full article  
 
Source: BeInNews   Read full article  


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Commodities

1. Goldman sees a substantial upside for industrial metals.
 
Source: Goldman Sachs; @MikeZaccardi  
 
2. The dislocation of gold prices from real yields looks extreme.
 
Source: @TheTerminal, Bloomberg Finance L.P.; h/t Walter, @FT  
 
3. The platinum-palladium performance gap continues to widen.
 

 
4. US wheat futures remain under pressure.
 


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Equities

1. It will be a busy few days for earnings reports.
 
Source: Goldman Sachs  
 
2. The decline in bonds versus stocks appears to be bottoming, which typically happens during shifts in the economic cycle.
 
Source: Aazan Habib, Paradigm Capital  
 
3. Curve inversion plays a role in equity performance after the last rate hike.
 
Source: Morgan Stanley Research  
 
4. Deutsche Bank expects S&P 500 defensive sector earnings to return toward trend, which is typical during recessions.
 
Source: Deutsche Bank Research  
 
5. The decline in US leading indicators points to lower earnings ahead.
 
Source: Numera Analytics (@NumeraAnalytics)  
 
But equity market sentiment is improving from extreme bearish levels. Have markets priced in a recession?
 
Source: Numera Analytics (@NumeraAnalytics)  
 
More companies are seeing improvements in projected revenues and earnings.
 
Source: Yardeni Research  
 
Here are the month-to-date revisions.
 
Source: BofA Global Research; @alexandraandnyc, @markets   Read full article  

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6. Companies with low free-cash-flow yields have been outperforming.
 

 
7. This chart shows dividend forecasts by sector from S&P Global Market Intelligence.
 
Source: S&P Global Market Intelligence  
 
8. Here are the cumulative performance results for SPY on days with above- or below-average trading volume.
 
Source: Mizuho Securities USA  
 
9. Demand for put options relative to calls continues to climb.
 

 
10. The newly-launched index of 1-day implied volatility has diverged from the longer-term indicators (purple = 1-day index, black = 9-day index).
 

 
Source: @luwangnyc, @markets   Read full article  


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Credit

1. Money supply is contracting but remains elevated in real terms and as a percentage of GDP.
 
Source: MRB Partners  
 
2. Bankruptcies among small private firms have risen sharply.
 
Source: @business   Read full article  
 
Which retail establishments are most vulnerable?
 
Source: S&P Global Market Intelligence  

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3. CLOs are absorbing all of the new leveraged loan supply plus a big portion of the secondary market.
 
Source: Morgan Stanley Research; III Capital Management  


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Rates

1. BofA private clients continue to buy bonds.
 
Source: BofA Global Research  
 
2. The breakdown in the copper/gold ratio points to lower Treasury yields.
 
Source: Aazan Habib, Paradigm Capital  


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Global Developments

1. The Oxford Economics leading indicator signals a rebound in global manufacturing.
 
Source: Oxford Economics  
 
2. This chart shows leading indicators in selected economies.
 
Source: Deutsche Bank Research  
 
3. Sovereign bond yields have declined across G10 nations, led by Treasuries. Weaker interest rate differentials could weigh on the dollar.
 
Source: Alpine Macro  
 
4. Here are ING’s forecasts for DM central banks’ policy rates.
 
Source: ING  


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Food for Thought

1. Google search activity for “artificial intelligence”:
 
Source: Citi Private Bank  
 
2. AI neural net complexity over time:
 
Source: Anil Ananthaswamy, Nature  
 
3. AI outperforming human benchmarks:
 
Source: Goldman Sachs  
 
4. Companies embedding AI in products and processes:
 
Source: Barclays Research  
 
5. The end of Bed Bath & Beyond:
 
Source: @chartrdaily  
 
6. Urbanization rates:
 
Source: J.P. Morgan Asset Management  
 
7. Will American students return to China?
 
Source: @WSJ   Read full article  
 
8. Most popular pet names:
 
Source: Genuine Impact  

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