The Daily Shot: 28-Apr-23
• The United States
• Canada
• The United Kingdom
• The Eurozone
• Japan
• Asia – Pacific
• Emerging Markets
• Commodities
• Energy
• Equities
• Food for Thought
The United States
1. The first-quarter GDP report fell short of expectations, as inventory reductions contributed to a slowdown in economic growth.
Source: Reuters Read full article
• Boosted by stronger consumer spending, …
… real final sales to private domestic purchasers (sometimes called the “core GDP”) rebounded.
• Business investment decelerated but remained positive.
• The drag from weak housing investment slowed.
• The GDP-GDI gap has been closed.
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2. Inflation continues to run hot. Here are the quarterly changes in the PCE price index.
We are still on track for a 25 bps rate hike in May.
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3. Initial jobless claims have risen this year but are not surging yet.
• Continuing claims are 22.5% above last year’s levels.
• More states have experienced a rise in jobless claims compared to last year.
Source: Variant Perception
• Given the recent trend, the labor market imbalance could be gone soon.
Source: BCA Research
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4. In March, pending home sales were 23% lower than the previous year’s levels, underperforming expectations.
Source: Reuters Read full article
• Mortgage applications point to further weakness ahead.
Source: Pantheon Macroeconomics
• Existing home sales should follow.
Source: Oxford Economics
• This chart shows total home sales relative to the long-term trend (seasonally adjusted).
Source: Arcano Economics
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5. The Kansas City Fed’s manufacturing index declined sharply this month as demand softened further.
The employment index dipped into negative territory for the first time since 2020.
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6. The US goods trade deficit narrowed last month.
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7. Next, we have some updates on the debt ceiling situation.
• Tax collections are running well below last year’s levels.
Source: Oxford Economics
According to Oxford Economics, “June is off the table for a debt limit crisis, but July is not.”
Source: Oxford Economics
{*) The US sovereign CDS spread continues to widen, reflecting an escalating risk of potential default.
• Who will be blamed?
Source: Alpine Macro
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Canada
1. The CFIB small-business activity index edged higher this month.
The charts below show the index level and monthly changes by sector.
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2. What money market rates are available to Canadians?
Source: Hugo Ste-Marie, Portfolio & Quantitative Strategy Global Equity Research, Scotia Capital
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The United Kingdom
1. The CBI retail sales index showed an improvement this month.
Source: Reuters Read full article
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2. The Lloyds Busines Barometer edged higher.
3. How quickly will “excess” household deposits be depleted?
Source: Longview Economics
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The Eurozone
1. Italian consumer sentiment ticked higher this month, …
… but the manufacturing confidence index declined.
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2. Here are the sentiment indicators at the Eurozone level.
• Manufacturing:
• Services (the divergence between services and manufacturing is also seen in the PMI report):
• Economic sentiment (including consumer sentiment):
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3. Spain’s retail sales have been surging.
4. This chart shows commercial real estate loan levels and default rates in the Eurozone and the US.
Source: Natixis
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Japan
1. Ueda’s BoJ debut left policy unchanged. The market expected some signs of a policy shift.
Source: @markets Read full article
The yen tumbled (the chart shows the US dollar rallying against the yen).
JGB yields declined.
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2. The Tokyo CPI report for this month showed inflation running hot, topping expectations.
• Here are some trends from the report.
• Below is a long-term chart showing the percentage of CPI components rising.
Source: Simon White, Bloomberg Markets Live Blog
• Wage growth is accelerating.
Source: Natixis
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3. The labor market has been softening.
Source: Nippon Read full article
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Asia – Pacific
1. South Korea’s industrial production jumped in March.
2. Will we see rate cuts in Taiwan next year?
Source: ING
3. Similar to business confidence, New Zealand’s consumer sentiment remains depressed.
4. Australia’s credit growth continues to slow.
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Emerging Markets
1. Brazil’s services output improved in February.
The nation’s formal job creation hit a multi-year high, topping expectations.
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2. Mexico’s trade balance unexpectedly swung into surplus, …
… as exports hit a record high.
Source: MarketWatch Read full article
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3. Turkey’s economic confidence jumped in April.
Separately, here are the latest poll results.
Source: @pollofpolls_EU
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Commodities
1. Steel prices continue to sink in China, …
… dragging down metallurgical coal futures.
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2. Gold improves risk-adjusted performance during periods of stagflation.
Source: BofA Global Research; @MikeZaccardi
3. US corn futures keep sinking after China canceled a 233K metric ton order.
Source: Reuters Read full article
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Energy
1. Brent oil is trading at a roughly $15/bbl premium to “fair value.”
Source: Numera Analytics (@NumeraAnalytics)
2. The recent rise in oil prices diverged from US inflation expectations.
Source: FHN Financial
3. Some clean energy stocks are under pressure.
Source: @WSJ Read full article
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Equities
1. Stocks rallied on tech earnings, but futures are down this morning.
2. With mega-caps outpacing the rest of the market, equal-weight indices have underperformed sharply this week.
• Here is the 2-day relative performance of the Nasdaq 100 equal-weight index.
• What percentage of S&P 500 members are outperforming the index?
Source: Jefferies; @Mayhem4Markets; h/t @chartrdaily
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3. Small caps are struggling relative to the Nasdaq 100, dragged lower by bank shares.
4. Tech funds have been seeing some inflows in recent days.
Source: BofA Global Research
5. Tech shares’ valuation premium is widening again.
Source: @TheTerminal, Bloomberg Finance L.P.
6. Tighter credit points to weaker revenue growth.
Source: Merrill Lynch
7. Share buyback activity has been robust so far this year.
Source: Goldman Sachs
8. Burned by Tesla, retail investors remain cautious, particularly with single-stock purchases.
Source: Vanda Research
Separately, retail investors tend to lose money on 0DTE (less than 24 hr) options, especially after fees.
Source: Beckmeyer, Branger, Gayda Read full article
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9. Worried about commercial real estate, BofA’s private clients continue to dump REITs.
Source: BofA Global Research
Office properties keep widening their underperformance.
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Food for Thought
1. ChatGPT 4.0 vs. 3.5:
Source: Statista
2. Cross-border collaborations on AI projects:
Source: Stanford University Read full article
3. Concerns about TikTok:
Source: @CivicScience Read full article
4. App store revenue growth:
Source: Semafor
5. US Latinos’ religious affiliation over time:
Source: Pew Research Center Read full article
6. Who is boosting coal capacity?
Source: Statista
7. New York City’s least snowy winters:
Source: The New York Times Read full article
8. Trust in allergy medicines:
Source: @CivicScience
9. Changes in life expectancy:
Source: The Economist Read full article
10. Average movie length:
Source: EOM
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Have a great weekend!
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