The Daily Shot: 19-May-23
• The United States
• The United Kingdom
• The Eurozone
• Europe
• Asia-Pacific
• China
• Emerging Markets
• Commodities
• Equities
• Credit
• Food for Thought
The United States
1. Let’s begin with the labor market.
• Initial jobless claims declined last week …
… as fraudulent filings in Massachusetts are reversed.
Source: Reuters Read full article
Source: @axios Read full article
Source: MarketWatch Read full article
• Nonetheless, continuing claims are over 25% above last year’s levels.
Here is the percentage of states with continuing claims rising by more than 30%.
Source: Simon White, Bloomberg Markets Live Blog
• The breadth of job gains is declining.
Source: Morgan Stanley Research
• Fewer small businesses plan to increase headcount.
Source: @WSJ Read full article
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2. The Philly Fed’s regional manufacturing index improved in May but remains in contraction territory.
• Expectated orders and shipments deteriorated.
• Factories report shedding jobs …
… and cutting prices.
• Here is the Philly Fed’s index vs. the ISM Manufacturing PMI (manufacturing at the national level).
Source: @TheTerminal, Bloomberg Finance L.P.
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3. The Conference Board’s leading index declined again last month, …
Source: Wells Fargo Securities
… signaling a recession ahead (2 charts).
Source: @TheTerminal, Bloomberg Finance L.P.
Source: Oxford Economics
Source: MarketWatch Read full article
The index also suggests that wage growth will slow sharply.
Source: Merrill Lynch
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4. Existing home sales slowed to multi-year lows in April.
• Below are the seasonally-adjusted trends by region.
Source: Wells Fargo Securities
• Here is a look at trends in new and existing home sales as well as mortgage applications.
Source: ING
• Existing home inventory is now roughly at last year’s levels, but the months-of-supply measure is higher due to slower sales.
• Here is the median price (year-over-year change).
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5. Economists keep pushing forward their estimates for a negative real GDP quarter. Most expect a contraction in Q3, which could kickstart a recession (2 charts).
Source: Deutsche Bank Research
Source: @endacurran, @readep, @BW Read full article
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6. The World Economics SMI index shows almost no growth in US business activity this month.
Source: World Economics
7. US travel spending has been slowing.
Source: BofA Global Research
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The United Kingdom
1. The 10-year gilt yield is nearing 4%.
2. Speculators have trimmed net-short GBP positions over the past year. Positioning is now neutral.
Source: PGM Global
3. London’s economy has been outperforming.
Source: @financialtimes Read full article
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The Eurozone
1. The euro rally has stalled.
2. The Citi Economic Surprise Index has been declining.
3. Tighter lending standards have dampened credit growth for households and firms.
Source: ECB
The Capital Economics’ financial conditions index points to downside risks for euro-area growth.
Source: Capital Economics
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4. Eurozone housing markets are facing some headwinds.
Source: Pantheon Macroeconomics
5. Inflation momentum remains high for all components except energy.
Source: ECB
6. Spain’s trade gap has almost closed.
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Europe
1. EUR/SEK is testing long-term resistance.
2. Here is a look at young adults living with parents.
Source: Pew Research Center Read full article
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Asia-Pacific
1. Japan’s inflation increased in April.
Food prices continue to surge.
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2. The Korean Won is deeply undervalued.
Source: Alpine Macro
3. New Zealand’s trade balance shot into surplus last month as exports surged.
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China
1. The renminbi has massively underperformed the MSCI EM Currency Index.
h/t @BloombergLive
2. Housing prices are increasing in most cities, with improving sales and delivery.
Source: Alpine Macro
3. Service sector growth was robust in May, according to the World Economics SMI report.
Source: World Economics
Manufacturing activity also expanded.
Source: World Economics
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Emerging Markets
1. Banxico finally halted its rate hikes.
Source: Reuters Read full article
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2. Chile’s GDP expanded in Q1.
3. India’s SMI report shows improving growth in May. This indicator is not nearly as upbeat as the S&P Global’s PMI.
Source: World Economics
4. Policy easing in Vietnam could fuel economic recovery and possibly benefit stocks.
Source: Alpine Macro
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Commodities
1. US cattle futures are surging.
Source: Financial Post Read full article
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2. Chicago milk futures continue to sink.
3. This chart shows the divergence between soybean oil and meal futures.
Source: @SusanNOBULL Read full article
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Equities
1. The Nasdaq 100 Index has rallied as Treasury yields peaked.
Source: Aazan Habib, Paradigm Capital
• But technical indicators suggest that the Nasdaq 100 is overbought.
• The Nasdaq Composite breadth remains weak.
Source: @TheTerminal, Bloomberg Finance L.P.
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2. The S&P 500 IT index is breaking above long-term resistance relative to the S&P 500.
h/t @lizannsonders
3. Top five stocks contributed more than 80% of the S&P 500 gains this year.
Source: Merrill Lynch
4. Small caps outperformed this week, …
… boosted by banks.
Small-cap call options volume has risen.
Source: @ericwallerstein, @WSJmarkets Read full article
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5. Healthcare stocks are struggling.
6. Neither Home Depot shares nor lumber prices corroborate the rally in homebuilders.
Source: Liz Young, On The Money; h/t @dailychartbook Read full article
7. Despite all the discussions surrounding the retrenchment of US consumers, consumer discretionary companies are managing to enhance their margins this year through a combination of lower input costs, reduced inventories, and continued price hikes.
Source: Reuters Read full article
8. Long-duration equities continue to outperform.
9. Hedge funds have been cutting cyclicals exposure relative to defensives.
Source: Goldman Sachs
But cyclicals outperformed sharply this week.
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10. Here is a look at growth vs. value year-to-date performance globally.
Source: S&P Dow Jones Indices
11. Finally, let’s take a look at some correlation trends.
• The S&P 500 vs. the US dollar:
• The S&P 500 vs. Treasuries:
• The S&P 500 vs. inflation-protected Treasuries:
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Credit
1. Here is a look at the Fed’s emergency funding facilities.
2. It’s hard for banks to compete with this …
3. According to the Credit Derivatives Determinations Committee, the Credit Suisse CoCo bond wipeout does not qualify as a default. CDS spreads tumbled.
Source: @gmorpurgo, @markets Read full article
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4. Which commercial real estate sectors are most exposed to tighter credit conditions?
Source: Oxford Economics
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Food for Thought
1. Views on work requirements for federal aid:
Source: @axios Read full article
2. Gun carrying rates:
Source: USAFacts
3. Quality of the rule of law:
Source: Statista
4. What do college seniors see as the most important benefit in their first job?
Source: Quality Logo Products
5. People forced to flee their homes:
Source: The Economist Read full article
6. The average length of ongoing military conflicts:
Source: The Economist Read full article
7. US homeownership rates by generation and age:
Source: Apartment List
8. The presence of bacteria in human tumors:
Source: Ground Truths Read full article Further reading
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Have a great weekend!
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