The Daily Shot: 24-May-23
• The United States
• Canada
• The United Kingdom
• The Eurozone
• Asia-Pacific
• China
• Emerging Markets
• Commodities
• Energy
• Equities
• Alternatives
• Credit
• Rates
• Global Developments
• Food for Thought
The United States
1. The May flash PMI report from S&P Global showed a contraction in US factory activity.
But service-sector growth strengthened.
This divergence is a global phenomenon, with the Eurozone, the UK, Japan, and Australia experiencing similar trends.
Source: S&P Global PMI; @TheTerminal, Bloomberg Finance L.P.
• The manufacturing export orders index is crashing.
• Factory input costs are now falling.
• Employment in both manufacturing and services remains robust.
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2. The Richmond Fed’s regional manufacturing index showed slowing activity, …
… as demand craters.
• Fewer companies are boosting wages.
• Price pressures are easing.
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3. New home sales were stronger than expected in April, rising 10.7% above 2022 levels.
• Inventories of new homes dipped below last year’s levels.
However, the market for new houses is not nearly as tight as with existing homes, …
Source: Wells Fargo Securities
… contributing to sustained sales performance.
Source: Capital Economics
• The median new home price is down 8% year-over-year.
• This chart shows new home sales by stage of construction.
Source: Chart and data provided by Macrobond
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4. Next, we have some updates on the debt ceiling situation.
• Here is Deutsche Bank’s forecast for the US Treasury’s cash levels. Early June looks problematic.
Source: Deutsche Bank Research
• Some T-bill yields exceeded 6% as the X-date approaches.
Source: @purviso, @markets Read full article
• The T-bill market response has been faster and more severe than in previous debt ceiling episodes.
Source: Goldman Sachs
• The window of opportunity for reaching a deal is rapidly closing. Here is a look at the congressional calendar.
Source: Deutsche Bank Research
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Canada
1. Consumer confidence continues to rebound.
2. Inflation is declining, but the housing market is regaining strength. The BoC’s tightening cycle could persist.
Source: BCA Research
3. Here is the Oxford Economics recession model for Canada.
Source: Oxford Economics
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The United Kingdom
1. Factory activity contracted at a faster pace this month.
But services expansion remains robust, …
… sustaining the overall business growth.
Source: S&P Global PMI
• Manufacturing input prices are now falling.
However, price pressures persist in services.
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2. Fiscal borrowing was higher than expected in April.
Source: Reuters Read full article
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3. Gilt yields continue to climb.
4. Britons are pessimistic about their disposable income.
Source: @financialtimes Read full article
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The Eurozone
1. The overall business activity continued to grow this month, …
Source: S&P Global PMI
… signaling stronger GDP growth …
Source: Pantheon Macroeconomics
… held up by services.
But the manufacturing sector moved deeper into contraction territory, …
Source: S&P Global PMI
Source: @CraigStirling, @economics Read full article
… as demand softened further.
• The manufacturing/services divergence persists (2 charts).
Source: S&P Global PMI; @TheTerminal, Bloomberg Finance L.P.
Source: Arcano Economics
• Price pressures are easing.
• Employment is holding up well.
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2. The Citi Economic Surprise Index continues to deteriorate.
3. Spain’s tourism activity is now above pre-COVID levels.
Source: Arcano Economics
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Asia-Pacific
1. Japanese share prices have not kept up with climbing profits.
Source: Gavekal Research
2. The Bank of Korea’s business surveys continue to show improvement.
3. Singapore’s inflation surprised to the upside.
4. Taiwan’s industrial production is down sharply from a year ago, with semiconductor output declining by 31%.
5. As anticipated, New Zealand’s central bank delivered a rate hike but announced that it has reached the end of its tightening cycle.
Source: @tracywwithers, @markets Read full article
• The Kiwi dollar and bond yields tumbled.
Australian bond yields also declined in response to the RBNZ’s announcement.
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China
1. The renminbi continues to weaken despite warnings from Beijing.
2. Chinese equities are underperforming global counterparts, and falling industrial metal prices reflect disappointing momentum.
Source: BCA Research
3. Property sales growth is slowly recovering.
Source: TS Lombard
4. China doesn’t have enough white-collar jobs to accommodate the surge in college graduates.
Source: @yifanxie, @WSJ Read full article
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Emerging Markets
1. The Malaysian ringgit remains under pressure.
2. This chart shows government debt-to-GDP ratios for select economies.
Source: Oxford Economics
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Commodities
1. Industrial commodity prices continue to sink.
• Iron ore (Singapore):
• Steel rebar (Shanghai):
• Copper (New York):
• Bloomberg’s industrial metals index:
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2. Investors increased their bullish bets on platinum futures while shying away from palladium.
Source: @ANZ_Research
3. With cold storage frozen orange juice inventories approaching their lowest level in over 50 years, US orange juice futures hit a record high.
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Energy
The Saudis are jawboning oil prices higher ahead of the OPEC+ meeting.
Source: CNBC Read full article
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Equities
1. The S&P 500 resistance is holding amid debt ceiling concerns.
2. Fund flows do not support the recent gains.
Source: Goldman Sachs; h/t @t1alpha
3. The 2023 earnings estimates have been robust for the top ten stocks but not the rest of the index.
Source: @WarrenPies; h/t @dailychartbook
4. Systematic strategies have turned bullish on stocks, but discretionary investors remain cautious.
Source: Deutsche Bank Research
5. Open interest in ETF put options is at multi-year highs.
Source: @Marlin_Capital; h/t @dailychartbook
• The S&P 500 vol curve is highly inverted at the front end as traders anxiously await updates on the debt ceiling negotiations.
Source: @TheTerminal, Bloomberg Finance L.P.
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6. Small-cap tech stocks are starting to improve relative to the S&P 500.
Source: Aazan Habib, Paradigm Capital
7. Next, we have some sector updates.
• Dividend actions by sector:
Source: Hugo Ste-Marie, Portfolio & Quantitative Strategy Global Equity Research, Scotia Capital
• Each sector’s top three members by net income:
Source: Merrill Lynch
• Profit margin forward estimates by sector:
Source: Yardeni Research
• S&P 500 industrial stocks face headwinds from weaker global growth and a breakdown in the copper/gold ratio.
Source: BCA Research
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Alternatives
1. This chart shows global VC investment trends by deal size.
Source: @genuine_impact
2. Late-stage valuations in European venture capital have significantly declined.
Source: PitchBook
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Credit
1. Leveraged loan funds continue to see outflows.
Source: Deutsche Bank Research
2. A lot of CLOs are out of their investment periods.
Source: Bloomberg Law Read full article
3. Only a small amount of fixed-rate debt is coming due next year in the riskiest ratings.
Source: S&P Global Ratings
4. Longer-dated IG corporates underperformed this month.
Source: @josyanajoshua, @markets Read full article
5. Here are the largest corporate bond deals.
Source: @josyanajoshua, @markets Read full article
6. This chart shows US retail-sector bankruptcies.
Source: S&P Global Market Intelligence
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Rates
1. Industrial commodities are increasingly pricing a recession. Will Treasury yields follow?
Source: @TheTerminal, Bloomberg Finance L.P.
2. This chart shows the balances in private repo markets versus the Fed’s RRP facility usage. An overview of “SLR relief” is available here.
Source: Liberty Street Economics Read full article
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Global Developments
1. The 60-40 portfolio is rebounding this year. The 25/25/25/25 portfolio is also performing well.
Source: BofA Global Research
2. The amount of funding allocated to national statistical agencies varies significantly across countries.
Source: Codera Analytics Read full article
3. This chart shows global vehicle production relative to pre-COVID levels.
Source: Capital Economics
4. Industrial packaging is experiencing its first contraction since the financial crisis. (2 charts)
Source: Quill Intelligence
Source: Quill Intelligence
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Food for Thought
1. Maternal mortality rates (2 charts):
Source: @WSJ Read full article
Source: @WSJ Read full article
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2. It’s going to be a warm summer:
Source: NOAA
3. Texas electricity generation by source:
Source: @WSJ Read full article
4. Judicial appointments:
Source: Brookings Read full article
5. Polling methods over time:
Source: Pew Research Center Read full article
6. Religious affiliations of US adults and Congress members:
Source: @axios Read full article
7. US daily newspapers with the largest annual print circulation:
Source: WordsRated; h/t Walter Read full article
8. Extensive Russian fortifications along the frontline in occupied Ukraine:
Source: Reuters Read full article
9. GDP per capita in India and China:
Source: The New York Times Read full article
• Literacy rates in India and China:
Source: The New York Times Read full article
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10. The daily routines of famous creatives:
Source: Visual Capitalist Read full article
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