The Daily Shot: 29-May-23
• The United States
• Canada
• The United Kingdom
• The Eurozone
• Europe
• Japan
• Asia-Pacific
• China
• Emerging Markets
• Cryptocurrency
• Commodities
• Energy
• Equities
• Credit
• Rates
• Global Developments
• Food for Thought
The United States
1. The Q1 GDP growth was revised higher, …
… partially due to reduced inventory drag.
• This chart shows real final sales to private domestic purchasers (the “core” GDP).
• Unlike the GDP, the GDI measure points to weaker growth (2 charts).
Source: Wells Fargo Securities
Source: @readep, @economics Read full article
• Corporate profits declined.
Source: Wells Fargo Securities
• The Q1 core PCE inflation was revised to 5%.
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2. Initial jobless claims remain noisy, with further adjustments from the Massachusetts fraud.
Source: @gutavsaraiva, @economics Read full article
Here is the impact on the seasonally-adjusted claims data.
Source: Oxford Economics
Continuing claims remain 25% above last year’s levels.
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3. Pending home sales were softer than expected last month, …
… amid rising mortgage rates.
Softer pending sales point to further weakness in existing home sales.
Source: Oxford Economics
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4. The Chicago Fed’s national activity index rebounded last month.
Source: @ChicagoFed; h/t @dailychartbook
5. There was positive news on the debt ceiling negotiations.
Source: Reuters Read full article
• Some T-bill yields dropped sharply.
• The US Treasury’s cash balance dipped below $50 billion.
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6. Amid positive developments regarding the debt ceiling situation, the market raised expectations of a Fed rate hike in either June or July, …
… while significantly curbing expectations for rate cuts in the latter part of this year.
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Canada
1. The CFIB small/medium-size business indicator improved again this month.
Here is the breakdown by sector (level and changes).
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2. Recreational cannabis sales at licensed stores continue to rise.
Source: Global X ETFs Read full article
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The United Kingdom
1. Gilt yields keep surging, …
… rapidly outpacing Treasuries.
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2. UK food inflation has surpassed that of other advanced economies.
Source: @WSJ Read full article
3. The CBI retail sales indicator declined in May.
Source: Reuters Read full article
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4. UK trade openness has been lagging.
Source: UK in a Changing Europe
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The Eurozone
1. Germany’s revised Q1 GDP puts the country into technical recession.
Source: CNBC Read full article
Here are the contributions.
Source: Arcano Economics
• Private consumption and government spending were revised lower.
2. Germany’s consumer confidence continues to recover.
3. French business confidence is rolling over.
Source: ING Read full article
• French retail sales have been softening.
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4. Spain’s PPI is now in negative territory.
5. Fund outflows finally came to a halt.
Source: Arcano Economics
6. Weak economic surprises relative to the US are a headwind for the euro.
Source: @themarketear
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Europe
1. Sweden’s unemployment rate was lower than expected.
The Swedish krona is nearing the GFC lows vs. the euro.
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2. Who is quitting school in the EU? The chart shows people aged 18-24 leaving early from education and training.
Source: Eurostat Read full article
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Japan
1. The Tokyo CPI declined in May, but the core index continues to climb.
Here are a couple of CPI components.
2. The services PPI topped expectations.
3. Roughly 46% of Japanese government debt is held by the BoJ.
Source: Torsten Slok, Apollo
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Asia-Pacific
1. New Zealand’s consumer confidence remains depressed.
2. Australia’s retail sales were flat last month (an increase was expected).
Source: @WSJ Read full article
The market sees the RBA holding rates unchanged in June.
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China
1. Economists downgraded the 2023 GDP projections, but growth is expected to be robust.
Economists continue to lower China’s CPI forecasts.
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2. Industrial production has been far short of expectations.
Source: Quill Intelligence
3. Large-cap bank stocks have held up as property developers underperform.
Source: PGM Global
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Emerging Markets
1. South Africa’s central bank hiked rates again.
Source: Reuters Read full article
• The rand tumbled to record lows.
Source: Reuters Read full article
• The PPI continues to moderate.
• South Africa is one of only a small number of large economies that have experienced a decline in GDP per capita since 2010. Notably, it is the sole country analyzed by the IMF that is projected to endure a continued decrease in per capita income.
Source: Codera Analytics Read full article
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2. Brazil’s inflation continues to moderate.
3. Easing inflation pressures could encourage rate cuts in some EM countries.
Source: MRB Partners
4. Mexico’s exports dipped below last year’s levels.
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Cryptocurrency
1. It has been a difficult month for cryptos, with bitcoin underperforming other main tokens.
Source: FinViz
Still, only 33% of altcoins have outperformed bitcoin over the past month.
Source: Blockchain Center
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2. Bitcoin’s put/call ratio is trending lower.
Source: The Block Research
3. Bitcoin’s correlation with Chinese equities is now higher than its correlation with the S&P 500.
Source: KaikoData
4. Binance may have commingled customer funds with company revenue, according to Reuters.
Source: Reuters Read full article
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Commodities
1. Beef is in, pork is out.
• Cattle futures:
• Lean hogs:
Source: Reuters Read full article
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2. The severe drought in Plains states has inflicted significant damage on hay crops, resulting in surging prices.
Source: @WSJ Read full article
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Energy
1. Oil futures declined on Thursday.
Source: Reuters Read full article
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2. Russia’s oil production has been rebounding.
Source: Gavekal Research
3. This chart shows Europe’s diesel imports.
Source: @CrowleyKev, @markets Read full article
4. BofA’s private clients have been dumping energy stocks.
Source: BofA Global Research
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Equities
1. Equal-weighted indices continue to widen their underperformance as tech mega-caps surge.
– S&P 500:
– Nasdaq 100:
• Tech mega-caps have left the ARK Innovation ETF in the dust.
Source: @themarketear
• Hedge funds have been boosting their exposure to tech mega-caps (based on GS prime brokerage data).
Source: Goldman Sachs; @carlquintanilla
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2. If consensus estimates prove accurate, the recent contraction in S&P 500 earnings appears relatively mild compared to historical trends.
Source: BofA Global Research
3. How do US stock indices correlate to domestic economic activity?
Source: S&P Dow Jones Indices
4. The stock-bond correlation continues to move deeper into negative territory.
5. Retail investor positioning remains light.
Source: Vanda Research
• Retail investors are not chasing the AI-fuelled rally.
Source: Vanda Research
• Tax refunds have not been driving retail stock purchasing this year.
Source: Vanda Research
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6. The MSCI ACWI Equal Weight Index (global stock index) is holding support with improving breadth.
Source: Aazan Habib, Paradigm Capital
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Credit
1. The average HY bond trades at 13% below par.
h/t BofA Global Research
2. Small banks have driven lending growth over the past year.
Source: Torsten Slok, Apollo
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Rates
1. Longer-term Treasuries’ implied volatility rose sharply this week.
2. This chart shows selected foreign owners of US Treasury securities.
Source: @WSJ Read full article
3. The US policy rate is about 130 bps above the market expectations for the long-run fed funds rate.
Source: @TheTerminal, Bloomberg Finance L.P.
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Global Developments
1. The dollar’s recent bounce occurred alongside positive US economic surprises relative to other G10 nations. Slightly wider interest rate differentials also helped.
Source: BCA Research
2. This chart shows Wells Fargo’s projections for key policy rates.
Source: Wells Fargo Securities
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Food for Thought
1. US wage data from the Bureau of Labor Statistics:
Source: Bloomberg Law Read full article
2. Who intends to buy an EV?
Source: @CivicScience Read full article
3. EV sales projections:
Source: Goldman Sachs
4. Polarization in the US Congress:
Source: BCA Research
5. Google search frequency for “artificial intelligence”:
Source: Google Trends
6. US rail accidents:
Source: @WSJ Read full article
7. Memorial Day plans:
Source: @CivicScience Read full article
• Memorial Day cookout:
Source: @CivicScience Read full article
• Memorial Day preferred beer brands:
Source: @CivicScience Read full article
8. The number of Americans who served and died in each of the US wars:
Source: U.S. Census Bureau Read full article
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The next Daily Shot will be out on Tuesday, May 30th.
Have a great weekend!
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