Posted on by The Daily Shot Editor: Lev Borodovsky

Small businesses fueled US job gains this year

The Daily Shot: 18-Aug-23
• The United States
• Europe
• Japan
• China
• Emerging Markets
• Cryptocurrency
• Commodities
• Equities
• Credit
• Rates
• Global Developments
• Food for Thought

 

The United States

1. The Conference Board’s leading index continues to signal an economic slowdown.
 

 
Here are the drivers of last month’s decline.
 
Source: Wells Fargo Securities  

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2. Below are some updates on the labor market.
 
• Initial jobless claims increased in the past couple of weeks relative to previous years.
 

 

 
Continuing claims are also edging higher.
 

 
• Fewer Americans are concerned about unemployment.
 

 
• Small businesses fueled US job gains this year. But now small firms are reporting deteriorating sales.
 
Source: Economics and Strategy Group, National Bank of Canada  
 
To put this in perspective, small businesses employ a lot of Americans.
 
Source: Economics and Strategy Group, National Bank of Canada  

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3. The Philly Fed’s regional manufacturing index points to improving factory activity this month.
 

 
• Factories are increasing workers’ hours as demand picks up.
 

 
• However, more companies are reporting rising costs.
 

 
• Manufacturers are cutting their CapEx plans.
 

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4. Housing affordability hit its worst levels in decades last quarter.
 

 
Now, with mortgage rates at over two-decade highs, affordability has deteriorated even more.
 

 
Source: @wealth   Read full article  

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5. Next, we have some updates on inflation.
 
• Disinflation appears to be intensifying.
 
Source: @ANZ_Research  
 
• Import prices were flat last month.
 

 
• Inflation expectations continue to ease.
 

 
• Stifel expects headline inflation to settle near 3.5% later this year, which could keep monetary policy tight.
 
Source: Stifel  

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Europe

1. The euro area’s trade balance is back in surplus.
 

 
2. Norway’s central bank raised rates, as expected. Economists see one more increase in this cycle.
 

 
The yield curve has shifted up in recent days.
 

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3. Poland’s GDP declined sharply last quarter.
 

 
Core inflation is starting to ease.
 

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4. Who are the biggest ice cream exporters in the EU?
 
Source: Eurostat   Read full article  

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Japan

1. Core inflation continues to climb.
 


 
Here are some inflation trends.
 
• Food:
 

 
• Recreation and culture:
 

 
• Clothing and footwear:
 

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2. This chart shows Japan’s service-sector activity.
 

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China

1. Beijing seems to have arrested the RMB’s decline.
 

 
Source: Barron’s   Read full article  
 
Rate differentials with the US remain at multi-year wides.
 

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2. China’s bond yields continue to fall, …
 

 
…as the yield curve flattens.
 

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3. Property developers’ debt remains under pressure (2 charts).
 
Source: BofA Global Research  
 
Source: Simon White, Bloomberg Markets Live Blog  
 
Developers’ stock prices are also falling.
 

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4. Beijing’s focus shifts to shadow banking.
 
Source: @markets   Read full article  
 
Source: @markets   Read full article  

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5. The Heng Seng TECH Index is at its 200-day moving average.
 
Source: @TheTerminal, Bloomberg Finance L.P.  
 
Source: @technology   Read full article  

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6. Hong Kong’s unemployment rate keeps dropping.
 

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Emerging Markets

1. Prices are falling rapidly in Brazil.
 

 
2. Colombia’s GDP contracted last quarter.
 

 
3. EM debt funds saw substantial outflows last week.
 
Source: BofA Global Research  

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Cryptocurrency

1. It has been a difficult week for cryptos, with Litecoin’s LTC underperforming top peers.
 
Source: FinViz  
 
Bitcoin dipped below $26k, crashing through the 200-day moving average. Here is one explanation for the drop.
 

 
2. The latest price correction triggered a sharp drop in the percentage of BTC supply in profit…
 
Source: @glassnode  
 
…and a significant spike in long liquidations.
 
Source: Coinglass  
 
Source: CoinDesk   Read full article  

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3. Solana’s SOL token became one of the most liquid altcoins on Coinbase.
 
Source: @KaikoData  

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Commodities

1. China’s imports of commodities fell in July, although Capital Economics expects infrastructure spending to boost demand for metals over the next few months.
 
Source: Capital Economics  
 
2. Here is a look at global steel production.
 
Source: Semafor  
 
Who are the largest US steel producers?
 
Source: @WSJ   Read full article  

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Equities

1. US equity indices are nearing oversold territory.
 
• S&P 500:

 
• Nasdaq Composite:

 
• S&P 600 (small caps):

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2. This trend is not sustainable.
 

 
Bonds have been dragging stocks lower this month, …
 
Source: @TheTerminal, Bloomberg Finance L.P.  
 
… as the stock-bond correlation remains in positive territory.
 
Source: Simon White, Bloomberg Markets Live Blog  

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3. The single-stock put-call ratio has risen sharply in recent days as caution returns to the market.
 

 
4. US firms with substantial exposure to China are having a rough month.
 

 
5. Short interest continues to trend lower.
 
Source: Deutsche Bank Research  
 
6. How will the market react to the looming government shutdown?
 
Source: BCA Research  
 
7. Here is a look at buybacks as a share of the total cash returned across global equity markets.
 
Source: Oxford Economics  

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Credit

1. Money market funds’ assets keep climbing.
 

 
Source: BofA Global Research  

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2. So far, US high-yield credit spreads are not showing signs of stress.
 
Source: Aazan Habib, Paradigm Capital  
 
3. Private loan activity has accelerated.
 
Source: @technology   Read full article  

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Rates

1. The real US policy rate is well above the estimated long-run equilibrium real rate (R*). This restrictive stance is consistent with the deeply inverted yield curve.
 
Source: Alpine Macro  
 
2. Either Treasury yields are heading lower, or the Fed isn’t done with rate hikes yet.
 
Source: Capital Economics  

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Global Developments

1. Narrower interest rate differentials could weigh on the dollar, especially during the late stage of the US hiking cycle.
 
Source: Alpine Macro  
 
However, recent weakness in China occurred alongside dollar strength, indicating a flight to safety.
 
Source: Alpine Macro  

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2. Here is a look at potential growth in advanced economies.
 
Source: Fitch Ratings  
 
3. Smartphone sales have been slowing.
 
Source: @technology   Read full article  
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Food for Thought

1. Are advertisers ignoring older Americans?
 
Source: @CivicScience   Read full article  
 
2. Taking on more work before student loan payments resume:
 
Source: Intelligent   Read full article  
 
• Boycotting student loan payments?
 
Source: Intelligent   Read full article  

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3. The distribution of US college admission rates:
 
Source: Pew Research Center   Read full article  
 
4. Changes in COVID-related hospitalization rates:
 
Source: @axios   Read full article  
 
5. Prescriptions for diabetes drugs:
 
Source: @chartrdaily  
 
6. US obesity rates:
 
Source: @chartrdaily  
 
7. Disaster funding sources:
 
Source: Brookings   Read full article  
 
8. Movie running times:
 
Source: @chartrdaily  
 

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Have a great weekend!

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