The Daily Shot: 23-Aug-23
• The United States
• The United Kingdom
• The Eurozone
• Japan
• Asia-Pacific
• China
• Commodities
• Equities
• Credit
• Rates
• Food for Thought
The United States
1. Despite soft demand, businesses are reporting an upturn in inflation.
• The Philly Fed’s non-manufacturing survey shows deteriorating sales, …
… and yet, gains in costs and prices charged have moved higher.
• The region’s manufacturers expect a reacceleration in inflation.
• Richmond Fed’s regional manufacturing survey shows slower current price increases, …
… but measures of expected prices have turned higher.
Factories also expect faster wage growth.
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2. Next, we have some updates on the housing market.
• Mortgage rates continue to hit multi-year highs, …
Source: Mortgage News Daily
… pressuring affordability.
Source: @Barchart, @M_McDonough
• Existing home sales were soft last month …
… dipping well below the average of recent years.
Here is the cumulative year-to-date trend.
– This chart shows the seasonally-adjusted home sales index and its regional breakdown.
Source: @TheTerminal, Bloomberg Finance L.P.
• The median sales price hit a new high for this time of the year, …
… as inventories slump.
• With homeowners locked into low-rate mortgages (“effective rate”), there is little incentive to sell (2 charts).
Source: Wells Fargo Securities
Source: Merrill Lynch
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3. US truck tonnage dipped below 2021 levels last month.
4. Has the Citi Economic Surprise Index peaked?
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The United Kingdom
1. The PMI report unexpectedly signaled a contraction in business activity this month. We will have more on the PMI data tomorrow.
2. The CBI report showed factory orders and output weakening in August.
Source: CBI
Source: Reuters Read full article
• Industrial price expectations continue to moderate.
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3. Government borrowing was lower than expected last month.
Source: @financialtimes Read full article
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The Eurozone
1. Business activity moved deeper into recessionary territory this month, according to S&P Global.
Germany’s composite PMI hit the lowest level since the 2020 COVID shock as services slumped. We will have more on the PMI report tomorrow.
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2. French retail sales continue to move lower.
3. Germany’s public investment has lagged behind European peers.
Source: The Economist Read full article
4. Euro-area current account rebounded sharply in June as energy prices eased (2 charts).
Source: Pantheon Macroeconomics
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5. EUR/USD is going to test support at the 200-day moving average.
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Japan
1. JGB yields are grinding higher, …
… as the curve steepens.
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2. Excess savings remain elevated.
Source: BCA Research
3. Exports to China are running below last year’s levels.
Source: @WSJ Read full article
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Asia-Pacific
1. Taiwan’s unemployment rate hit a multi-year low.
Source: Focus Taiwan Read full article
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2. Australia’s service-sector contraction accelerated this month.
Source: S&P Global PMI
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China
1. Mainland stocks remain under pressure.
2. The August SMI report showed a slower contraction in manufacturing and a return to growth in services this month.
Source: World Economics
3. Real rates have risen sharply due to deflation, but for now, Beijing is unwilling to provide meaningful policy accommodation (2 charts).
Source: BCA Research
Source: Alpine Macro
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4. Consumer and business sentiment has been soft.
Source: Alpine Macro
5. Here are China’s exports to Belt and Road Initiative countries.
Source: @financialtimes Read full article
6. Debt servicing costs for households and companies are relatively high versus other major economies.
Source: BCA Research
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Commodities
1. Iron ore futures are rebounding.
2. Hedge funds have reduced their exposure to precious metals.
Source: Deutsche Bank Research
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Equities
1. The S&P 500 held short-term support, although the decline in breadth and momentum suggests upside could be limited.
Source: Aazan Habib, Paradigm Capital
Here is the percentage of S&P 500 members trading above their 50-day moving averages.
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2. Sideways trading ahead?
Source: Truist Advisory Services
3. The S&P 500 expected dividend yield is well below the 10-year Treasury yield, …
… which was the norm before the GFC.
Source: Truist Advisory Services
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4. JP Morgan’s short-term sentiment index is at extreme lows …
Source: JP Morgan Research; @WallStJesus
… but some of the firm’s clients are boosting their equity exposure.
Source: JP Morgan Research; @WallStJesus
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5. S&P 500 projected earnings per share over the next 12 months keep climbing.
Globally, upward earnings revisions continue to outpace downgrades.
Source: @JeffreyKleintop
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6. Next, we have some sector updates.
• Consumer discretionary and tech positioning remains bullish.
Source: Deutsche Bank Research
• Speculative tech shares have been underperforming.
• The US tech sector bounced from short-term oversold levels relative to the S&P 500. However, resistance is nearby.
• Fundamentals are improving in the US Aerospace & Defense sector.
Source: MRB Partners
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7. US shares continue to outperform international markets.
Source: Truist Advisory Services
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Credit
MBS spreads have diverged from investment-grade corporate credit.
Source: Convexity Maven
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Rates
1. The Fed is less uncertain about forecasting lower inflation ahead.
Source: MRB Partners
2. T-bill yields are grinding higher.
Source: @markets Read full article
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Food for Thought
1. US vehicle production by type:
Source: Visual Capitalist Read full article
2. Overpaid and underpaid professions:
Source: @chartrdaily
3. Back to the office in small cities but not so much in larger cities:
Source: The Economist Read full article
4. Satisfaction with smart-home tech:
Source: Morning Consult Read full article
5. Foreign companies’ presence in Russia:
Source: @financialtimes Read full article
6. Russian vs. Ukrainian weapons stockpiles:
Source: The Economist Read full article
7. Relative chance of enrolling in highly selective colleges based on parents’ income group:
Source: The Economist Read full article
8. FIFA Women’s World Cup data:
Source: Statista
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