The Daily Shot: 24-Aug-23
• The United States
• Canada
• The United Kingdom
• The Eurozone
• Europe
• Asia-Pacific
• China
• Emerging Markets
• Energy
• Equities
• Alternatives
• Credit
• Rates
• Global Developments
• Food for Thought
The United States
1. The August US PMI report from S&P Global showed growth stalling in services, …
Source: Reuters Read full article
… and faster contraction in manufacturing. Both measures were below consensus estimates. The report suggests that a resurgence in economic growth is unlikely at this point.
Treasury yields declined in response to the PMI report, …
… boosting stock prices.
——————–
2. Next, we have some updates on the housing market.
• Loan applications weakened further last week as mortgage rates surged.
This chart shows the mortgage rate-lock count.
Source: AEI Housing Center
• New home sales were robust last month, up 34% vs. last year.
– However, weak mortgage applications point to downside risks for new residential sales.
Source: Pantheon Macroeconomics
– Measured in months of supply, new house inventories remain elevated but are well below last year’s levels.
Here are a couple of additional trends in new home sales.
– Units under construction vs. new houses sold:
Source: Chart and data provided by Macrobond
– The price distribution of new homes sold:
Source: Calculated Risk
——————–
3. US payrolls were revised down, although the revision was smaller than expected.
Source: @stuartapaul, @TheTerminal, Bloomberg Finance L.P. Read full article
Source: Oxford Economics
Source: @economics Read full article
Here are the revisions by sector.
Source: Oxford Economics
——————–
4. The Active Jobs Index points to further declines in job openings.
Source: GlobalData Read full article
5. Markets are pricing in a soft-landing scenario.
Source: Alpine Macro
News stories of “soft landing” spiked.
Source: JP Morgan Research
Back to Index
Canada
1. Retail sales edged higher in June, driven by vehicle purchases. Excluding autos, however, sales declined.
This chart shows the levels of nominal and real retail sales.
Source: Scotiabank Economics
——————–
2. Canada’s economic growth has been supported by sectors that are less sensitive to interest rates.
Source: Capital Economics
Back to Index
The United Kingdom
As we saw yesterday, the PMI report was disappointing, raising the risk of a recession in the UK.
Source: The Guardian Read full article
Here are some details from the report.
• Manufacturing PMI:
– Manufacturing orders:
– Export orders:
– Manufacturing backlog:
– Input prices (falling faster):
• Services PMI:
– Services outstanding business:
– Services prices charged (rising at a slower pace):
• Composite PMI output prices vs. the core CPI:
Source: Capital Economics
• Composite PMI vs. GDP:
Source: Capital Economics
Back to Index
The Eurozone
1. As we saw yesterday, the euro-area PMI reports signal a faster contraction in business activity. Recession looks increasingly likely.
Source: Commerzbank Research
• The deterioration in services is particularly concerning.
Source: Reuters Read full article
– Germany’s services PMI (2 charts):
– France services PMI:
• Manufacturing indices edged higher but remained in contraction territory.
– Germany (2 charts):
– France (3 charts):
• Here are some trends for the euro-area composite PMI.
– New orders:
– Employment:
– Input prices (rising a bit faster):
• Economic contraction looks likely.
– France:
Source: Pantheon Macroeconomics
– Germany:
Source: Pantheon Macroeconomics
– The Eurozone:
Source: Scotiabank Economics
——————–
2. Consumer confidence unexpectedly turned lower this month.
Back to Index
Europe
1. Norway’s economic growth stalled last quarter.
2. Here is a look at corporate profits and inflation.
Source: OECD Read full article
3. This chart shows rent growth in some European capitals.
Source: @financialtimes Read full article
Back to Index
Asia-Pacific
1. Foreigners are taking profits on Japanese shares.
2. Taiwan’s industrial production is running well below last year’s levels.
3. Singapore’s inflation is moderating.
4. Australia’s non-bank lenders’ home loan portfolios are facing higher delinquency rates.
Source: Coolabah Capital Investments
Back to Index
China
1. China’s stocks continue to underperform EM peers.
2. Beijing was able to halt the renminbi’s decline at around 7.3 to the dollar.
3. China’s total debt-to-GDP ratio has surpassed that of the US and the Eurozone.
Source: @WSJ Read full article
4. This chart shows Chinese corporations’ average return on assets.
Source: Bruegel Read full article
5. Meat prices have contributed to China’s disinflation.
Source: USDA Read full article
Back to Index
Emerging Markets
1. South Africa’s inflation was below forecasts.
2. Turkey’s consumer confidence suddenly deteriorated this month.
Source: @economics Read full article
——————–
3. Indian small-cap stocks are approaching new highs while displaying relative strength versus global equities.
Source: Aazan Habib, Paradigm Capital
Separately, this chart illustrates the notably low participation of Indian women in the labor force compared to their counterparts in other countries.
Source: @WSJ Read full article
——————–
4. Argentina’s economic activity continues to contract.
Source: Reuters Read full article
——————–
5. EM equities held resistance as the dollar strengthened.
Source: BCA Research
Back to Index
Energy
1. US oil inventories saw another sharp decline last week, …
… as refinery runs climbed.
Source: Reuters Read full article
• However, refined product inventories increased.
Gasoline demand remains relatively soft.
• Here are the inventory levels.
2. US crude oil production climbed again last week, …
… and is expected to clear the pre-COVID peak in the months ahead.
Source: @EIAgov
3. Brent crude declined on Wednesday but held support at the 200-day moving average.
Source: Reuters Read full article
——————–
4. European natural gas futures dropped sharply this week.
Source: @markets Read full article
——————–
5. So far, China’s oil demand has been resilient despite the economic slowdown. (3 charts)
Source: @ANZ_Research
Source: Gavekal Research
Source: @EIAgov
Back to Index
Equities
1. The market liked what it heard from Nvidia.
Source: barchart.com
Source: barchart.com
Source: CNBC Read full article
Stock futures are up sharply.
——————–
2. The Nasdaq Composite breadth has been weak during this year’s rally.
Source: @TheTerminal, Bloomberg Finance L.P.
3. Margin debt has declined sharply as a percentage of market capitalization. Leverage has shifted from stock financing to using options.
Source: Yardeni Research
4. Lofty valuations typically mean lackluster returns.
Source: BCA Research
• Equity risk premia for tech and consumer discretionary sectors have turned negative for the first time in years.
Source: Morgan Stanley Research; @dailychartbook
——————–
5. US small-cap stocks are trading at the widest discount to the overall market since coming out of the tech bubble.
Source: Tidal Financial Group
6. The top-10 US large-cap stocks may be significantly overvalued, according to Research Affiliates.
Source: Research Affiliates
7. Overnight (zero-days-until-expiration) options traders became more cautious in recent weeks.
Source: Chris Murphy, Susquehanna International Group
6. Retail investors have turned bearish.
• Most retail investors view inflation as the main factor driving market volatility, according to a survey by Global X ETFs.
Source: Global X ETFs Read full article
• Retail investors are most likely to research option strategies on the internet, while speaking with a financial advisor came in close second, according to a survey by Global X ETFs.
Source: Global X ETFs Read full article
Back to Index
Alternatives
1. US late-stage venture capital companies need about three times more capital than is entering the market.
Source: PitchBook
2. This chart shows the total private capital AUM.
Source: @markets Read full article
Back to Index
Credit
1. Bankruptcy filings suggest that high-yield spreads should be wider.
Source: Simon White, Bloomberg Markets Live Blog
2. Retail-sector CDS spreads have been widening.
Source: @Callum_Thomas
3. Office availability continues to rise, which could pressure rents.
Source: Fitch Ratings
Tenants are renewing their leases but for smaller spaces.
Source: @WSJ Read full article
Back to Index
Rates
The iShares 20+ Year Treasury Bond ETF (TLT) rose sharply on Wednesday as investors bought longer-dated bonds.
Options traders have been betting on a rebound in longer-dated Treasuries for some time.
Back to Index
Global Developments
1. Here is a look at average economic growth rates during the ten years after crossing the $10,000 GDP per capita threshold.
Source: Bruegel Read full article
2. Which countries are most exposed to China?
Source: The Economist Read full article
——————–
Food for Thought
1. How Netflix uses its subscription revenue:
Source: @chartrdaily
2. Streaming vs. cable:
Source: @chartrdaily
3. Streaming services price increases:
Source: @axios Read full article
4. The biggest US importers and exporters:
Source: Statista
5. US avocado imports:
Source: @chartrdaily
6. Pressure to marry:
Source: @CivicScience Read full article
7. Asian Americans’ views on their ancestral homelands:
Source: Pew Research Center Read full article
8. Renewables’ electricity generation in California and Texas:
Source: @WSJ Read full article
9. Moon landings and crashes:
Source: @WSJ Read full article
——————–
Back to Index