The Daily Shot: 28-Aug-23
• Administrative Update
• The United States
• Canada
• The Eurozone
• Europe
• Asia-Pacific
• China
• Emerging Markets
• Commodities
• Energy
• Equities
• Credit
• Global Developments
• Food for Thought
Administrative Update
The Daily Shot will not be published on Monday, September 4th.
Back to Index
The United States
Chair Powell’s speech at Jackson Hole was measured and revealed little new insight. Although he recognized improvements on the inflation front, he emphasized the need for further progress, indicating that the central bank stands ready to tighten policy again.
Source: CNBC Read full article
• The market interpreted Powell’s comments as being a bit on the hawkish side, pushing the probability of another rate hike to 65%.
• The terminal rate hit the highest level since March.
• Treasury yields climbed.
• Rate cut expectations in the first half of next year moderated further.
——————–
2. The updated consumer sentiment report from the University of Michigan indicated a decline in confidence during the latter half of August. This dip can be attributed in part to higher gasoline prices and stock market volatility.
Households are more optimistic about their short-term financial prospects.
Inflation expectation metrics have risen slightly since the early August readings.
——————–
3. The Citi Economic Surprise Index appears to be rolling over.
4. Next, we have some updates on households’ financial situation.
• Credit card delinquencies are grinding higher as consumers face headwinds.
Source: @WSJ Read full article
Source: Insider Read full article
• Households’ interest payments as a share of personal disposable income have been rising.
Source: BofA Global Research; @MikeZaccardi
• Excess savings are still elevated (2 charts).
Source: BofA Global Research; @MikeZaccardi
Source: BofA Global Research; @MikeZaccardi
——————–
5. Here are some charts on US federal debt.
• The Congressional Budget Office projects federal debt as a percent of GDP to nearly double by 2053 if current tax and spending laws remain unchanged.
Source: Committee for a Responsible Federal Budget
• Interest expense is expected to accelerate.
Source: Torsten Slok, Apollo
Source: Torsten Slok, Apollo
Back to Index
Canada
1. Growth in mortgage lending has been slowing.
Source: @markets Read full article
2. This chart shows remote and hybrid job postings on Indeed.
Source: @BrendonBernard_ Read full article
3. Canada’s forest fires have been devastating.
Source: Capital Economics
Back to Index
The Eurozone
1. Germany’s Ifo sentiment index surprised to the downside, …
Source: ifo Institute Read full article
… signaling rising risks for economic growth.
Source: Capital Economics
Source: Reuters Read full article
• Germany’s business investment was stronger than expected in the second quarter, …
… but there was no growth in consumer spending.
——————–
2. Has euro-area wage growth peaked?
Source: TS Lombard
3. The Eurozone’s longer-dated inflation expectations are converging with those in the US, which is highly unusual.
Source: Gavekal Research
Back to Index
Europe
1. Sweden’s unemployment rate dropped sharply last month.
The employment rate continues to climb.
Source: Nordea Markets
• Lending to households is slowing.
——————–
2. Here is a look at homeownership rates in the EU.
Source: @financialtimes Read full article
Back to Index
Asia-Pacific
1. The BoJ’s JGB purchases are expected to hit a record high this year.
Source: @markets Read full article
2. New Zealand’s economic growth is stalling.
Source: Capital Economics
Back to Index
China
1. Beijing is attempting to mitigate the negative publicity stemming from the nation’s underperforming stock market. Will it work?
Source: @markets Read full article
Source: @markets Read full article
Source: @markets Read full article
Source: @TheTerminal, Bloomberg Finance L.P.
——————–
2. Industrial profits have been soft.
Source: Reuters Read full article
——————–
3. Real estate is becoming a smaller part of fixed asset investment.
Source: Commerzbank Research
4. Productivity growth has slowed in recent decades.
Source: @WSJ Read full article
Back to Index
Emerging Markets
1. Economists have been upgrading their estimates for this year’s GDP growth in Brazil and Mexico.
Chile’s economy is still expected to contract in 2023.
——————–
2. Mexico’s Q2 current account surplus topped expectations.
3. The World Economics SMI report for India shows ongoing expansion in business activity.
Source: World Economics
4. Turkey’s manufacturing confidence edged lower this month.
5. The ruble is weakening again.
6. Here is a comparison of EM and DM countries across different metrics.
Source: BofA Global Research
7. Finally, we have last week’s performance data.
• Currencies:
• Bond yields:
• Equity ETFs:
Back to Index
Commodities
1. US soft red winter wheat is selling off, …
… pressured by robust Russian output.
Source: @sizov_andre Read full article
Will wheat test support at $6 per bushel?
——————–
2. Sugar prices are higher.
Source: @markets Read full article
——————–
3. As the milk supply climbs, US dairy prices are steadily declining. Milk cow efficiency rates have reached new highs.
Source: Wells Fargo Securities
4. Orange juice prices continue to surge, …
… driven by depressed yields.
Source: Wells Fargo Securities
——————–
5. Here is last week’s performance across key commodity markets.
Back to Index
Energy
1. US diesel prices and crack spreads are sharply higher, …
… as Marathon shuts down the Garyville refinery.
Source: @markets Read full article
——————–
2. US LNG exports surpassed those of other countries in the first half of the year.
Source: @EIAgov
3. US natural gas injections into storage slowed, …
… as scorching heat in parts of the US boosts demand.
Source: NOAA
Here is the situation in Texas.
Source: @JKempEnergy
Source: Reuters Read full article
Back to Index
Equities
1. This month, the S&P 500 failed to achieve two consecutive daily gains – a phenomenon not seen in years.
Source: @markets Read full article
——————–
2. Stocks look increasingly expensive relative to corporate credit.
3. The S&P 500 remains concentrated.
Source: BofA Global Research
4. Investment managers have turned bearish.
Source: NAAIM
5. The top three largest US ETF issuers collectively generate more revenue than all other issuers combined.
Source: The ETF Shelf
6. Here is a look at the Fortune 500 companies’ age.
Source: The Economist Read full article
7. Finally, we have some performance data from last week.
• Sectors:
• Equity factors:
• Macro baskets’ relative performance:
• Thematic ETFs:
• Largest US tech firms:
Back to Index
Credit
1. Stressed credits have been outperforming.
Source: @markets Read full article
——————–
2. Leveraged loan recovery rates are crashing, offsetting the benefits of relatively low default rates.
Source: @markets Read full article
3. Multifamily housing delinquency rates continue to rise.
Source: Calculated Risk
4. Here is last week’s performance across credit asset classes.
Back to Index
Global Developments
1. US dollar usage in global payments hit a record high.
Source: @markets Read full article
2. Which DM currencies are most correlated to stocks?
Source: Capital Economics
3. Next, we have some DM performance data from last week.
• Currencies:
• Bond yields:
• Equities:
——————–
Food for Thought
1. Alcohol consumption by age:
Source: @CivicScience Read full article
2. Inflation-adjusted cost of US disasters:
Source: @bbgvisualdata Read full article
3. US EV charging infrastructure:
Source: @WSJ Read full article
• Fast-charging stations:
Source: @bbgvisualdata Read full article
——————–
4. Active trading by members of Congress:
Source: @genuine_impact
5. Websites blocking OpenAI’s web-scraping bots:
Source: Originality.AI Read full article
6. Preferred payment apps:
Source: @CivicScience Read full article
7. Blue-collar workers working from home:
Source: USA Today Read full article
8. Ice cream consumption in the US:
Source: CNN Business Read full article
——————–
Back to Index