Posted on by The Daily Shot Editor: Lev Borodovsky

Millennials increasingly struggle with debt – just as student loan payments resume

The Daily Shot: 29-Aug-23
• The United States
• Europe
• Japan
• China
• Emerging Markets
• Commodities
• Equities
• Rates
• Food for Thought

 

The United States

1. The Dallas Fed’s manufacturing survey shows persistent weakness in the region’s factory activity, …
 

 
… as the index of production deteriorates further.
 

 
• Manufacturers don’t expect to be very busy in the months ahead.
 

 
• Businesses boosted wages this month.
 

 
And more factories expect to pay higher prices for raw materials.
 

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2. Next, let’s take a look at some labor market trends.
 
• Employee sentiment has been eroding.
 
Source: @economics   Read full article  
 
• The Indeed Wage Tracker points to slower wage growth.
 
Source: @nick_bunker   Read full article  
 
And so does the falling quits rate (voluntary resignations).
 
Source: Oxford Economics  
 
• Response rates on the Bureau of Labor Statistics’ employment surveys, including the official employment report (first panel), continue to drop.
 
h/t Felice Maranz  

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3. Some economists see a pullback in consumption later this year. Here is one catalyst: Interest on federal student loans will resume this Friday, with the initial payments scheduled for October. The amount of loans in forbearance is now above $1 trillion.
 
Source: @WSJ   Read full article  
 
• Millennials are particularly exposed.
 
Source: Quill Intelligence  
 
• Some Millennials are already struggling with credit card debt, as delinquencies hit the highest level since 2012.
 
Source: PGM Global  
 
And auto loan delinquencies are at their highest since 2011.
 
Source: PGM Global  

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Europe

1. The Eurozone is facing a liquidity crunch.
 
• Growth in loans to companies and households:
 

 
• Growth in money supply metrics:
 

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2. The Swiss National Bank’s quantitative tightening continues.
 

 
3. Norway’s retail sales are holding at pre-COVID levels.
 

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Japan

The labor market is showing signs of slowing down.
 
Source: @economics   Read full article  
 
• The unemployment rate and jobs-to-applicants ratio:
 

 
• Unemployment among women:
 

 
• New job offers:
 

 
• Year-over-year growth in manufacturing job vacancies:
 

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China

1. Economists continue to lower their projections for China’s GDP growth.
 

 
Source: @economics   Read full article  
 
Inflation forecasts are also getting trimmed.
 

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2. Evergrande’s share trading has resumed.
 
Source: Reuters   Read full article  
 

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3. Investors are increasingly bearish on China.
 
Source: @markets   Read full article  
 
4. China’s local governments’ LGFV funding costs are highest for the poorer areas.
 
Source: @markets   Read full article  
 
5. Chip equipment imports have been surging.
 
Source: @financialtimes   Read full article  

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Emerging Markets

1. Hedge funds have been boosting their bets on EM equities.
 

 
Source: @markets   Read full article  

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2. According to BCA Research, EM “cyclical and structural growth prospects are poor.”
 
Source: BCA Research  

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Commodities

1. Platinum has been rebounding, widening its outperformance over palladium.
 

 
2. CTAs are betting on silver.
 
Source: TD Securities; @WallStJesus  
 
3. Sugar continues to rally.

Reuters: – Dealers said the market has been supported by news that India is expected to ban mills from exporting sugar in the season starting in October, halting shipments for the first time in seven years.
There were also concerns about the production in Thailand, where below-average rains were seen reducing sugarcane development.

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Equities

1. September tends to be the worst month for US stocks.
 
Source: Scotiabank Economics  
 
2. Earnings optimism has been all about AI-related businesses.
 
Source: Morgan Stanley; @WallStJesus  
 
3. Everyone is piling into the same names.
 
Source: JP Morgan Research; @dailychartbook  
 
Hedge funds’ exposure to tech megacaps hit a new high.
 
Source: @themarketear  

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4. The S&P 500 expected dividend yield is now massively below the 10-year Treasury yield.
 
Source: @TheTerminal, Bloomberg Finance L.P.  
 
5. VIX has been below 19 for 64 consecutive sessions.
 
Source: @Barchart  
 
6. Here are a couple of sector trends.
 
• Healthcare:
 

 
• Industrials:
 

 
Source: Reuters   Read full article  

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Rates

1. Speculative positioning in Treasury futures remains extraordinarily bearish.
 
Source: Deutsche Bank Research  
 

 
• Hedge funds’ Treasury positioning has diverged sharply from that of asset managers (2 charts).
 
Source: @markets   Read full article  
 
Source: Deutsche Bank Research  

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2. The Treasury curve undergoes a bull steepener when the unemployment rate starts rising.
 
Source: Gavekal Research  
 
3. BCA’s Fed policy indicator suggests that no more rate hikes are needed.
 
Source: BCA Research  

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Food for Thought

1. Used Tesla prices:
 
Source: CarGurus  
 
2. Amazon’s net sales by segment:
 
Source: Statista  
 
3. States’ contribution to US GDP:
 
Source: Statista  
 
4. US school teacher numbers are yet to recover from the COVID losses.
 
Source: @WSJ   Read full article  
 
5. When do US public school students start their classes after the summer break?
 
Source: Pew Research Center   Read full article  
 
6. Hurricanes are coming:
 
Source: @WSJ   Read full article  
 
7. Canada’s 2023 wildfire emissions in perspective:
 
Source: @financialtimes   Read full article  
 
8. Freelancers’ rates by profession:
 
Source: @genuine_impact  
 
9. US imports of soccer balls:
 
Source: S&P Global Market Intelligence  
 

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