Small businesses report declining sales

The Daily Shot: 13-Sep-23
The United States
Canada
The United Kingdom
The Eurozone
Europe
Japan
Asia-Pacific
China
Emerging Markets
Commodities
Energy
Equities
Credit
Rates
Food for Thought



 

The United States

1. The NFIB small business sentiment index edged lower last month.
 

 
Source: Reuters   Read full article  
 
More firms have been reporting declining sales.
 

 
A larger percentage of companies boosted prices last month.
 

 
Credit was less of an issue in August.
 

 
Hiring is slowing.
 

 
Fewer companies have been boosting wages, but the index of compensation plans surged last month.
 

——————–

 
2. Last year, households saw a decline in real incomes due to inflation.
 

 
Source: @economics   Read full article  

——————–

 
3. Total hours worked is running below the post-reopening trend.
 
Source: Jerome Powell   Read full article  
 
4. Next, we have some updates on inflation.
 
Economists expect a modest increase in the core CPI for August.
 
Morgan Stanley (0.18% in August vs. 0.16% gain in July):
 
Source: Morgan Stanley Research  
 
Nomura (a 0.24% increase):
 
Source: Nomura Securities  
 
But the supercore CPI is expected to jump.
 
Source: Nomura Securities  
 
Weaker wage pressures in the food services sector, resulting from more relaxed labor conditions, are expected to reduce food inflation.
 
Source: Nomura Securities  
 
Data from Indeed continues to show softer wage growth.
 
Source: Hiring Lab  


Back to Index

 

Canada

1. Consumer confidence is weakening again.
 

 
2. The underperformance of TSX Utilities and Communication sectors appears stretched but not yet extreme. (2 charts)
 
Source: Hugo Ste-Marie, Portfolio & Quantitative Strategy Global Equity Research, Scotia Capital  
 
Source: Hugo Ste-Marie, Portfolio & Quantitative Strategy Global Equity Research, Scotia Capital  


Back to Index

 

The United Kingdom

1. The labor market is losing momentum.
 
Employment growth (through July):
 

 
Payrolls:
 

 
The unemployment rate:
 

 
And yet, wage growth remains quite strong.
 

 
Source: Reuters   Read full article  

——————–

 
2. It’s been warm in central England.
 
Source: @ScottDuncanWX  


Back to Index

 

The Eurozone

1. The probability of a rate hike on Thursday is roughly a coin toss.
 

 
Rapidly rising labor costs are a concern for the ECB.
 
Source: @financialtimes   Read full article  
 
But it’s hard to be aggressive with rate hikes when the credit impulse crashes.
 
Source: @skhanniche  

——————–

 
2. The European Commission lowered its euro-area GDP growth projections.
 
Source: @economics   Read full article  
 
3. Germany’s ZEW expectations index edged higher even as current conditions deteriorated.
 

 
As the PMI report showed, Germany’s construction sector is in trouble.
 
Source: @financialtimes   Read full article  
 
The number of German corporate bankruptcies has been running well above their pre-COVID-era pace.
 
Source: PGM Global  

——————–

 
4. Interest rates on outstanding mortgages have risen sharply in some countries.
 
Source: @DanielKral1, @OxfordEconomics  
 
5. Italy’s government debt remains high.
 
Source: @financialtimes   Read full article  
 
6. Spain’s tourism spending keeps rising.
 
Source: Arcano Economics  
 
7. Finland’s housing construction activity is sharply lower.
 
Source: Danske Bank  


Back to Index

 

Europe

1. Norway’s inflation surprised to the downside.
 

 
The GDP remains on its pre-COVID trend.
 

——————–

 
2. Denmark’s industrial production accelerated in recent years, largely because of the pharma sector and the success of Novo Nordisk.
 
Source: Danske Bank  
 
Source: Reuters   Read full article  

——————–

 
3. The Polish zloty continues to weaken after a larger-than-expected rate cut.
 


Back to Index

 

Japan

1. The PPI is moderating.
 

 
2. The BSI business conditions index improved in Q3.
 

 
3. Japan’s workers are not very engaged.
 
Source: Gallup   Read full article  


Back to Index

 

Asia-Pacific

1. South Korea’s unemployment rate hit a record low.
 

 
The nation’s international trade prices surged last month.
 

——————–

 
2. New Zealand’s home sales are running above last year’s levels.
 

 
3. Next, we have some updates on Australia.
 
Consumer confidence (still depressed):
 

 
Household spending (headed lower):
 
Source: Capital Economics  
 
Saving rate (slowing but still elevated):
 
Source: @ANZ_Research  


Back to Index

 

China

1. Hong Kong-based and foreign investors continue to dump mainland stocks (2 charts).
 

 
Source: @ANZ_Research  

——————–

 
2. Hedge funds remain very cautious on China.
 
Source: Goldman Sachs; @ResearchQf  
 
3. The imbalance between China’s consumption and investment persists.
 
Source: Reuters   Read full article  
 
4. Property sales remain depressed relative to last year.
 
Source: Gavekal Research  
 
5. The auto industry’s profit margins are shrinking.
 
Source: Reuters   Read full article  
 
6. This map illustrates the evolution of China’s Belt and Road Initiative.
 
Source: Council on Foreign Relations   Read full article  


Back to Index

 

Emerging Markets

1. Brazil’s CPI remains muted.
 

 
2. India’s industrial output has been very strong.
 

 
Source: The Economic Times   Read full article  

——————–

 
3. Fund managers have been rotating from EM equities into US shares.
 
Source: BofA Global Research  
 
4. Which economies are most exposed to the impact of El NiƱo?
 
Source: Morgan Stanley Research  


Back to Index

 

Commodities

1. Gold futures are at the 200-day moving average.
 

 
2. CTAs have been trimming their exposure to copper.
 
Source: Deutsche Bank Research  
 
3. Aluminum demand has been supported by the energy transition.
 
Source: @ANZ_Research  
 
Aluminum prices on the Shanghai Futures Exchange significantly diverged from LME prices over the past few months. This could be due to China’s investment in grid infrastructure.
 
Source: @ANZ_Research  
 
Investor positioning in LME Aluminum futures is increasingly bearish.
 
Source: @ANZ_Research  

——————–

 
4. US orange juice futures continue to hit record highs due to limited supplies.
 


Back to Index

 

Energy

1. Crude oil prices continue to climb.
 

 
Source: CNN Business   Read full article  
 
2. The backwardation in the Brent curve is intensifying, indicating tighter supplies.
 

 

——————–

 
3. US crude oil implied demand remains elevated.
 

 
4. CTAs are boosting their exposure to crude oil.
 
Source: Deutsche Bank Research  

——————–

 
5. The Global X uranium ETF has been rallying.
 


Back to Index

 

Equities

1. The Russell 2000/Nasdaq 100 ratio hit a new low as small caps continue to underperform.
 

 
2. The S&P 500 equity risk premium is now below the average investment-grade bond spread, pointing to lofty equity valuations.
 
Source: @TheTerminal, Bloomberg Finance L.P.; h/t Barclays Research  
 
3. Next, let’s take a look at equity positioning.
 
Institutional investors have been very bearish and are now catching up to retail investors.
 
Source: BofA Global Research  
 
JP Morgan’s clients are also boosting equity exposure after being underinvested.
 
Source: JP Morgan Research; @WallStJesus  
 
Here is Deutsche Bank’s aggregate positioning indicator.
 
Source: Deutsche Bank Research  
 
Tech positioning is off the recent highs.
 
Source: Deutsche Bank Research  

——————–

 
4. Despite rising concentration in the S&P 500, …
 
Source: BCA Research  
 
… the US large-cap index is more diversified than the global peers.
 
Source: Merrill Lynch  

——————–

 
5. This chart shows the largest companies in the S&P 500 over time.
 
Source: Goldman Sachs; @dailychartbook  
 
6. Next, we have some sector updates.
 
Healthcare:
 

 
Tech:
 

 
Energy:
 

 
Here is a look at current sector valuations versus historical averages.
 
Source: Goldman Sachs  


Back to Index

 

Credit

1. US banks’ loan-to-deposit ratio has resumed its climb.
 

 
2. Fund managers increasingly see investment-grade bonds outperforming high-yield debt.
 
Source: BofA Global Research  
 
3. Here is a look at rating agencies’ market share.
 
Source: @genuine_impact  


Back to Index

 

Rates

1. Changes in the 10-year Treasury yield are correlated with the US economic surprise index.
 
Source: Hugo Ste-Marie, Portfolio & Quantitative Strategy Global Equity Research, Scotia Capital  
 
2. The copper-to-gold ratio continues to signal lower Treasury yields ahead.
 
Source: @TheTerminal, Bloomberg Finance L.P.  
 
3. When will the Fed begin to cut rates?
 
Source: BofA Global Research  


——————–

Back to Index

 

Food for Thought

1. Sports media-rights revenues:
 
Source: The Economist   Read full article  
 
Sports-league revenues:
 
Source: The Economist   Read full article  

——————–

 
2. Investment and productivity boom due to innovations in electricity:
 
Source: Goldman Sachs  
 
3. The happiness curve:
 
Source: The Economist   Read full article  
 
4. Advantages of remote work flexibility:
 
Source: @WSJ  
 
5. Job postings for remote work:
 
Source: Hiring Lab  
 
6. Changes in abortions performed:
 
Source: The New York Times   Read full article  
 
7. Wikipedia traffic:
 
Source: @chartrdaily  
 

——————–


Back to Index