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.
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2. Last year, households saw a decline in real incomes due to inflation.
Source: @economics Read full article
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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
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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
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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
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2. It’s been warm in central England.
Source: @ScottDuncanWX
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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
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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
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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
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Europe
1. Norway’s inflation surprised to the downside.
• The GDP remains on its pre-COVID trend.
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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
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3. The Polish zloty continues to weaken after a larger-than-expected rate cut.
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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
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Asia-Pacific
1. South Korea’s unemployment rate hit a record low.
• The nation’s international trade prices surged last month.
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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
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China
1. Hong Kong-based and foreign investors continue to dump mainland stocks (2 charts).
Source: @ANZ_Research
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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
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Emerging Markets
1. Brazil’s CPI remains muted.
2. India’s industrial output has been very strong.
Source: The Economic Times Read full article
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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 Niño?
Source: Morgan Stanley Research
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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
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4. US orange juice futures continue to hit record highs due to limited supplies.
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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.
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3. US crude oil implied demand remains elevated.
4. CTAs are boosting their exposure to crude oil.
Source: Deutsche Bank Research
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5. The Global X uranium ETF has been rallying.
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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
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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
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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
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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
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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
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Food for Thought
1. Sports media-rights revenues:
Source: The Economist Read full article
• Sports-league revenues:
Source: The Economist Read full article
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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
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