The Daily Shot: 26-Sep-23
• The United States
• The United Kingdom
• The Eurozone
• Europe
• Japan
• Asia-Pacific
• China
• Emerging Markets
• Cryptocurrency
• Commodities
• Energy
• Equities
• Credit
• Global Developments
• Food for Thought
The United States
1. Moody’s warned that the government shutdown could affect its assessment of US debt.
Source: Reuters Read full article
• Treasury yields continue to hit multi-year highs, …
… with the yield curve steepening further.
• Here is the 30-year bond price drawdown.
• TIPS yields (real rates) are climbing as well.
• Equity futures are down this morning, driven by the selloff in bonds.
• The US dollar continues to climb amid increased risk aversion.
• The 30-year mortgage rate hit a multi-year high.
Source: Mortgage News Daily
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2. The Dallas Fed’s manufacturing index showed ongoing weakness in the region’s factory activity. However, the underlying indicators signaled some improvement, with new orders starting to stabilize.
Measures of capacity utilization and employment improved.
As we’ve seen elsewhere, more companies report rising costs.
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3. US industrial activity is stabilizing along with China’s credit impulse.
Source: PGM Global
4. Business applications remain elevated.
Source: Arcano Economics
5. As we pointed out earlier, US consumption is slowing.
Source: Goldman Sachs; @MikeZaccardi
• Here is an estimate of excess savings.
Source: @economics Read full article
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6. How many workers will be furloughed in the upcoming government shutdown? Below is an estimate from Oxford Economics.
Source: Oxford Economics
7. There is a structural decline in the share of the population moving to a new address (falling mobility).
Source: Torsten Slok, Apollo
8. Will advances in AI boost US productivity growth?
Source: J.P. Morgan Asset Management
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The United Kingdom
1. The slump in retail sales unexpectedly eased this month.
2. As we saw yesterday, the PMI report points to a deterioration in the labor market.
Source: Pantheon Macroeconomics
3. Investors have been reducing their bets against gilts.
Source: @financialtimes Read full article
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The Eurozone
1. Bund yields are hitting multi-year highs.
2. Germany’s Ifo expectations indicator was roughly unchanged from August.
Below, we have the sector trends.
Source: ifo Institute
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3. PMI indicators point to downside risks for economic growth …
Source: Pantheon Macroeconomics
… and corporate earnings.
Source: Hugo Ste-Marie, Portfolio & Quantitative Strategy Global Equity Research, Scotia Capital
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4. Here is a look at the Q2 GDP growth by country (with the UK added for comparison).
Source: Arcano Economics
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Europe
1. Will the Swiss franc decline further after the SNB’s unexpected hold on rates? EUR/CHF is at resistance.
2. Czech sentiment indicators declined this month.
3. Here is a look at defense spending in the EU.
Source: ECB
4. Which countries/regions have the highest suicide rates?
Source: Eurostat Read full article
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Japan
1. Dollar-yen continues to grind higher.
2. Japan’s services PPI topped expectations.
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Asia-Pacific
1. South Korea’s retail sales are slowing.
Consumer confidence appears to have peaked.
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2. Singapore’s inflation continues to ease.
3. Will higher fuel prices boost Australian inflation expectations?
Source: @ANZ_Research
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China
1. The Hang Seng Properties Index hit the lowest level since the GFC.
2. Regulators have been banning some of the biggest corporate shareholders from selling.
Source: @WSJ Read full article
3. This chart shows power generation by source. Coal usage continues to climb.
Source: @JKempEnergy
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Emerging Markets
1. Brazil’s consumer confidence keeps rising.
2. Turkey’s manufacturing confidence edged higher this month.
Capacity utilization improved.
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3. India’s foreign direct investment outflows accelerated this year.
Source: Macrobond
4. The Thai baht selloff continues.
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Cryptocurrency
1. Crypto funds saw minor outflows last week led by bitcoin products. (2 charts)
Source: CoinShares Read full article
Source: CoinShares Read full article
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2. The BTC/ETH price ratio continues to trend higher with a short-term breakout.
Source: @StocktonKatie
3. The most liquid altcoins on FTX’s balance sheet have seen their liquidity decline.
Source: @KaikoData
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Commodities
Copper moved deep into contango, signaling a well-supplied market.
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Energy
1. Here is Goldman’s forecast for Brent crude prices.
Source: Goldman Sachs
2. Canada is expected to significantly boost heavy crude sales to Asian refineries, cutting dependence on the US market.
Source: @markets Read full article
3. European natural gas prices jumped recently, partly due to Russia’s ban on diesel exports.
Source: @markets Read full article
• By the way, here is a look at Russia’s diesel sales.
Source: @cangsizhi, @markets Read full article
• Gas imports from Norway have declined sharply in recent months.
Source: Commerzbank Research
• This chart shows natural gas exports to the EU by source.
Source: @WSJ Read full article
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4. Uranium prices are surging, …
… boosting share prices of uranium producers.
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Equities
1. Consensus price targets 12 months out look very optimistic.
Source: @FactSethttps Read full article
2. Rising real yields suggest that valuations are stretched.
Source: @TheTerminal, Bloomberg Finance L.P.
• The S&P 500 equity risk premium is hitting multi-year lows.
Here is a similar measure using the 1-year yield.
Source: Alpine Macro
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3. Sentiment indicators point to a pullback in risk appetite.
• Goldman’s positioning indicator:
Source: Goldman Sachs; @dailychartbook
• CNN’s Fear & Greed Index:
Source: CNN Business
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4. Tighter liquidity conditions (due to the Fed’s QT) could weigh on stocks.
5. Stock-bond correlations remain elevated.
6. The S&P 500 has seen the longest streak of declining versus advancing stocks this year – tied for the longest since December 2018.
Source: @WillieDelwiche
This chart shows the advance/decline line for the Nasdaq Composite.
Source: @TheTerminal, Bloomberg Finance L.P.
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7. Here is a look at global EPS growth attributions for Q3 and consensus estimates for Q4 and 2024 (blue=growth, orange=declines).
Source: Nucleus Wealth
8. Year-to-date, the top seven stocks have accounted for the majority of the returns in the S&P 500.
Source: Torsten Slok, Apollo
9. Overnight options are now half of the total S&P 500 options volume.
Source: JP Morgan Research; @RobinWigg, @FTAlphaville, @financialtimes Read full article
10. Risk parity strategies have been struggling amid increased correlations.
Source: @markets Read full article
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Credit
1. Momentum in the US leveraged loan market continued last week.
Source: PitchBook
• Borrowers keep refinancing outstanding debt. According to PItchBook, 60% of US loan activity this year is refinancing.
Source: PitchBook
• Along with refinancings, US leveraged loan issuers have addressed upcoming maturities via a record volume of amend-and-extend deals (2 charts).
Source: PitchBook
Source: Semafor
The story is similar in Europe, where loan extensions account for roughly two-thirds of this year’s loan activity, according to PitchBook.
Source: PitchBook
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2. BCA Research forecasts higher US corporate bond spreads driven by a rise in defaults next year.
Source: BCA Research
3. Bond repurchases have slowed.
Source: @markets Read full article
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Global Developments
1. Bond yields are rising globally.
2. Trade has been slowing.
Source: PGM Global
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Food for Thought
1. Disappearing nursing homes:
Source: @WSJ Read full article
2. US emergency-department backlogs:
Source: @WSJ Read full article
3. The US plant-based milk market:
Source: Statista
• Water usage and CO2 emissions from the production of different types of milk:
Source: Statista
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4. Top reasons young Americans wouldn’t consider joining the military:
Source: USAFacts
5. Emigration from Russia:
Source: The Economist Read full article
6. Abortion bans:
Source: @axios Read full article
7. Paid leave:
Source: OECD Read full article
8. Largest wine producers:
Source: Visual Capitalist Read full article
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