Automakers have stopped incentives for new vehicles

The Daily Shot: 24-Oct-23
The United States
Canada
The Eurozone
Europe
Japan
Asia-Pacific
China
Emerging Markets
Cryptocurrency
Commodities
Energy
Equities
Rates
Global Developments
Food for Thought



 

The United States

1. While a November rate increase is off the table, the market has been pricing in some probability of a hike in January.
 

 
2. Next, we have some updates on inflation.
 
The deceleration in broad money supply growth should assist the Fed in its battle against inflation.
 
Source: Deutsche Bank Research  
 
Nomura expects a downshift in owners’ equivalent rent CPI over the next few months.
 
Source: Nomura Securities  
 
This chart shows the combined rent and owners’ equivalent rent CPI (year-over-year) and Zillow’s rent index.
 
Source: Pantheon Macroeconomics  
 
With the UAW strike in progress, automakers have stopped incentives for new vehicles, potentially contributing to an increase in vehicle CPI.
 
Source: Nomura Securities  

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3. Now, we have some data on the housing market.
 
Economists have been downgrading their forecasts for next year’s housing market activity.
 
Building permits:
 

 
Existing home sales:
 

 
Here is a look at homebuyer share rankings by generation.
 
Source: @financialtimes   Read full article  
 
The share of house purchases that fall through has been rising.
 
Source: Redfin  
 
How long does it take to build single-family and multi-family housing?
 
Source: Torsten Slok,¬†Apollo  
 
Buying a home is now 52% more expensive than renting.
 
Source: @WSJ   Read full article  
 
Rent was becoming more affordable before COVID.
 
Source: Apartment List  

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4. Student loan payments remain elevated.
 
Source: JP Morgan Research; @dailychartbook  


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Canada

1. Inflation remains high and broad-based.
 
Source: Scotiabank Economics  
 
Economists have been boosting their projections for the 2024 CPI.
 

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2. Economists continue to downgrade their forecasts for next year’s consumer spending.
 

 
3. Consumer confidence continues to slide.
 


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The Eurozone

1. The PMI report showed a deepening contraction in the euro-area business activity this month. We will have more on the PMI report tomorrow.
 

 
2. Germany’s consumer confidence declined again this month.
 

 
At the Eurozone level, consumer sentiment was roughly flat.
 

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3. The euro jumped on Monday, stopping at the 50-day moving average.
 


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Europe

1. The Norwegian krone is under pressure again.
 
Source: barchart.com  
 
2. After hitting a multi-year high against the euro, the Swiss franc saw a sharp pullback.
 
Source: barchart.com  
 
3. Here is a look at commercial flights in the EU.
 
Source: Eurostat   Read full article  


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Japan

1. The BoJ stepped in to halt the rise in JGB yields.
 

 
Source: @markets   Read full article  

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2. Manufacturing activity held in contraction territory this month.
 

 
Service sector growth slowed sharply.
 


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Asia-Pacific

1. Taiwan’s industrial production edged higher in September.
 

 
The unemployment rate moved up slightly but remains very low.
 

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2. Singapore’s inflation is slowing.
 

 
3. Australian PMI indicators are now both in contraction territory.
 
Manufacturing:
 

 
Services:
 


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China

1. The World Economics report shows service sector growth improving this month. Factory activity remains soft.
 
Source: World Economics  
 
2. Local government debt continues to grow.
 
Source: @WSJ   Read full article  
 
3. Domestic demand for autos has been weak.
 
Source: BCA Research  
 
4. Market rates continue to climb.
 

 
But China’s 10-year government bond yield remains well below the US equivalent.
 

 
Source: @markets   Read full article  


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Emerging Markets

1. Mexico’s economic activity has been growing rapidly.
 

 
2. Turkey’s consumer sentiment jumped this month.
 

 
3. The Nigerian naira hit a record low vs. the dollar. Will the central bank intervene?
 

 
4. Investors have been rotating out of the broad EM equity ETF (EEM) into the EM ex-China ETF (EMXC).
 
Source: @TheTerminal, Bloomberg Finance L.P.; h/t Goldman Sachs  


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Cryptocurrency

1. Bitcoin rallied from oversold levels and is approaching initial resistance near $35K.
 

 
Source: @crypto   Read full article  
 
The rally triggered a spike in short BTC liquidations.
 
Source: Coinglass  
 
The Grayscale news contributed to the rally.
 
Source: @crypto   Read full article  
 
The discount to NAV continues to shrink as the ETF conversion becomes more likely.
 

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2. This chart shows the month-to-date performance across some of the most liquid cryptos.
 

 
3. Bitcoin’s market cap relative to the crypto market cap (dominance ratio) is breaking out.
 

 
4. The ETH/BTC price ratio continues to decline from long-term resistance.
 

 
Here is the relative performance.
 

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5. Crypto funds saw inflows for the fourth consecutive week.
 
Source: CoinShares   Read full article  


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Commodities

1. So far, ETFs’ gold holdings have not rebounded.
 

 
2. Cocoa prices are surging.
 

 

 
Source: @markets   Read full article  

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3. Cattle futures tumbled after a USDA report showed higher-than-expected livestock numbers.
 


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Energy

1. Floating storage of crude oil is down sharply as Iran liquidates its stockpiles.
 
h/t @JavierBlas  
 
2. The WTI Crude Oil price is well above breakeven prices for existing and new US drilling wells. (2 charts)
 
Source: Global X ETFs   Read full article  
 
Source: Global X ETFs   Read full article  

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3. Energy shares continue to underperform crude oil.
 


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Equities

1. Market breadth continues to deteriorate.
 

 
2. Analysts’ earnings downgrades are outnumbering upgrades.
 

 
Corporate guidance has also been soft.
 
Source: BofA Global Research; @MikeZaccardi  

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3. The market hasn’t been kind to companies missing earnings or sales estimates.
 
Source: @markets   Read full article  
 
4. Intraday price movements have diverged from realized volatility based on closing prices.
 
Source: @TheTerminal, Bloomberg Finance L.P.; h/t Goldman Sachs  
 
5. Derivative income ETFs continue to see strong inflows.
 
Source: Global X ETFs   Read full article  
 
6. Hedge funds like the tech mega-caps but not the rest of the S&P 500.
 
Source: Goldman Sachs; @dailychartbook  
 
7. The Russell 2000 is nearing support.
 
Source: @TheTerminal, Bloomberg Finance L.P.  
 
8. The S&P 500 equal-weight index is nearing oversold territory.
 

 


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Rates

1. The Fed’s ownership share of government debt is falling.
 
Source: Gavekal Research  
 
The Fed has managed to reduce the maturity profile of public debt.
 
Source: Gavekal Research  

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2. Treasury market liquidity is worsening again.
 

 
3. Treasury funds continue to see inflows.
 
Source: BofA Global Research  


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Global Developments

1. Global trade is now firmly below last year’s levels.
 
Source: @JeffreyKleintop  
 
2. How long has it been since each country’s CPI was in its target range?
 
Source: Macrobond  
 
3. Based on nominal GDP growth, policy rates across G7 nations are not yet restrictive.
 
Source: MRB Partners  
 
4. Israel’s sovereign CDS spread has reached its highest level in a decade, driven by concerns about the conflict expanding.
 


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Food for Thought

1. Views on driverless cars:
 
Source: @YouGovAmerica   Read full article  
 
2. Favorability scores for social media brands:
 
Source: @CivicScience  
 
3. AI platform website visits:
 
Source: The Economist   Read full article  
 
4. Wikipedia page views:
 
Source: @chartrdaily  
 
5. Gender pay gaps in OECD countries:
 
Source: @OECD   Read full article  
 
6. Unfavorable views of both Democratic and Republican parties:
 
Source: @axios   Read full article  
 
7. A large increase in China’s coal usage:
 
Source: IEA  
 
8. TV shows with the highest ratings:
 
Source: @genuine_impact  
 

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