Small businesses increasingly report declining sales and earnings

The Daily Shot: 16-Nov-23
The United States
Canada
The United Kingdom
The Eurozone
Japan
Asia-Pacific
China
Emerging Markets
Cryptocurrency
Commodities
Energy
Equities
Credit
Global Developments
Food for Thought



 

The United States

1. The October PPI report was softer than expected, with the headline figure pulled lower by energy prices.
 
Source: @TheTerminal, Bloomberg Finance L.P.  
 
Here is the core PPI.
 

 
Based on the CPI and PPI data, Nomura sees the October core PCE inflation increasing by around 0.2% (below consensus).
 
Source: Nomura Securities  

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2. Retail sales slowed last month, …
 

 
… dragged lower by automobile sales.
 

 
Below are the components of last month’s changes in retail sales (nominal and real).
 
Source: @GregDaco, @EY_Parthenon  
 
The “core” retail sales saw a modest gain.
 

 
Here is a look at retail sales levels.
 

 
This chart shows the divergence between US and German real retail sales.
 
Source: @RobinBrooksIIF  

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3. The NFIB small business sentiment index edged lower in October.
 

 
Businesses are increasingly reporting declining sales and earnings.
 

 
Employment indicators have been holding up.
 

 
Many businesses continue to boost wages.
 

 
More firms are reporting expensive financing as a problem.
 

 
This chart from BofA shows rising small business credit card balances.
 
Source: Bank of America Institute  

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4. Mortgage applications edged higher again, …
 

 
… as mortgage rates ease from multi-year highs.
 

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5. The Atalanta Fed’s GDPNow Q4 growth estimate is holding above 2% (annualized).
 
Source: Federal Reserve Bank of Atlanta  
 
Here are the contributions to the model (inventories are less of a drag on growth).
 
Source: @TheTerminal, Bloomberg Finance L.P.  

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6. This week, US financial conditions eased, driven by the subdued CPI report, which led to a decrease in yields, the dollar, and credit spreads, while lifting stock prices.
 


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Canada

1. Existing home sales declined sharply last month.
 

 
2. Nominal September manufacturing sales were stronger than expected, still running above last year’s levels.
 


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The United Kingdom

1. The CPI report was a bit softer than expected.
 
Source: @TheTerminal, Bloomberg Finance L.P.  
 
Core inflation dipped below 6%.
 

 
Services inflation is still elevated, with rent CPI remaining stubbornly high.
 

 
The retail sector inflation (RPI) is falling rapidly.
 

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2. The Land Registry house price index is down year-over-year for the first time in over a decade. However, the decline was smaller than expected.
 


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The Eurozone

1. Euro-area industrial production contracted further in September.
 

 
Source: MarketWatch   Read full article  

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2. The trade surplus was higher than expected.
 

 
Here is a look at exports of services.
 
Source: @DanielKral1, @OxfordEconomics  
 
By the way, below is the Eurozone’s trade balance with China.
 
Source: Alpine Macro  

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3. German construction firms increasingly see softening demand.
 
Source: Torsten Slok,¬†Apollo  
 
4. French unemployment increased last quarter.
 


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Japan

1. The trade gap was smaller than expected last month, …
 

 
… as exports remain robust.
 

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2. Service sector output edged lower in September.
 


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Asia-Pacific

1. New Zealand’s house sales are holding above last year’s levels.
 

 
2. Next, we have some updates on Australia.
 
The employment report topped expectations.
 

 
Source: Reuters   Read full article  
 
The unemployment rate increased, …
 

 
.. but so did the labor force participation rate.
 

 
Inflation expectations remain elevated.
 


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China

1. New home prices declined for the fifth month in a row.
 

 
2. Advisory services in China’s capital markets and M&A deals have become much less lucrative.
 
Source: @WSJ   Read full article  


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Emerging Markets

1. India’s trade gap hit a record high, …
 

 
… as imports surge.
 

 
Source: The Indian Express   Read full article  

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2. South Africa’s retail sales volume continues to grow.
 

 
3. Colombia and Peru report shrinking economic activity (year-over-year).
 

 

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4. Argentina’s CPI exceeded 140% in October.
 


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Cryptocurrency

Bitcoin is up almost 130% year-to-date.
 


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Commodities

1. Coffee futures continue to climb.
 

 
2. China’s soybean market is well supplied.
 
Source: USDA   Read full article  


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Energy

1. US oil inventories continue to rise.
 
Barrels:
 

 
Days of supply:
 

 
Cushing, OK stocks:
 

 
US refinery runs and utilization have been relatively soft.
 

 

 
After the recent surge, US gasoline inventories are back near last year’s levels.
 

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2. Oil prices eased in response to rising US inventories.
 


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Equities

1. Analysts are upbeat on the growth prospects of tech mega-caps.
 
Source: Goldman Sachs; @dailychartbook  
 
As a group, the Magnificent Seven stocks are now up over 100% year-to-date, outpacing the S&P 500 by over 80%.
 

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2. The trade services PPI signals slowing margin growth.
 

 
3. The latest pullback in earnings was relatively mild.
 
Source: Capital Economics  
 
4. Bullish options bets on small caps are hitting record highs.
 

 
5. The S&P 500 futures liquidity has been improving.
 
Source: Deutsche Bank Research  
 
6. Next, we have some sector performance data (over the past five business days).
 
Retail:
 

 
Source: @WSJ   Read full article  
 
Banks:
 

 
Transportation:
 

 
Communication Services:
 

 
Metals & Mining:
 

 
Healthcare:
 


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Credit

1. Total available credit declined from its recent peak, which particularly impacts small businesses.
 
Source: MUFG Securities  
 
2. This chart shows foreclosure notices for commercial real-estate mezzanine loans.
 
Source: @WSJ   Read full article  
 
3. Banks’ preferred share offerings stalled this year.
 
Source: Global X ETFs   Read full article  


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Global Developments

1. Where are the G-20 economies in the economic cycle? Here is the analysis from Moody’s.
 
Source: Moody’s Investors Service  
 
How will G-20 economies expand over the next couple of years compared to pre-COVID growth?
 
Source: Moody’s Investors Service  

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2. Govenments’ interest expense is expected to surge.
 
Source: @WSJ   Read full article  


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Food for Thought

1. US trade with China and the rest of Asia:
 
Source: @WSJ   Read full article  
 
2. US bookkeepers vs. financial managers:
 
Source: Morgan Stanley Research  
 
Graduates with accounting degrees:
 
Source: @WSJ   Read full article  

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3. Job postings for remote and in-person work:
 
Source: Indeed Hiring Lab  
 
Top and bottom work-from-home states:
 
Source: @thefuture   Read full article  

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4. Using sick days:
 
Source: @WSJ   Read full article  
 
5. Largest tea exporters:
 
Source: @TheDailyShot  

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