Posted on by The Daily Shot Editor: Lev Borodovsky

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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