The Daily Shot: 21-Nov-23
• The United States
• The Eurozone
• Japan
• Asia-Pacific
• China
• Emerging Markets
• Cryptocurrency
• Commodities
• Energy
• Equities
• Rates
• Global Developments
• Food for Thought
The United States
1. The index of leading economic indicators (LEI) has recorded its 19th consecutive monthly decline.
• Here are the contributions to last month’s changes.
Source: Wells Fargo Securities
• The 6-month rolling changes continue to signal a recession.
Source: @TheTerminal, Bloomberg Finance L.P.
– The LEI is down 11.7% from the peak. How does the latest decline compare to previous downturns?
Source: Wells Fargo Securities
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2. While some sentiment measures from surveys show pessimism, hard data indicators, such as consumer spending, have been resilient. (2 charts)
Source: MBA Research
Source: MBA Research
• We also see this divergence in the NFIB small business data.
Source: Oxford Economics
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3. US financial conditions continue to ease, driven by lower Treasury yields, tighter credit spreads, higher equity prices, …
… and a weaker US dollar.
Source: barchart.com
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4. In 2024, both fiscal and monetary policies are expected to be restrictive.
Source: Oxford Economics
5. Americans with auto and/or student loans are more likely to be delinquent on their credit card debt.
Source: Liberty Street Economics Read full article
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The Eurozone
1. The euro continues to rally.
2. Sovereign bond spreads have been tightening.
• Italy:
• Greece:
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3. Industrial employment is about to turn sharply lower.
Source: ING
4. Risk premia in equities and corporate bonds remain resilient despite softer economic conditions. (2 charts)
Source: ECB
Source: ECB
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Japan
1. JGB yields are falling.
2. The yen has been strengthening in recent days, …
… putting pressure on hedge funds to cover their short bets.
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3. The number of Tokyo condominiums for sale hit a multi-year low.
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Asia-Pacific
1. Asian currencies are surging (the second panel shows the Taiwan dollar).
2. Taiwan’s export orders are recovering.
Source: @economics Read full article
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2. South Korea’s exports are holding above last year’s levels.
Here is the breakdown by product and export destination.
Source: @samkimasia Read full article
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3. Exports are rebounding across Asia.
Source: @ANZ_Research
4. New Zealand’s trade deficit has narrowed relative to last year.
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China
1. The renminbi continues to strengthen.
2. Property developers’ bonds have stabilized as Beijing introduces more support for the sector.
Source: @business Read full article
• Flows into China’s equity markets also appear to have stabilized.
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3. China’s stocks continue to trade at a discount to global peers.
Source: Capital Economics
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Emerging Markets
1. The markets cheered the defeat of the Peronist government in Argentina’s presidential election.
Source: Reuters Read full article
• Equity ETF:
• Bond price:
• The peso surged in the “unofficial” market.
Source: @TheTerminal, Bloomberg Finance L.P.
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2. Chile’s Q3 GDP growth topped expectations.
Source: @economics Read full article
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3. This chart shows the key components of India’s imports.
Source: Capital Economics
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Cryptocurrency
1. Bitcoin’s market cap as a share of the total crypto market cap has trended upward since August, signifying BTC’s leadership. However, the uptrend is starting to slow.
• The recent rally pushed the total crypto market cap firmly above $1 trillion.
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2. Crypto funds registered eight straight weeks of inflows as investors continued to exit short-bitcoin products. (2 charts)
Source: CoinShares Read full article
Source: CoinShares Read full article
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Commodities
1. Copper is rebounding …
… on tighter inventories, …
… but demand concerns persist.
Source: oilprice.com Read full article
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2. Here is a breakdown of key minerals used in renewable energy systems.
Source: Global X ETFs Read full article
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Energy
1. Brent crude bounced from last week’s lows but is struggling to break above the 200-day moving average.
Source: @TheTerminal, Bloomberg Finance L.P.
Will OPEC deepen its production cuts?
Source: Reuters Read full article
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2. Capital Economics expects European natural gas and Asian LNG prices to fall next year as new LNG export capacity enters commercial service.
Source: Capital Economics
• North America’s LNG export capacity is expected to increase by over 100% through 2027.
Source: @EIAgov
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Equities
1. Main US stock market indices are now in overbought territory.
2. The S&P 500 equal-weight index continues to widen its underperformance, …
… as tech mega-caps power ahead, driving the S&P 500 to a 20% gain year-to-date (total return).
• Goldman expects the S&P 500 equal-weight index to continue trading at a deep discount to the capitalization-weighted index.
Source: Goldman Sachs; @MikeZaccardi
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3. This chart shows the attribution of the MSCI USA year-to-date performance.
Source: Capital Economics
4. The earnings recession persists when the five largest stocks are excluded.
Source: Simon White, Bloomberg Markets Live Blog
5. The S&P 500 concentration is near record levels.
Source: Goldman Sachs; @MikeZaccardi
6. The Reddit crowd hasn’t been very active in chasing the most shorted names.
7. Small-cap funds have been seeing strong inflows this month.
Source: EPFR
• The Russell 2000 realized volatility has been outpacing the implied vol.
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8. Will a shift in Fed policy (or recession) trigger a decline in the stock/bond ratio?
Source: MRB Partners
9. VIX and US high-yield credit spreads remain below their 200-day moving average, indicating a risk-on environment.
Source: Aazan Habib, Paradigm Capital
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Rates
1. When will the Treasury curve inversion end? Here is a forecast from BofA.
Source: BofA Global Research; @MikeZaccardi
2. Will the 10-year Treasury yield dip below the August peak in the weeks ahead?
Source: @TheTerminal, Bloomberg Finance L.P.
3. The first full Fed rate cut is priced for June 2024, which would be an 11-month hold period – the longest gap between the last hike and the first cut, according to Deutsche Bank. Generally, the market has been too early to price in cuts.
Source: Deutsche Bank Research
4. Speculators are extremely net-short Treasuries, which typically precede periods of falling yields …
Source: Denise Chisholm; Fidelity Investments
… along with rising stock and bond returns.
Source: Denise Chisholm; Fidelity Investments
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Global Developments
1. According to Oxford Economics, market-implied projections for long-term bond yields are too high.
Source: Oxford Economics
2. According to Goldman, anticipated declines in inflation will pave the way for rate cuts across advanced economies in late 2024.
Source: Goldman Sachs
3. Data center investment in new capacity construction and absorption is surging in North America.
Source: Global X ETFs Read full article
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Food for Thought
1. Growth in non-alcoholic beer sales:
Source: @WSJ Read full article
2. Thanksgiving dinner inflation:
Source: @WSJ Read full article
3. The number of US tellers and bank branches over time:
Source: Morgan Stanley Research
4. US wage growth by wage quartile:
Source: @WSJ Read full article
5. Elon Musk’s $44 billion bully pulpit:
Source: @WSJ Read full article
6. Comfort with AI-generated streaming content:
Source: Global X ETFs Read full article
7. Home cooks:
Source: Gallup
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