The Daily Shot: 05-Dec-23
• The United States
• The Eurozone
• Europe
• Japan
• Asia-Pacific
• China
• Emerging Markets
• Cryptocurrency
• Energy
• Equities
• Rates
• Global Developments
• Food for Thought
The United States
1. Factory orders declined in October.
Source: RTT News Read full article
This chart shows the dollar level of vehicle and parts orders.
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2. The economic surprise index has been rolling over.
3. Real GDP growth consensus estimates have been revised higher.
Source: Deutsche Bank Research
• Here is Goldman’s forecast.
Source: Goldman Sachs
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4. The GDP-GDI divergence has reached extreme levels. Could recent GDP data be overstating the true extent of the US economic growth?
Source: USA Today Read full article
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5. Next, we have some updates on the US consumer.
• Dwindling excess savings:
Source: JP Morgan Research; @WallStJesus
• Slowing student loan payments:
Source: Oxford Economics
• Real household income vs. the pre-COVID trend:
Source: Deutsche Bank Research
• Capital Economics expects real disposable income to remain well below the current pace of consumption growth.
Source: Capital Economics
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5. The GS Twitter Economic Sentiment continues to diverge from the U. Michigan’s measure.
Source: Goldman Sachs; @MikeZaccardi
6. The 30-year mortgage rate is approaching 7%.
Source: Mortgage News Daily
7. Market pricing for faster Fed rate cuts suggests that the US dollar has room to decline further.
Source: BNP Paribas; @WallStJesus
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The Eurozone
1. The market is pricing in steep ECB rate cuts next year.
Here is the 2-year Bund yield.
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2. While the Sentix Investor Confidence Index experienced a marginal uptick, the extent of its recovery fell short of market expectations.
3. Germany’s trade surplus increased in October.
• Amid an already faltering economy, Germany’s ‘debt brake’ may pose a significant additional obstacle to economic growth, intensifying existing headwinds.
Source: Gavekal Research
Source: @bpolitics Read full article
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4. Here is a look at labor force participation.
Source: ECB Read full article
Source: ECB Read full article
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Europe
1. Swiss inflation eased last month.
2. Next, we have the number of FDI projects by country.
Source: The Economist Read full article
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Japan
1. Tokyo’s November CPI was lower than expected, but core inflation is still elevated relative to recent history.
2. As Japanese firms increasingly divest from cross-shareholdings, a longstanding barrier to investment in Japan’s stock market is being dismantled, potentially altering the landscape for equity investors.
Source: Goldman Sachs
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Asia-Pacific
1. South Korea’s inflation eased last month.
2. Next, we have some updates on Australia.
• Although the RBA maintained its interest rates, its less hawkish-than-expected commentary fell short of market anticipations, leading to a dip in the Australian dollar and short-term yields.
• Australia’s services sector is now a drag on economic growth.
Source: World Economics
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China
1. The selloff continues despite Beijing’s attempts to stabilize the stock market.
• Mainland shares:
• Hong Kong:
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2. Fluctuations in the excess reserve ratio lead the non-public credit impulse by several months.
Source: BCA Research
3. Hong Kong’s retail sales have been slowing.
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Emerging Markets
1. Let’s begin with Mexico.
• The unemployment rate (very low):
• Vehicle sales (well above last year’s levels):
• CapEx (down in September):
• Remittances (record high):
• The budget deficit (extra spending ahead of the elections):
• The latest poll:
Source: The ETF Shelf
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2. Argenitna’s consumer confidence is rebounding.
3. South Africa’s vehicle sales are 10% below last year’s levels.
• The trade balance unexpectedly swung into deficit in October.
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4. Is Turkey’s inflation finally peaking as the central bank pushes rates to extreme levels?
5. EM leading indicators are turning up alongside an improvement in trade.
Source: TS Lombard
Source: TS Lombard
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Cryptocurrency
1. Cryptos are off to a strong month, with bitcoin cash (BCH) and bitcoin (BTC) in the lead.
Source: FinViz
2. Bitcoin’s market cap relative to the total crypto market cap, or dominance ratio, continues to trend higher.
3. The BTC/ETH price ratio is also trending higher.
4. Crypto funds continued to see inflows last week, led by long-bitcoin products. (2 charts)
Source: CoinShares
Source: CoinShares
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Energy
1. European natural gas futures dip below €40.0/MWh.
2. Uranium prices are surging.
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Equities
1. There are not a lot of bearish retail investors left.
• CTAs have turned very bullish.
Source: Goldman Sachs; @dailychartbook
• And yet, corporate insiders are bearish.
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2. Fund inflows have been robust (2 charts).
Source: Goldman Sachs; @MikeZaccardi
Source: BNP Paribas; @WallStJesus
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3. Tailwinds from higher liquidity (reserves) are fading.
Source: @TheTerminal, Bloomberg Finance L.P.
4. Many hedge funds have piled into the same stocks.
Source: Goldman Sachs
5. Deeper yield-curve inversions mean larger market corrections in a recession.
Source: Simon White, Bloomberg Markets Live Blog
6. US investors have been willing to pay a large premium for rising, high-quality profits this year.
Source: Citi Private Bank
7. The S&P 500 is trading at the bottom end of its long-term trend channel since 2008.
Source: Deutsche Bank Research
8. How did forward PE multiples across S&P 500 sectors change in November?
• Here is a look at expected performance (forward earnings yield) vs. perceived risk (implied volatility) by sector.
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9. Finally, we have detailed equity factor performance data for small and large caps over the past five weeks.
Source: CornerCap Institutional
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Rates
1. Repo rates jumped last week due partly to tax payment dynamics and bond settlements.
SOFR climbed above the fed funds rate.
Source: @TheTerminal, Bloomberg Finance L.P.
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2. Hedge funds have been boosting their bets on rapid-fire Fed rate cuts next year. Too much enthusiasm?
Source: @markets Read full article
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3. The real Fed funds rate rose from very low levels back into its historically normal range.
Source: Deutsche Bank Research
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Global Developments
1. Here is a look at the November manufacturing PMIs. 22 out of 31 countries tracked by S&P Global are in contraction territory.
Source: S&P Global PMI
2. Real consumer spending has been strong in the US while the Eurozone and UK continue to see weakness.
Source: Capital Economics
3. The CPI distribution has shifted lower across major developed markets.
Source: TS Lombard
And wage pressure has started to ease.
Source: TS Lombard
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Food for Thought
1. How Americans view small businesses:
Source: @chartrdaily
2. Amazon’s seasonal workforce:
Source: @chartrdaily
3. US healthcare employment growth:
Source: @WSJ Read full article
4. Allocation of defense spending by category:
Source: OECD Read full article
5. Deaths attributed to smoking in selected countries:
Source: Jeremy Ney Read full article
• Smoking and median household income by US county:
Source: Jeremy Ney Read full article
• Smoking rates:
Source: Jeremy Ney Read full article
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6. Common Christmas dishes in Europe:
Source: @loverofgeography
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