The Daily Shot: 15-Dec-23
• The United States
• Canada
• The United Kingdom
• The Eurozone
• Europe
• Japan
• China
• Emerging Markets
• Cryptocurrency
• Energy
• Equities
• Credit
• Rates
• Global Developments
• Food for Thought
The United States
1. Last month’s retail sales exceeded expectations, signaling robust economic activity.
Source: @economics Read full article
Here is the breakdown by sector (2 charts).
Source: @TheTerminal, Bloomberg Finance L.P.
Source: @GregDaco
• Adjusted for inflation, retail sales have been accelerating.
• Separately, BofA data shows that discretionary spending remains resilient.
Source: BofA Global Research; @MikeZaccardi
And cash levels are still relatively high.
Source: Bank of America Institute
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2. The GDPNow nowcast estimate for the Q4 economic growth climbed to 2.6% (annualized), …
Source: Federal Reserve Bank of Atlanta
… boosted by resilient consumer spending (“PCE Goods/Services”).
Source: @TheTerminal, Bloomberg Finance L.P.
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3. Initial jobless claims hit a multi-year low for this time of the year.
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4. Import prices unexpectedly increased last month, …
… and we could see more gains ahead due to the recent pullback in the US dollar.
Source: @TheTerminal, Bloomberg Finance L.P.
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5. Fed surveys signal a reduction in CapEx.
Source: TS Lombard
6. Here is a look at US trade with China, Mexico, and Canada.
Source: @financialtimes Read full article
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Canada
1. Existing home sales declined for the fifth month in a row last month.
2. Manufacturing sales dropped sharply in October.
3. Vehicle sales have been rebounding.
Source: Scotiabank Economics
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The United Kingdom
The BoE pushed back on rate cut expectations triggered by the Fed’s “pivot.”
Source: Reuters Read full article
The pound jumped.
But gilt yields continued to trend lower.
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The Eurozone
1. The ECB also pushed back on all the talk about rate cuts. Christine Lagarde commented that we “did not discuss rate cuts at all.”
Source: Reuters Read full article
The euro climbed further, …
… making another run at the 1.10 level.
• The ECB announced plans to scale down its Pandemic Emergency Purchase Programme (PEPP) reinvestments by an average of €7.5 billion monthly throughout the latter half of 2024, with a complete cessation expected by the end of that year.
Source: @economics Read full article
• The ECB lowered its forecasts for next year’s inflation.
Source: @economics Read full article
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2. Germany’s market-based inflation expectations have been falling.
3. Ireland has been boosting the euro area’s industrial production volatility.
Source: @financialtimes Read full article
4. This chart shows Deutsche Bank’s forecast for the Eurozone’s hours worked.
Source: Deutsche Bank Research
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Europe
1. Norway’s central bank unexpectedly hiked rates despite moderating inflation.
Source: Reuters Read full article
The Norwegian krone surged.
But bond yields continue to move lower.
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2. Sweden’s underlying inflation surprised to the downside.
Source: @economics Read full article
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3. Poland’s trade surplus topped expectations as exports exceeded last year’s levels.
4. Here is a look at electronics recycling in the EU.
Source: Eurostat Read full article
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Japan
1. The PMI report showed factory activity contraction accelerating last month amid soft demand.
But services output strengthened.
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2. Foreigners have taken advantage of the weak yen.
Source: Alpine Macro
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China
1. The PBoC accelerated liquidity injections to boost economic growth.
Source: @markets Read full article
Nonetheless, the stock market is still not rebounding.
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3. Economic activity has been strengthening.
• Industrial production:
• Retail sales:
Property investment and residential sales remain soft relative to recent years.
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4. Economists have been downgrading their forecasts for China’s inflation next year.
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Emerging Markets
1. Mexico’s benchmark stock market index hit a record high, boosted by the Fed’s pivot.
2. Brazil’s retail sales edged lower, but the upward trend remains intact.
3. Foreigners have been buying Turkish equities, …
… and Turkey’s domestic bonds.
Source: @markets Read full article
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4. Ukraine’s central bank cut rates again.
5. ASEAN and India have attracted a growing amount of foreign investment over the years.
Source: HSBC
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Cryptocurrency
1. Cryptos gave up earlier gains this week, although bitcoin outperformed other major tokens.
Source: FinViz
2. BTC/USD maintained its uptrend from the November 2022 price low. The next key resistance level is around $48,500.
3. The Crypto Fear & Greed Index remains firmly in “greed” territory, which typically precedes price pullbacks. However, bullish sentiment is not yet extreme compared with prior cycles.
Source: Alternative.me
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Energy
1. Crude oil bounced from the recent lows.
Source: Reuters Read full article
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2. Who is buying Russian oil?
Source: @financialtimes Read full article
Who is moving Russian oil?
Source: @financialtimes Read full article
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3. Uranium prices keep climbing.
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Equities
1. The rally looks increasingly stretched.
And it’s not just about the mega-caps. The average S&P 500 stock appears very overbought. Here is the equal-weight index.
However, the S&P 500 momentum remains positive. This suggests pullbacks could be contained along the uptrend from the October 2022 price low.
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2. Market breadth has improved dramatically. Here is the percentage of S&P 500 stocks trading above their 200-day moving average.
3. Fund flows remain strong.
Source: Bank of America Institute
4. The stock/bond correlation remains elevated, although a shifting interest rate environment could help restore fixed income’s diversification benefits.
Source: Global X ETFs Read full article
5. Option bets on further gains in small caps are hitting record highs (IWM = Russell 2000 ETF).
It’s all about the upside, with little demand for downside protection. Here is the IWM skew.
6. The skew index on SPY (S&P 500 ETF) also points to strong demand for calls relative to puts.
7. US investors are far more optimistic about long-term stock market returns than financial professionals.
Source: Visual Capitalist Read full article
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Credit
1. Morgan Stanley expects the US high-yield bond default rate to peak at 5% next year.
Source: Morgan Stanley Research
2. The global net rating bias improved as rising stars reached a new monthly high for the year in October, according to S&P Ratings. However, the US remains a focal point of downward pressure.
Source: S&P Global Ratings
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Rates
1. Investors are taking profits in Treasuries.
Source: Bank of America Institute
2. This chart shows private vs. official foreign holders of Treasuries.
Source: Torsten Slok, Apollo
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Global Developments
1. Which countries’ stock markets are least correlated to the MSCI’s global equity index?
Source: Simon White, Bloomberg Markets Live Blog
2. Outside of US tech, equity valuations are not unusually high relative to history.
Source: Goldman Sachs
3. Asia continues to lead in electric vehicle sales.
Source: HSBC
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Food for Thought
1. US clothing and footwear imports:
Source: S&P Global Market Intelligence
2. Commercial jetmakers’ order backlog:
Source: @financialtimes Read full article
3. US projected population by race and ethnicity:
Source: @WSJ Read full article
4. Support for legalizing marijuana:
Source: Gallup Read full article
5. What kills birds?
Source: @lararhiannonw, @opinion Read full article
6. Number of curse words on streaming services:
Source: @WSJ Read full article
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Have a great weekend!
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