The Daily Shot: 03-Jan-24
• The United States
• Canada
• The United Kingdom
• The Eurozone
• Europe
• Japan
• Asia-Pacific
• China
• Emerging Markets
• Cryptocurrency
• Commodities
• Equities
• Credit
• Rates
• Global Developments
• Food for Thought
The United States
1. Construction spending in November increased less than expected.
• Private construction spending continues to rise, with recent gains driven by residential investment.
Source: @TheTerminal, Bloomberg Finance L.P.
– Growth in single-family construction spending has been outpacing multifamily housing projects.
Source: LPL Research
• Manufacturing construction spending continues to climb, driven by semiconductor facility investment.
• Public construction spending has been surging, …
… but there was a pullback in November.
Source: Wells Fargo Securities
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2. Next, we have some updates on the housing market.
• Mortgage rates are below 6.5%.
• Home prices continued to climb in October, rising by almost five percent relative to 2022.
• The gap between home prices and wages keeps widening.
• Housing inventories are back at last year’s levels.
Source: AEI Housing Center
• Many home sales are falling through.
Source: Redfin
• Mortgage delinquencies remain very low.
• Fewer homebuyers are looking for a home outside their metro area.
Source: Redfin Read full article
• New home sales declined sharply in November.
Source: MarketWatch Read full article
– Measured in months of supply, new home inventories surged.
– Here is the composition of new home inventories (by stage of construction).
Source: Calculated Risk
• Pending home sales held at multi-year lows in November.
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3. The updated manufacturing PMI from S&P Global showed a faster contraction in the nation’s manufacturing activity last month.
4. Labor productivity is rising alongside slowing inflation.
Source: Alpine Macro
• The average cost of industrial robots is expected to decline, which could boost labor productivity.
Source: Global X ETFs Read full article
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Canada
Manufacturing activity has slowed sharply, forcing factories to shed jobs.
Source: Reuters Read full article
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The United Kingdom
1. Factory activity remains depressed.
Source: S&P Global PMI
Source: Reuters Read full article
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2. Here is a look at UK immigration trends.
Source: @WSJ Read full article
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The Eurozone
1. The PMI data continues to signal a recession.
Source: S&P Global PMI
Source: Reuters Read full article
Here are the PMI trends for Italy, Spain, and the Netherlands.
Source: S&P Global PMI
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2. Germany’s real residential property prices have been crashing.
Source: BIS; h/t @ValuablOfficial
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Europe
1. Poland’s factory activity failed to stabilize last month.
Source: S&P Global PMI
The Czech Republic’s manufacturing sector continues to shrink.
Source: S&P Global PMI
2. Norway’s manufacturing is back in growth territory.
3. Here is a look at asylum applications in the EU.
Source: @financialtimes Read full article
4. This map shows all the European renewable energy projects.
Source: The Economist Read full article
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Japan
1. M&A activity accelerated last year.
Source: Torsten Slok, Apollo
2. Japan’s population is expected to keep aging.
Source: @WSJ Read full article
3. Here is a look at the Sea of Japan earthquake intensity.
Source: @financialtimes Read full article
Source: The New York Times Read full article
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Asia-Pacific
1. The rebound in Asian currencies is stalling.
Source: @TheTerminal, Bloomberg Finance L.P.
2. NZD/USD appears overbought within its long-term downtrend.
3. Next, let’s take a look at South Korea’s exports.
• Exports to the US vs. China:
Source: @JeffreyKleintop
• Key products:
Source: ING
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4. Australia’s housing credit growth appears to have bottomed.
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China
1. The PBoC is providing more liquidity accommodation to boost growth.
Source: @markets Read full article
2. Properties are taking longer to sell.
Source: Longview Economics
3. Home prices have been falling in Hong Kong while rents are climbing.
Source: @economics Read full article
4. China faces deteriorating demographics.
Source: @WSJ Read full article
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Emerging Markets
1. Let’s run through some manufacturing PMI trends.
• India (growth is still strong but slowing):
Source: S&P Global PMI
• Turkey (dragged lower by weak EU activity):
• Mexico (growing):
Source: S&P Global PMI
• Brazil (mild contraction):
Source: S&P Global PMI
• Colombia (rebounding):
Source: S&P Global PMI
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2. Generally, investors are underweight in their allocation to EM equities.
Source: Global X ETFs Read full article
• EM equities typically outperform US equities 12 months after the last Fed rate hike.
Source: Global X ETFs Read full article
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3. Here is a look at external debt-to-GDP ratios.
Source: Goldman Sachs
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Cryptocurrency
1. Bitcoin climbed above $45k on spot bitcoin ETF hopes.
Source: Reuters Read full article
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2. Ether continues to lag.
3. Bitcoin options activity has accelerated in recent months.
Source: The Block
4. Bitcoin proof-of-work difficulty levels continue to hit record highs.
Source: CoinWarz
5. The supply of stablecoins is growing again.
Source: @axios Read full article
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Commodities
1. US corn prices have been under pressure.
2. Brazil’s rainfall improved soybean growing conditions, sending prices sharply lower this week.
Speculative accounts have become bearish on soybeans.
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3. Here is Bloomberg’s grains index.
4. Rice futures have been rallying, …
… with speculative accounts boosting their bets.
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5. Chicago hog futures have been tumbling.
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Equities
1. The Nasdaq 100 took a hit in the first session of the year as bond yields climbed.
• The S&P 500 is starting to break below its uptrend from October 2023.
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2. Defensives are back in favor as sentiment turns cautious. Here are some sector trends over the past few days.
• Healthcare:
• REITs:
• Consumer staples:
• Consumer discretionary:
• Transportation:
• Tech and semiconductors:
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3. High-beta stocks are very correlated to Treasuries.
4. Here is a look at equity valuations relative to the past ten years.
5. This chart shows CapEx and R&D by sector.
Source: J.P. Morgan Asset Management
6. Return dispersion remains elevated.
Source: BlackRock Investment Institute
7. Analysts are upbeat about this year’s tech mega-cap performance.
Source: @WSJ Read full article
8. Share buybacks are expected to drive much of the new demand for equities in 2024.
Source: Goldman Sachs
9. 2023 was a rough year for SPACs.
Source: @markets Read full article
10. Finally, we have detailed equity factor performance over the past year.
Source: CornerCap Institutional
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Credit
1. Market focus will likely shift to the impending US high-yield maturity wall.
Source: PitchBook
2. Leveraged finance assets outperformed investment-grade debt over the past three years.
Source: @markets Read full article
3. The US leveraged loan default rate rose toward its 10-year average.
Source: PitchBook
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Rates
1. Repo rates are elevated, pointing to tight liquidity.
Source: @markets Read full article
Here is the spread between the overnight Treasury repo rate and fed funds.
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2. The Fed’s RRP facility balances dropped after the year-end “window dressing” spike.
3. The Fed’s estimate of the longer-run fed funds rate (chart below) is now about 50 bps below the market’s projection (2nd chart).
Source: @WSJ Read full article
Source: @TheTerminal, Bloomberg Finance L.P.
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Global Developments
1. The dollar index is oversold and holding short-term support above 99.57.
2. Manufacturing activity remained in the doldrums last month amid soft demand.
Source: S&P Global PMI
3. 2023 was a positive year for most financial assets, particularly developed market equities. However, oil and Chinese stocks sold off.
Source: Deutsche Bank Research
Here is a look at total returns since Treasury yields peaked in October 2023.
Source: Deutsche Bank Research
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Food for Thought
1. Demand for weight loss drugs:
Source: The Economist Read full article
2. Influenza activity map:
Source: CDC; h/t @MikeZaccardi
3. Palestinian support for Hamas:
Source: @financialtimes Read full article
4. Trans people killed:
Source: Statista
5. Mass shootings and low-weight births in impacted communities:
Source: NBER Read full article
6. GRE scores across college majors:
Source: @debarghya_das
7. Economic activity by state:
Source: Federal Reserve Bank of Philadelphia
8. New Year’s resolutions:
Source: @genuine_impact
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