The Daily Shot: 05-Feb-24
• The United States
• The Eurozone
• Asia-Pacific
• China
• Emerging Markets
• Commodities
• Equities
• Credit
• Global Developments
• Food for Thought
The United States
1. The January jobs figure was almost twice the expected, challenging the narrative of a decelerating labor market.
Here are the contributions.
Source: @TheTerminal, Bloomberg Finance L.P.
– The pullback in healthcare hiring we saw in the ADP report appears to have been a false signal.
Source: @axios Read full article
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– However, the Household Survey once again showed a decline in jobs, further diverging from the Establishment Survey (above).
– Here is a look at the 6-month changes by sector.
Source: @WSJ Read full article
• The unemployment rate held steady last month, …
… but underemployment edged higher.
• The participation rate was unchanged, but prime-age participation ticked up.
– The share of Americans with disabilities who are working remains elevated.
• Wage growth unexpectedly accelerated, further spooking the markets.
– But hours worked dipped to the lowest level since the COVID shock.
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2. Fed rate cut expectations eased after the employment report.
– Probability of a March rate cut:
– The total expected rate reduction in 2024:
• Treasury yields surged, climbing further this morning.
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3. The Citi Economic Surprise Index has been moving higher.
4. The University of Michigan’s final consumer sentiment index for last month confirmed a substantial uptick in sentiment.
Here are the contributions to the index.
Source: @TheTerminal, Bloomberg Finance L.P.
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5. Railcar loadings have improved over the past six months.
Source: TS Lombard
6. Legislative initiatives like the Inflation Reduction Act, CHIPS Act, and the Bipartisan Infrastructure Law are exerting a greater impact on trade policy.
Source: JP Morgan Research
• Moreover, geopolitical tensions intensify changes in trade decisions.
Source: JP Morgan Research
• As a result, we are already seeing dramatic shifts in trade patterns.
Source: JP Morgan Research
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The Eurozone
1. The sharp decline in Germany’s truck toll mileage points to weaker real GDP, which could also weigh on the broader euro area.
Source: PGM Global
2. French factory output strengthened in December.
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Asia-Pacific
1. In December, Singapore’s retail sales saw the biggest year-over-year decline since early 2021.
2. Australia’s inflation tracker eased last month.
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China
1. The mainland stock market benchmark is at a five-year low.
• Tech shares remain under pressure.
• Domestic investors increasingly look abroad.
Source: @markets Read full article
• Beijing is desperately trying to stem the market rout.
Source: @markets Read full article
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2. China’s government bond yields continue to drop.
3. This chart shows the largest global bankruptcies.
Source: @axios Read full article
4. Beijing is increasingly focused on infusing liquidity into the struggling property sector.
Source: Reuters Read full article
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5. The PMI report from S&P Global points to ongoing expansion in China’s services sector.
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Emerging Markets
1. Many EM currencies have been under pressure.
Here is the Chilean peso.
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2. Brazil’s industrial production accelerated in December.
3. India’s services sector remains remarkably strong.
Source: S&P Global PMI
4. Thai inflation continues to slow.
5. Finally, we have some performance data from last week.
• Currencies:
• Bond Yields:
• Equity ETFs:
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Commodities
1. Gold ETF holdings have diverged from gold prices.
Source: @TheTerminal, Bloomberg Finance L.P.
• The VanEck Gold Miners ETF (GDX) is starting to outperform the SPDR Gold ETF (GLD).
Source: Aazan Habib, Paradigm Capital
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2. Nickel remains in the doldrums.
Source: @markets Read full article
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3. The sharp rebound in orange juice prices continues.
4. Traders are increasingly bearish on soybeans and corn, …
… but are upbeat on coffee.
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5. Finally, here is a look at last week’s performance.
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Equities
1. The S&P 500 hit another record high and is closing in on 5,000.
2. S&P 500 valuations keep rising even as real yields are no longer falling.
Source: @TheTerminal, Bloomberg Finance L.P.
3. Deutsche Bank’s positioning index signals that investors are overweight stocks, though not yet at extreme levels.
Source: Deutsche Bank Research
• Goldman’s indicator points to a similar situation.
Source: Goldman Sachs; @MikeZaccardi
• This chart shows speculative positioning in the Nasdaq 100 futures.
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4. Global market breadth is holding up.
Source: MarketDesk Research
• S&P 500 breadth and momentum are in the top quartile historically.
Source: Strategas Securities
• So far, US small-caps have not participated in the breadth expansion.
Source: Aazan Habib, Paradigm Capital
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5. BofA sees global earnings growth picking up over the next 12 months.
Source: BofA Global Research
6. A boost in share buybacks this year?
Source: Reuters Read full article
7. This chart shows the biggest single-day market cap gains.
Source: @markets Read full article
8. IPO performance has been lackluster.
Source: @markets Read full article
9. Margins are expected to climb this year.
Source: Yahoo Finance Read full article
Here is Goldman’s forecast for the Magnificent 7 margins vs. the rest of the S&P 500.
Source: Goldman Sachs; @MikeZaccardi
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10. Finally, we have some performance data from last week.
• Sectors:
• Equity factors:
\
• Macro basket pairs’ relative performance:
• Thematic ETFs:
• Largest tech firms:
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Credit
1. US banks’ capital buffers remain robust.
Source: Alpine Macro
2. Tighter lending standards point to further declines in commercial real estate prices.
Source: Deutsche Bank Research
3. BDCs took a hit after the NY Community Bancorp news.
Source: @TheTerminal, Bloomberg Finance L.P.
4. Finally, we have some performance data from last week.
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Global Developments
1. Balance of payments levels are normalizing, with creditor nations seeing a deterioration in surpluses, while there has been an improvement in deficit nations.
Source: BCA Research
• Balance of payment flows could be negative for the dollar.
Source: BCA Research
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2. January returns tend to set the tone for the remainder of the year.
Source: Mensur Pocini; Julius Baer Read full article
3. Finally, we have some DM performance data from last week.
• Currencies:
• Bond yields:
• Large-cap equities:
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Food for Thought
1. Box office tickets sold:
Source: @financialtimes Read full article
2. Car owners’ negative equity:
Source: Torsten Slok, Apollo
3. Meta’s revenue:
Source: Reuters Read full article
4. Defense companies’ growing order books:
Source: @WSJ Read full article
5. Mexico raiding inactive fentanyl labs to pacify the US:
Source: Reuters Read full article
6. Diet pills and travel plans:
Source: @CivicScience Read full article
7. Political party identification:
Source: Gallup Read full article
8. How do people in different countries spend their time?
Source: Our World in Data
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