Student debt drops $37 billion from 2022

The Daily Shot: 08-Feb-24
The United States
The United Kingdom
The Eurozone
Europe
Japan
China
Emerging Markets
Commodities
Energy
Equities
Credit
Rates
Global Developments
Food for Thought



 

The United States

1. Growth in consumer credit slowed sharply in December.
 

 
This chart shows the year-over-year trends.
 
Source: Oxford Economics  
 
Growth in credit card debt stalled and was negative when adjusted for inflation.
 

 
Here is credit card debt relative to disposable personal income.
 

 
Student debt was down $37 billion last quarter compared to 2022.
 

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2. US households maintain a relatively strong financial position, as evidenced by the Financial Obligations Ratio remaining at comparatively low levels.
 
h/t Deutsche Bank Research  
 
Households’ financial assets surged since the pandemic, especially among high-income groups.
 
Source: MRB Partners  

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3. Perceptions of the economy have split massively along political party lines.
 
Source: @johnauthers, @opinion   Read full article  
 
4. Next, we have some updates on inflation.
 
Fewer companies are mentioning inflation in earnings calls.
 
Source: BofA Global Research  
 
Supply chain pressures are relatively low despite the Suez Canal fiasco.
 
Source: TS Lombard  
 
The Atlanta Fed’s wage growth tracker declined further last month but remains well above pre-COVID levels.
 

 
However, when adjusted for productivity, growth in employment costs is around 2%.
 
Source: Alpine Macro  

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5. Mortgage applications are holding at multi-year lows.
 

 

 
Here is the rate lock count.
 
Source: AEI Housing Center  
 
6. According to Optimal Blue, home price appreciation reached 5.9% (year-over-year) in January but is expected to ease from here.
 
Source: AEI Housing Center  

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7. The trade balance was almost unchanged in December.
 

 
Both imports and exports increased.
 
Source: @TheTerminal, Bloomberg Finance L.P.  
 
Here is the trade balance in services.
 
Source: Wells Fargo Securities  


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The United Kingdom

1. According to the most recent RICS report, the housing market shows signs of revitalization.
 

 
Buyer interest is picking up momentum.
 

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2. Signs point to the construction sector slump easing, but housing construction remains in the doldrums.
 

 
3. GBP/EUR is off to a strong start this year compared to its historical pattern.
 
Source: Convera  


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The Eurozone

1. It is rare for the ECB to cut rates when stocks have not been declining for several months.
 
Source: Deutsche Bank Research  
 
2. Here is the breakdown of the ECB’s net securities purchases by country.
 
Source: @DanielKral1  
 
3. This chart shows the components of Germany’s industrial production slump.
 
Source: @DanielKral1  
 
4. Spain’s industrial production edged lower in September.
 


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Europe

1. Is the SNB selling the franc again?
 

 
Fundamentals do not favor the Swiss franc.
 
Source: Gavekal Research  

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2. Here is a look at the share of renewable energy sources in transportation.
 
Source: Eurostat   Read full article  


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Japan

1. The Nikkei 225 is nearing its 1990 peak.
 

 
2. The correlation between USD/JPY and the S&P 500 has broken down.
 
Source: Oxford Economics  


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China

1. China’s disinflationary pressures persist, partly reflecting weak domestic demand. In January, the CPI had its biggest year-over-year decline since the GFC.
 

 
Source: South China Morning Post   Read full article  
 
Below are some CPI components.
 
Core inflation:
 

 
Services:
 

 
Consumer goods:
 

 
Food:
 

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2. The PPI also remains in deflation territory.
 

 
3. Beijing is pulling out all the stops to boost stock prices.
 
Source: @bpolitics   Read full article  
 

 
The FTSE China A50 Index experienced an oversold bounce and is approaching resistance at its 40-week moving average.
 


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Emerging Markets

1. Brazil’s retail sales dropped in December.
 

 
The public budget blew out going into the year-end.
 

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2. Chile’s trade surplus hit a multi-year high.
 

 
The nation’s wage growth is moderating.
 

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3. Mexico’s consumer sentiment is holding up.
 

 
4. India’s remittances are massive.
 
Source: Capital Economics  


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Commodities

1. Cocoa futures hit a record high, taking out the 1977 peak.
 

 
Source: barchart.com   Read full article  

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2. US corn futures hit the lowest level since 2020.
 

 
3. Frozen orange juice prices are nearing last year’s peak.
 


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Energy

1. US oil inventories jumped last week, but refined product stockpiles declined sharply.
 
Weekly changes:
 

 
Barrels:
 

 
2. Gasoline demand is rebounding after the January freeze.
 

 
3. Refinery utilization and inputs are still quite low.
 

 

 
Source: Reuters   Read full article  

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4. US crude oil production is back near record highs.
 

 
5. Crack spreads are rebounding.
 

 
6. US natural gas dipped below $2/mmbtu.
 

 
7. Big oil paid out a lot of cash to investors last year.
 
Source: @markets   Read full article  


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Equities

1. The S&P 500 hit another record high and is back in overbought territory.
 

 
2. Shares of regional banks continue to struggle.
 

 
The regional banks’ implied volatility response in the latest banking turmoil has been relatively modest.
 
Source: Barclays Derivatives Research; @WallStJesus  

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3. Small-cap underperformance widened in recent days, exacerbated by pressure on smaller banks.
 

 
4. The Q4 earnings data showed renewed margin pressures.
 
Source: Oxford Economics  
 
Will margin pressures persist into 2024? Here is a forecast from Oxford Economics.
 
Source: Oxford Economics  

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5. Last year, a record number of S&P 500 members underperformed the index.
 
Source: Gavekal Research  
 
6. Aerospace and Defence stocks typically outperform the S&P 500 after major geopolitical events.
 
Source: Numera Analytics (@NumeraAnalytics)  


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Credit

1. Office REITs are extending their underperformance as attention once again shifts to regional banks’ commercial real estate debt holdings.
 

 
2. Large banks are easing lending standards on business loans while regional/small banks are tightening standards. This is not a good outcome for small businesses.
 
Source: Simon White, Bloomberg Markets Live Blog  
 
3. Bankruptcy filings slowed in January.
 
Source: S&P Global Market Intelligence  
 
4. Leveraged loan recovery rates are at multi-year lows.
 
Source: @markets   Read full article  


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Rates

1. The Treasury significantly increased coupon auction sizes since the August refunding and announced increases for the February through April quarter. Supply continues to adjust for rising deficits and Fed redemptions.
 
Source: Oxford Economics  
 
A record-high 10-year note auction was met with solid demand on Wednesday, sending yields lower.
 
Source: @markets   Read full article  
 
Source: @markets   Read full article  

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2. Dealers’ outright coupon Treasury positions continue to climb.
 
Source: Deutsche Bank Research  


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Global Developments

1. According to JP Morgan Global Research, 56% of central banks will be easing by the time the Fed starts cutting rates.
 
Source: JP Morgan Research; @WallStJesus  
 
2. Here is a look at public debt-to-GDP ratios.
 
Source: OECD   Read full article  
 
3. Global real estate funds are starting to see positive returns.
 
Source: PitchBook  
 
4. Flows into risky assets relative to safe assets improved this year.
 
Source: Goldman Sachs; @WallStJesus  


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Food for Thought

1. Public pensions investing in China:
 
Source: @axios   Read full article  
 
2. Americans’ changing diet:
 
Source: The New York Times   Read full article  
 
3. Hospital beds per 1000 people:
 
Source: Codera Analytics  
 
4. Mentions of AI on earnings calls:
 
Source: @JeffreyKleintop  
 
5. Laws enacted by the US Congress:
 
Source: Bruce Mehlman   Read full article  
 
6. Live TV viewership:
 
Source: @axios   Read full article  
 
7. Super Bowl spending:
 
Source: Statista  
 

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