The Daily Shot: 16-Feb-24
• The United States
• Canada
• The United Kingdom
• The Eurozone
• Europe
• Japan
• China
• Emerging Markets
• Cryptocurrency
• Energy
• Equities
• Alternatives
• Credit
• Global Developments
• Food for Thought
The United States
1. Retail sales declined in January, …
… partly driven by adverse weather conditions.
Source: TS Lombard
• Here are the contributions to changes in retail sales.
Source: @TheTerminal, Bloomberg Finance L.P.
– These charts show last month’s downturn in the sales of vehicles and building materials.
• Here is a look at the evolution of real retail sales.
• Surveys point to downside risks for retail sales going forward.
Source: @MikaelSarwe
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2. Manufacturing output contracted in January, also driven by frigid weather in parts of the country.
Source: Reuters Read full article
Here are the changes excluding vehicle production.
Source: Pantheon Macroeconomics
• Capacity utilization continues to slide.
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3. The Q1 growth estimate from the Atlanta Fed’s GDPNow model dropped below 3% (annualized) after the retail sales and industrial production reports.
Source: Federal Reserve Bank of Atlanta
The GDPNow measure is currently consistent with Goldman’s GDP tracker.
Source: Goldman Sachs; @MikeZaccardi
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4. Regional Fed surveys signaled some improvement in factory activity.
• NY Fed’s manufacturing index:
– Expected new orders:
• Philly Fed’s manufacturing index:
Source: Morningstar Read full article
– Employment index (rapid deterioration):
– CapEx plans (ongoing improvement):
• The Philly Fed’s manufacturing index signals stronger activity at the national level.
Source: @TheTerminal, Bloomberg Finance L.P.
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5. Homebuilder sentiment improved further this month.
Source: HousingWire Read full article
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6. US import prices unexpectedly jumped in January.
Source: Reuters Read full article
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7. Last week, initial jobless claims held near their lowest levels in years.
• Continuing claims are still running above the levels we saw in recent years (excluding the COVID shock of 2020 and 2021).
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Canada
1. Existing home sales increased last month.
2. Housing starts softened in January.
Source: Reuters Read full article
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3. Here is a look at home price appreciation and the sales-to-new listings ratio.
Source: Scotiabank Economics
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The United Kingdom
1. As we saw yesterday, the economy entered a technical recession last quarter. However, the weakness was driven by government spending and net exports. Domestic demand was better than the headline GDP figure suggests.
– It’s been a while since UK exports saw four quarterly declines in a row.
– Consumer spending edged lower last quarter.
– Business investment unexpectedly jumped in Q4.
– This chart shows the COVID-era UK GDP recovery relative to DM peers.
Source: Nomura Securities
• The December monthly GDP decline was smaller than expected.
– Services output edged lower, …
… but manufacturing production increased again.
– Construction activity has been very soft, dipping below 2020 levels in December.
– The trade deficit narrowed.
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2. Here is a look at the latest voting intention polls.
Source: @Savanta_UK
3. This map shows the distribution of people aged 100 and over.
Source: The Economist Read full article
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The Eurozone
1. The euro-area trade surplus was smaller than expected in December.
2. EUR/USD has diverged from the ZEW Sentiment Index.
Source: BCA Research
3. The European Commission sees a slow recovery for Germany’s economy.
Source: European Commission
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Europe
1. Consumer inflation in Central European economies is experiencing a rapid deceleration.
– Poland:
– Czech Republic:
– Slovakia:
• Bond yields are following inflation lower.
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2. Here is a look at recession risks in Europe.
Source: @economics Read full article
3. This map illustrates the distribution of female scientists and engineers across the EU.
Source: Eurostat Read full article
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Japan
1. Services activity edged higher in December.
2. Corporate profits in Japan have experienced robust growth throughout the COVID era.
Source: @JeffreyKleintop
3. The Nikkei 225 is 1.1% percent away from its record high.
4. Is the yen too weak, given the US-Japan rate differential?
• Fundamentals show that the yen is oversold versus the dollar. A BoJ policy shift away from easing could limit the rise in USD/JPY. (2 charts)
Source: MRB Partners
Source: MRB Partners
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China
1. Is China’s equity underperformance versus EM peers finally over?
2. China’s property market remains in the doldrums.
Source: @JeffreyKleintop
3. Amid a price war, auto manufacturers are exacerbating deflationary pressures in China.
Source: @financialtimes Read full article
4. Much of the past decade’s stimulus spending has been financed by local governments.
Source: Gavekal Research
• China has low government revenue for its level of debt relative to other G20 nations.
Source: Gavekal Research
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Emerging Markets
1. India’s trade deficit narrowed last month.
• Exports hit a new high for this time of the year.
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2. Markets cheered Prabowo Subianto’s likely victory in Indonesia.
Source: NPR Read full article
3. Here is a look at the Mexican peso’s performance in election years.
Source: Wells Fargo Securities
4. Colombia managed to avoid a GDP contraction last quarter.
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Cryptocurrency
1. Ether has been outperforming bitcoin in recent days, …
… blasting past $2,800.
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2. This chart shows the evolution of stablecoin supply.
Source: Brookings Read full article
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Energy
1. WTI crude is making another run at the 200-day moving average.
Source: @TheTerminal, Bloomberg Finance L.P.
2. Here is a look at crude oil production by country.
Source: Visual Capitalist Read full article
3. Next, we have some updates on natural gas.
• US natural gas futures dipped below $1.60/MMBtu, …
… and are trading at the bottom of their long-term range.
• Natural gas in storage is now well above the five-year range.
• Asia and Europe could drive the bulk of LNG demand this year.
Source: @ANZ_Research
• The global LNG market remains in a deficit, which could support higher prices.
Source: @ANZ_Research
• This chart shows the expected growth in global LNG supply.
Source: Goldman Sachs; @MikeZaccardi
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Equities
1. Let’s begin with some updates on small caps.
• The Russell 2000 has outperformed the S&P 500 in recent weeks.
• Here is a look at historical cycles in the relative performance of US small-caps.
Source: Merrill Lynch
• Small-caps typically outperform during election years.
Source: Merrill Lynch
• The Russell 2000 implied volatility index (RVX) has sharply diverged from VIX, reflecting heightened volatility in small-cap stocks.
The ratio of the two volatility indicators surged this year.
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2. Dividend growers have been outperforming the average stock in the S&P 500.
• Low dividend payout ratios could indicate stronger dividend growth ahead, …
Source: Goldman Sachs; @MikeZaccardi
… which is what the market expects (DPS = dividend per share).
Source: Goldman Sachs; @MikeZaccardi
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3. The S&P 500’s outperformance relative to the average stock in the index has reached extreme levels.
Source: BofA Global Research
4. Fund flows turned positive last week.
Source: BofA Global Research
5. This chart shows risk-adjusted returns across various markets.
Source: Simon White, Bloomberg Markets Live Blog
6. The Q4 earnings surprises were positive but below average.
Source: BofA Global Research
7. Share buybacks have become a significant trend only in recent years, as illustrated by a comparison chart showing minimal activity in 1995 versus the extensive buybacks seen today.
Source: Goldman Sachs; @MikeZaccardi
8. Foreigners jumped back into US equities in December.
9. Zero-day options account for half of all options trading activity.
Source: Goldman Sachs; @WallStJesus
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Alternatives
1. Investments in new hedge funds slowed last year.
Source: @wealth Read full article
2. PE distributions hit the lowest level in more than a decade in 2023.
Source: @markets Read full article
This chart shows VC distributions over time.
Source: @axios Read full article
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3. Venture capital down rounds are increasing.
Source: PitchBook
4. US early-stage startups continue to receive the most invested capital.
Source: Carta
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Credit
1. Corporate US investment-grade bond spreads hit the lowest level in two years.
2. Smaller banks are more exposed to commercial real estate (2 charts).
Source: @wealth Read full article
Source: @PaulJDavies, @opinion Read full article
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Global Developments
1. Positive economic growth in the US versus the rest of the world and improving interest rate differentials have benefitted the dollar. (2 charts)
Source: BCA Research
Source: BCA Research
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2. This chart ranks countries by current inflation levels and inflation momentum over the last 12 months.
Source: Deutsche Bank Research
3. Finally, we have the evolution of dependency ratios in select economies.
Source: Nomura Securities
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Food for Thought
1. Global market share by unit smartphone shipments:
Source: @technology Read full article
2. Starbucks stores by country:
Source: Visual Capitalist Read full article
3. Adjusting to higher food prices:
Source: Morning Consult Read full article
4. US centenarian population:
Source: Pew Research Center Read full article
5. Cigarette sales in the US:
Source: Statista
6. Battery prices:
Source: @climate Read full article
7. US political party identification:
Source: Gallup Read full article
8. Views on Valentine’s Day around the world:
Source: YouGov Read full article
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Have a great weekend!
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