The Daily Shot: 19-Feb-24
• The United States
• The United Kingdom
• Europe
• Asia-Pacific
• China
• Emerging Markets
• Commodities
• Energy
• Equities
• Credit
• Global Developments
• Food for Thought
The United States
1. The January report on producer prices surpassed expectations, …
… with the increase fueled by consumer-facing services sectors (2 charts).
Source: @TheTerminal, Bloomberg Finance L.P.
Source: Reuters Read full article
Here are some examples.
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2. The U. Michigan’s consumer sentiment index edged higher, driven by another increase in the expectations component.
Here are some underlying trends.
– Buying conditions for vehicles:
– Longer-term job loss probability:
– Expected business conditions:
– Consumer expectations by political affiliation:
Source: @TheTerminal, Bloomberg Finance L.P.
• Will we see stronger consumer spending as sentiment rebounds?
Source: BCA Research
• Short-term inflation expectations ticked higher with gasoline prices.
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3. Housing starts softened last month, partially due to adverse weather conditions.
Source: Morningstar Read full article
• Here is the seasonally adjusted index.
Source: @economics Read full article
• Multifamily starts were particularly weak.
• However, building permits were above last year’s levels, …
… boosted by single-family housing (2 charts).
• Multi-family permits remain depressed.
• This chart shows the seasonally adjusted building permit trends.
Source: @RenMacLLC
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4. Freight rates continue to moderate.
Source: Cass Information Systems
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The United Kingdom
1. Retail sales rebounded last month.
Source: @economics Read full article
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2. Home prices are now rising.
3. Traders are increasingly upbeat on the British pound.
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Europe
1. Sweden’s core inflation for January matched projections, reflecting an ongoing moderation in the pace of price increases.
• Economists have been downgrading their forecasts for Sweden’s inflation.
• Projections for Sweden’s economic growth this year have been adjusted upwards, yet the outlook remains subdued.
2. Economists continue to downgrade their forecasts for Norway’s growth, …
… while boosting inflation estimates.
3. The Swedish krona and the Norwegian krone outperformed last week.
4. Here is a look at self-employment among young people in the EU.
Source: OECD Read full article
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Asia-Pacific
1. Japan’s shares keep outperforming.
Source: @markets Read full article
2. South Korea’s unemployment rate is back to 3%.
3. New Zealand’s housing sales were slightly above 2023 levels last month.
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China
1. State-owned entities continue to bail out the stock market.
– Domestic ETF flows:
Source: Goldman Sachs; @MikeZaccardi
– ETF volumes:
Source: Gavekal Research
– Beijing-ordered share buybacks:
Source: Gavekal Research
• The benchmark stock index broke above the 50-day moving average.
Source: @TheTerminal, Bloomberg Finance L.P.
• There was a significant spike in Shanghai Composite stocks making new one-year lows last week, similar to what occurred during the global financial crisis.
Source: SentimenTrader
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2. The PBoC’s liquidity injection via the medium-term lending facilities was modest.
3. Holiday travel and spending has been strong (2 charts).
Source: @economics Read full article
Source: Goldman Sachs; @MikeZaccardi
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Emerging Markets
1. Thailand’s economy ended last year on a soft note.
2. Chile’s investment project approvals are taking longer, capping economic growth.
Source: IMF Read full article
3. Next, we have some performance data from last week.
• Currencies:
• Bond yields:
• Equity ETFs:
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Commodities
1. Grains continue to struggle (2 charts), …
… with sentiment remaining depressed (2 charts).
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2. The cocoa rally is fading, …
… amid overextended positioning.
Source: @financialtimes Read full article
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3. Traders are boosting their bets on coffee and cotton.
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4. Chicago hog futures are rebounding.
5. Palladium’s premium over platinum has closed, …
Further reading
… with positioning becoming increasingly bearish.
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6. Here is a look at last week’s performance.
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Energy
1. Texas wholesale forward power prices are well above last year’s levels.
2. Natural gas futures continue to sink.
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Equities
1. Goldman boosted its target for the S&P 500 this year, …
Source: Goldman Sachs; @MikeZaccardi
Source: @markets Read full article
… with robust economic expansion supporting earnings growth.
Source: Goldman Sachs; @MikeZaccardi
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2. The stronger dollar contributed to the outperformance of US equities versus other developed market equities so far this year.
Source: Numera Analytics (@NumeraAnalytics)
3. Globally, elevated allocations to stocks could limit gains.
Source: JP Morgan Research; @carlquintanilla
4. Sentiment is increasingly bullish.
• Search activity for “call options”:
Source: Google Trends
• Net call options volume:
Source: Deutsche Bank Research
– Tech call options volume:
Source: Deutsche Bank Research
• Tech flows:
Source: Deutsche Bank Research
• Retail flows:
Source: JP Morgan Research; @WallStJesus
• Goldman’s positioning indicator:
Source: Goldman Sachs; @MikeZaccardi
• BofA’s financial stress indicator:
Source: @markets Read full article
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5. US small-caps typically underperform around the start of rate-cut cycles and have better odds of outperformance during high economic growth environments. (2 charts)
Source: MarketDesk Research
Source: MarketDesk Research
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6. Long-vol strategies have been pummelled by theta decay and persistently low volatility (2 charts).
Further reading
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7. Finally, we have some performance data from last week.
• Sectors:
• Equity factors:
• Macro basket pairs’ relative performance:
• Thematic ETFs:
• Largest US tech firms:
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Credit
1. Corporate bond spreads continue to tighten.
• Investment-grade:
• Single-B:
Are we near the bottom for spreads?
Source: Goldman Sachs; @MikeZaccardi
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2. Low-rated borrowers are flocking to the US leveraged loan market to refinance expensive debt at a record pace.
Source: PitchBook
3. US small businesses continue to boost their credit card balances.
Source: Bank of America Institute
4. Here is last week’s performance across credit markets.
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Global Developments
1. The dollar index has risen for five consecutive weeks.
2. Next, we have some performance data from last week.
• Currencies:
• Bond yields:
• Large-cap stock indices:
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Food for Thought
1. Mentions of AI on quarterly earnings calls:
Source: Goldman Sachs; @MikeZaccardi
2. The electoral votes map:
Source: BofA Global Research
3. Cocaine production and consumption:
Source: Statista
4. Risks most likely to present a crisis on a global scale:
Source: WEF Read full article
5. Autocratic countries overstating their GDP growth:
Source: The Economist Read full article
6. IMF growth forecasts:
Source: Statista
7. Views on competition across different sectors:
Source: @YouGovAmerica
8. Some facts about 14 US presidents:
Source: Pennington Creative Read full article
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