The Daily Shot: 29-Feb-24
• The United States
• The Eurozone
• Europe
• Japan
• China
• Cryptocurrency
• Commodities
• Energy
• Equities
• Credit
• Global Developments
• Food for Thought
The United States
1. The Q4 GDP growth was revised slightly lower, …
… driven by inventories. Domestic demand was adjusted upwards.
Here are a couple of trends.
– Consumer spending contribution to GDP:
Source: Reuters Read full article
– Real final sales to private domestic purchasers (“core” GDP):
• The output gap is now firmly in positive territory.
Source: Oxford Economics
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2. In consumer spending, goods are gradually ceding ground to services.
Source: Morgan Stanley Research
3. Next, we have some updates on the housing market.
• Mortage applications are holding at multi-year lows, …
… as rates climb.
Source: HousingWire Read full article
– Here is the affordability index.
Source: Reuters Read full article
• Apartment construction has been slowing.
Source: Reuters Read full article
• Housing inflation may end up being stubbornly high for some time.
Source: Gavekal Research
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4. There has been a notable uptick in market expectations of near-term inflation.
Source: Deutsche Bank Research
5. Retail inventories are now well above pre-COVID levels, even when adjusted for inflation.
6. Finally, we have some updates on international trade.
• The US trade deficit in goods expanded in January.
Source: @TheTerminal, Bloomberg Finance L.P.
Source: MarketWatch Read full article
• Here is a look at US imports from China.
Source: Merrill Lynch
• Stronger capital goods imports signal improving business investment.
Source: @RenMacLLC
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The Eurozone
1. German retail sales deteriorated further in January.
Source: Markets Insider Read full article
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2. Euro-area business confidence declined in February.
– Below is the Eurozone Economic Sentiment Index, which includes consumer confidence.
• Here is Italy’s manufacturing confidence.
– Italian consumer sentiment is recovering.
——————–
3. The euro-area economic surprise index has rebounded, aligning with that of the US.
Source: @TheTerminal, Bloomberg Finance L.P.
4. The market is scaling back ECB rate cut expectations, following a similar trend in the US.
Source: Nomura Securities
5. This chart shows the drivers of money supply growth.
Source: Arcano Economics
6. Services inflation has been accelerating.
Source: Nomura Securities
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Europe
1. Let’s begin with Sweden.
• The aggregate sentiment indicator was flat this month.
• The nation’s trade surplus surged in January.
• Sweden’s industrial shares are not reflecting weak export orders.
Source: @MikaelSarwe
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2. Swiss economic sentiment is rebounding.
3. This chart shows inflation rates across the EU.
Source: Eurostat Read full article
4. Here is a look at digital skill levels by age, gender, and education in the EU.
Source: Eurostat Read full article
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Japan
1. The BoJ is starting to prepare the market for rate hikes.
Source: @economics Read full article
• The yen and short-term JGB yields jumped.
• The JGB curve continues to flatten.
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2. Industrial production tumbled in January.
Source: BNN Read full article
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3. Business sentiment has been improving.
Source: Longview Economics
4. Retail sales climbed last month.
5. Stronger profit projections could support further wage growth.
Source: Longview Economics
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China
1. The stock market rebound continues.
2. Longer-dated bond yields keep sinking.
The yield curve has been flattening.
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3. Hong Kong’s exports climbed back to 2021 levels in January.
Source: South China Morning Post Read full article
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Cryptocurrency
1. Bitcoin blasted past $60k on Wednesday.
• BTC/USD’s rise above $60K triggered a spike in short liquidations.
Source: Coinglass
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2. The Crypto Fear & Greed Index rose to “extreme greed” territory.
Source: Alternative.me
3. US bitcoin ETF inflows remain robust, particularly for new issuers. (2 charts)
Source: CoinShares
Source: CoinShares
• The iShares Bitcoin Trust fund flows and trading volume surged this week.
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Commodities
1. Nickel is coming back to life.
2. ING expects gold to reach new highs this year.
Source: ING
3. Is palladium’s underperformance finally over?
4. Downside momentum has slowed for the Bloomberg Commodity Index ahead of a seasonally strong period. (2 charts)
Source: @TheTerminal, Bloomberg Finance L.P.
Source: @TheTerminal, Bloomberg Finance L.P.
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5. The Invesco Agriculture ETF (DBA), which has a high weighting to cocoa, is approaching downtrend resistance relative to the Invesco Commodity ETF (DBC), which has substantial exposure to gasoline and oil.
6. Cocoa finally saw a sharp pullback on Wednesday.
7. The bearish positioning in grains looks stretched.
Source: @financialtimes Read full article
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8. Generally, prices of apparel materials have declined, although synthetic fiber prices are expected to rise this year.
Source: S&P Global Market Intelligence
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Energy
1. US oil inventories climbed again last week while refined product stockpiles continued to ease.
– Weekly changes:
– Levels:
• Gasoline demand appears to rebounding.
• Refinery runs and utilization rates continue to be subdued.
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2. OPEC’s substantial spare capacity is a constraint on potential increases in oil prices.
Source: Goldman Sachs; @dailychartbook
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Equities
1. The S&P 500’s distance above its 200-day moving average is stretched.
Source: Aazan Habib, Paradigm Capital
2. This year’s earnings projections for tech mega-caps continue to diverge from the rest of the S&P 500.
Source: Barclays Research
3. Options activity keeps rising.
Source: Goldman Sachs; @dailychartbook
4. Mutual funds are holding less cash.
Source: Goldman Sachs; @MikeZaccardi
5. Current valuations point to sub-5% returns over the next decade.
Source: BofA Global Research
6. Will improving global excess liquidity continue to support the rally?
Source: Simon White, Bloomberg Markets Live Blog
7. Here is a look at sector correlations to reserve balances (liquidity banks hold at the Fed).
Source: HSBC; @WallStJesus
8. S&P 500 sectors and industries have a higher potential for return dispersion than growth vs. value factors.
Source: MarketDesk Research
9. Smaller firms are driving the US manufacturing renaissance.
h/t @meanstoatrend
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Credit
1. The COVID-era surge in bank deposits …
… forced commercial banks to buy bonds. Some smaller banks bought a lot of long-dated securities, creating an asset-liability mismatch.
Source: Arcano Economics
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2. Valuations of direct loans vary substantially across private credit managers.
Source: @markets Read full article
3. Office vacancy rates are expected to keep climbing.
Source: Goldman Sachs; @MikeZaccardi
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Global Developments
1. Central banks’ balance sheets continue to shrink.
Source: Arcano Economics
2. Here is a look at real house price trends in advanced economies.
Source: @financialtimes Read full article
3. Import restrictions proliferate.
Source: ING
4. Africa’s population is expected to expand, while Asia could plateau in a few decades. (2 charts)
Source: @JKempEnergy
Source: @JKempEnergy
Absent immigration, North America’s population may reach its zenith in the near future.
Source: @JKempEnergy
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Food for Thought
1. Florida condo prices:
Source: Redfin Read full article
2. Excess retirees:
Source: @axios Read full article
3. Interest payments as a share of consumer spending:
Source: @axios Read full article
4. Extreme-weather insurance trends:
Source: @financialtimes Read full article
5. Google searches for “child tax credit”:
Source: Oxford Economics
6. STIs on the rise in Europe:
Source: Statista
7. Facts about leap years:
Source: ThoughtCo Read full article
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