Posted on by The Daily Shot Editor: Lev Borodovsky

Consumers are growing concerned about securing new employment

The Daily Shot: 12-Mar-24
• The United States
• The United Kingdom
• Europe
• Japan
• China
• Cryptocurrency
• Commodities
• Energy
• Equities
• Credit
• Rates
• Food for Thought

 

The United States

1. Let’s begin with some updates on inflation.
 
• The NY Fed’s consumer survey showed inflation expectations moving up last month, …
 

 
… as gasoline prices climbed.
 

 
– Households expect slower inflation in food, medical care, and rent.
 
Source: Federal Reserve Bank of New York  
 
• But rent inflation is picking up again.
 
Source: Redfin  
 
• While most economists don’t expect such an outcome, concerns about reacceleration persist.
 
Source: Torsten Slok, Apollo  
 
• What should we expect from today’s inflation report?
 
– Nomura sees the core CPI gains slowing slightly (consensus estimate is 0.3%).
 
Source: Nomura Securities  
 
– The January surge in owners’ equivalent rent (OER) inflation probably moderated in February but remained above the December lows.
 
Source: Nomura Securities  
 
– Supercore inflation likely eased.
 
Source: Nomura Securities  
 
Supercore inflation tends to mean revert in February, but Nomura doesn’t see it reverting fully.
 
Source: Nomura Securities  

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2. Next, we have some updates on the labor market.
 
• Companies report that labor shortages are easing.
 
Source: Goldman Sachs; @MikeZaccardi  
 
• The labor leverage ratio (quits over layoffs) remains elevated.
 
Source: @axios   Read full article  
 
• Full-time employment is now down on a year-over-year basis.
 
Source: Economics and Strategy Group, National Bank of Canada  
 
• Employment in temporary help services has decreased monthly for the last 23 months.
 
Source: Economics and Strategy Group, National Bank of Canada  
 
• Here is a look at employment growth by education.
 
Source: Bank of America Institute  
 
• Consumers across income categories are growing more concerned about their ability to secure new employment should they lose their current job.
 

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3. The wholesale capital equipment inventories-to-sales ratio keeps rising, suggesting soft demand.
 

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The United Kingdom

1. Evidence of a softening UK labor market continues to emerge.
 
• Wage growth is slowing.
 

 
Source: Pantheon Macroeconomics  
 
• Job vacancies continue to fall.
 

 
Source: Econostrum.info   Read full article  
 
– This chart shows the ratio of job openings to the number of unemployed.
 
Source: Pantheon Macroeconomics  
 
• The unemployment rate edged higher.
 

 
• Claimant count increased last month.
 

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2. Traders are boosting their bets on the pound.
 

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Europe

1. Dutch manufacturing production reversed much of the December surge, which was driven by one-off items.
 

 
2. Norway’s underlying CPI surprised to the downside.
 

 
3. Czech inflation is back at 2%.
 

 
4. Swiss consumer confidence remains depressed.
 

 
5. In 2022, the EU granted citizenship to nearly one million individuals.
 
Source: Eurostat   Read full article  

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Japan

1. The stock rally has been fading …
 

 
… amid growing expectations for the BoJ tightening policy this spring.
 

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2. Earnings revisions in Japan remain predominantly positive.
 
Source: Goldman Sachs; @MikeZaccardi  

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China

1. The renminbi has been strengthening, with USD/CNH (offshore yuan) dropping below its 50-day moving average.
 
Source: @TheTerminal, Bloomberg Finance L.P.  
 
2. Here is a look at China’s EV sales.
 
Source: Reuters   Read full article  
 
3. Higher education levels still lag developed countries, but recent investments by the Chinese government could narrow the gap.
 
Source: Gavekal Research  

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Cryptocurrency

1. Bitcoin blasted past $70k, hitting a record high, …
 

 
… while ether breached $4k.
 

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2. On average, daily bitcoin US ETF demand has outstripped new supply.
 
Source: CoinShares   Read full article  
 
3. Crypto funds saw record inflows last week.
 
Source: CoinShares   Read full article  
 
4. BTC is trading above the average cost basis of short-term and long-term holders.
 
Source: Glassnode   Read full article  
 
• The magnitude of realized profit locked in by long-term BTC holders increased during the recent price rally.
 
Source: Glassnode   Read full article  
 
• Some measures, such as the market value vs. realized value (MVRV), suggest bitcoin is entering a euphoric state, although not as extreme compared with prior cycle peaks.
 
Source: Glassnode   Read full article  

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5. The Crypto Fear & Greed Index remains in “extreme greed” territory – the highest level since November 2020.
 
Source: Alternative.me  

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Commodities

1. Cocoa futures have resumed their record-breaking rally.
 

 
2. Nickel continues to rebound.
 

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Energy

1. The US rig count declined last week.
 

 
Source: Reuters   Read full article  

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2. Goldman anticipates continued growth in output from the Permian Basin.
 
Source: Goldman Sachs; @MikeZaccardi  

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Equities

1. Goldman’s sentiment index is in “stretched” territory.
 
Source: Goldman Sachs; @MikeZaccardi  
 
• A higher share of JP Morgan’s clients plan to boost their equity exposure.
 
Source: JP Morgan Research; @WallStJesus  
 
2. There are hints of increased speculative activity.
 

 
• Shorting vol has become popular again as investors flood into short-VIX products.
 

 
Source: @markets   Read full article  

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3. VIX climbed above the front VIX futures ahead of the CPI report.
 

 
• This chart shows the volatility risk premium (implied vs. realized) around elections.
 
Source: Goldman Sachs; @WallStJesus  

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4. Consumer staples are outperforming the consumer discretionary sector, with Tesla contributing to the drag.
 

 
5. So far, US equity/bond yield correlations have turned less negative this year.
 
Source: Goldman Sachs  
 
• This chart shows the historical real total return performance of a US 60% equity/40% bond portfolio with shaded “lost decades.”
 
Source: Goldman Sachs  

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6. S&P 500 earnings have outgrown nominal GDP by a large margin over the past decade (partially reflecting US companies’ global operations).
 
Source: Alpine Macro  
 
7. The Nasdaq Index’s recovery from the dot-com selloff significantly lagged the strong turnaround in forward earnings.
 
Source: MRB Partners  
8. Here is a look at recovery times after market declines.
 
Source: @wealth   Read full article  

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Credit

1. Money market funds’ assets hit another record high.
 

 
2. CLO issuance remains robust.
 
Source: PitchBook  
 
3. Here is a look at US banks’ commercial real estate exposure.
 
Source: Visual Capitalist   Read full article  

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Rates

1. Primary dealers have been boosting their holdings of Treasuries.
 
Source: Deutsche Bank Research  
 
2. Surveys point to the Fed’s balance sheet bottoming next year.
 
Source: Deutsche Bank Research  

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Food for Thought

1. Posting videos on TikTok:
 
Source: Pew Research Center   Read full article  
 
2. Shift in political affiliation among US men aged 18-29:
 
Source: American Storylines   Read full article  
 
3. US firearm-related deaths among children and adolescents:
 
Source: KFF   Read full article  
 
• Changes by state:
 
Source: KFF   Read full article  

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4. Top US public health threats:
 
Source: @axios   Read full article  
 
5. Key factors influencing relocation decisions:
 
Source: Home Bay  
 
6. The median down payment on a house:
 
Source: Visual Capitalist   Read full article  
 
7. US bills in circulation:
 
Source: @WSJ   Read full article  
 

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