Work-from-home continues to impact consumer spending patterns

The Daily Shot: 14-Mar-24
The United States
The United Kingdom
The Eurozone
China
Emerging Markets
Commodities
Energy
Equities
Global Developments
Food for Thought



 

The United States

1. Let’s begin with some updates on the US consumer.
 
So far, Fed rate hikes have had a limited impact on households’ financial burdens.
 
Source: Bank of America Institute  
 
But higher borrowing costs are making their way through the economy.
 
Source: Morgan Stanley Research; @WallStJesus  
 
Debit/credit card spending declined in February year-over-year for higher-income households, …
 
Source: Bank of America Institute  
 
… who drive much of the consumer spending in the US.
 
Source: Bank of America Institute  
 
Consumer sentiment is more robust among higher-income brackets.
 
Source: Bank of America Institute  
 
Household balance sheets remain strong.
 
Source: @sonusvarghese  
 
US households’ disposable income growth is expected to slow this year but still outpace other advanced economies.
 
Source: Oxford Economics  
 
Work-from-home continues to impact consumer spending patterns.
 
Source: Oxford Economics  

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2. Mortgage applications are still running below last year’s levels.
 

 
Here is the trend for rate locks.
 
Source: AEI Housing Center  
 
The mortgage rate is holding below 7%.
 
Source: Mortgage News Daily  
 
This chart shows home price appreciation by price tier.
 
Source: AEI Housing Center  

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3. Labor productivity at large US firms is rising again.
 
Source: BofA Global Research  
 
4. Companies are more upbeat about CapEx than the market had been expecting.
 
Source: BofA Global Research  


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The United Kingdom

1. The monthly GDP estimate edged higher in January. The GDP level has been relatively static over the past two years.
 

 
Source: @financialtimes   Read full article  
 
Services:
 

 
Manufacturing (unchanged from December):
 

 
Construction output:
 

 
The trade deficit widened.
 

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2. The housing market continues to strengthen.
 

 
Source: Reuters   Read full article  

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3. Health and education have accounted for a greater share of public spending than defense in the post-WWII era.
 
Source: Deutsche Bank Research  
 
4. The UK tax burden has been rising.
 
Source: @financialtimes   Read full article  


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The Eurozone

1. Industrial output declined sharply in January, more than reversing the Ireland-driven December surge.
 

 
Source: @DanielKral1, @OxfordEconomics  
 
Vehicle production slowed.
 

 
Stronger factory activity in Sweden signals a rebound in Germany’s manufacturing production.
 
Source: @DanielKral1, @OliverRakau  

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2. Excess liquidity in the Eurozone’s banking system remains elevated.
 
Source: @economics   Read full article  
 
3. Container shipping costs from Asia are gradually moderating.
 
Source: @TheTerminal, Bloomberg Finance L.P.  


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China

1. The yield curve has been flattening.
 

 
Source: @shuli_ren, @opinion   Read full article  

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2. Money supply growth has slowed considerably alongside weaker GDP in recent years.
 
Source: TS Lombard  
 
3. China’s housing vacancy rate is among the highest in the world.
 
Source: SOM Macro Strategies  
 
4. China’s carbon intensity has been declining rapidly.
 
Source: ING  


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Emerging Markets

1. Mexico’s manufacturing output was softer than expected in January.
 

 
2. Growth in Turkey’s industrial production continues to slow.
 

 
3. Turkey has accounted for a growing share of venture capital deal activity in the MENA region.
 
Source: PitchBook  
 
Overall, deal activity has softened in the MENA region, while early-stage ventures have gained market share. (2 charts)
 
Source: PitchBook  
 
Source: PitchBook  

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4. Vietnam’s vehicle sales have been very soft.
 


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Commodities

1. Copper surged on Wednesday, …
 

 
Source: Reuters   Read full article  
 
… boosting copper miners’ share prices (2 charts).
 

 

 
BCA Research expects the copper market to swing to a small surplus this year, which could weigh on prices.
 
Source: BCA Research  

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2. Gold ETFs’ holdings continue to sink (2 charts).
 

 

 
Silver is outperforming gold this week.
 

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3. Dry bulk shipping costs are running well above last year’s levels.
 


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Energy

1. Crude oil futures advanced on Wednesday.
 

 
Source: @markets   Read full article  
 
2. US crude oil inventories unexpectedly dropped last week, accompanied by a significant reduction in gasoline stockpiles.
 
Weekly changes:
 

 
Levels:
 

 
Gasoline demand strengthened.
 

 
Refinery inputs and utilization improved further.
 

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3. US gasoline prices at the pump are headed higher.
 
Source: @TheTerminal, Bloomberg Finance L.P.  
 
4. Crack spreads are rising, which has been a tailwind for refinery businesses.
 


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Equities

1. Regional banks continue to widen their underperformance, …
 

 
… as earnings expectations deteriorate.
 
Source: @TheTerminal, Bloomberg Finance L.P.  

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2. Share buybacks are now running above their seasonal trend.
 
Source: BofA Global Research  
 
3. Tesla continues to weigh on the consumer discretionary sector.
 

 
Numera Analytics sees a greater chance of consumer staples outperforming consumer discretionary over the next six to 12 months.
 
Source: Numera Analytics (@NumeraAnalytics)  

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4. US large-cap growth stocks are trading at a significant valuation premium relative to the broader market.
 
Source: MRB Partners  
 
5. The top ten stocks have played a major role in driving S&P 500 returns.
 
Source: Goldman Sachs; @MikeZaccardi  
 
6. Here is a look at the tech sector’s share of the overall market cap.
 
Source: @IanRHarnett, @asr_london  
 
7. The Magnificent 7 valuations are not extreme relative to the rest of the market.
 
Source: JP Morgan Research; @dailychartbook  
 
8. Markets often remain in overbought territory significantly longer than in oversold conditions.
 
Source: Simon White, Bloomberg Markets Live Blog  
 
9. Small-cap implied volatility premium over large caps is narrowing.
 

 
10. Single-stock options volume is once again above shares’ volume.
 
Source: Goldman Sachs; @WallStJesus  


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Global Developments

1. The dollar has corrected too far, given reduced US rate cut expectations.
 
Source: TS Lombard  
 
2. Consensus GDP estimates for developed markets have risen.
 
Source: Numera Analytics (@NumeraAnalytics)  
 
3. Here is a look at the resurgence of national industrial policies.
 
Source: International Monetary Fund  


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Food for Thought

1. Biggest cocoa producers:
 
Source: Visual Capitalist   Read full article  
 
2. Global smartphone shipments:
 
Source: semafor  
 
3. Pizza chains:
 
Source: @chartrdaily  
 
4. Spending on streaming services:
 
Source: BofA Global Research  
 
5. Fertility rates:
 
Source: Statista  
 
6. Educational requirements in job postings by sector:
 
Source: Indeed   Read full article  
 
7. Geographic distribution of US crops:
 
Source: Data Stuff   Read full article  
 

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