The Daily Shot: 20-Mar-24
• The United States
• Canada
• The United Kingdom
• The Eurozone
• Europe
• Japan
• Emerging Markets
• Cryptocurrency
• Equities
• Credit
• Rates
• Global Developments
• Food for Thought
The United States
1. Housing starts rebounded from the weather-related weakness in January, …
… boosted by single-family construction.
Source: @economics Read full article
• Single-family building permits were well above last year’s levels.
• Multifamily activity remains soft, …
• Permits:
• Starts:
… as a surge of new inventory hits the market, …
Source: Wells Fargo Securities
… and rent growth slows.
Source: Pantheon Macroeconomics
• This seasonally-adjusted chart of housing starts illustrates the divergence between single-family and multi-family construction activity.
Source: Oxford Economics
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2. Next, let’s take a look at some trends in US household finances.
• Household balance sheets, as a percentage of disposable income, remain robust relative to historical levels.
Source: Goldman Sachs; @MikeZaccardi
• Households with mortgages have experienced a rise in home equity, especially for those who purchased a home in early 2021. (2 charts)
Source: SOM Macro Strategies
Source: SOM Macro Strategies
• This diagram bridges nominal and real wage growth.
Source: Arcano Economics
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3. Below are some trends in the US labor market.
• The NFIB small business survey signals slower job growth ahead.
Source: Pantheon Macroeconomics
• Last month’s rise in the unemployment rate was attributed to younger workers.
Source: Oxford Economics
• Goldman anticipates that job growth will slightly exceed the medium-term breakeven rate (the rate necessary to replace retiring workers) later this year.
Source: Goldman Sachs; @MikeZaccardi
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Canada
1. Inflation surprised to the downside.
• Headline:
• Core CPI measures (3 charts):
– Month-over-month core inflation changes are now at the lower end of the BoC’s target range.
Source: Oxford Economics
• Inflation breadth is falling.
Source: Scotiabank Economics
2. Expectations for a Bank of Canada rate cut rose following the CPI report, with the first reduction anticipated in June.
Source: Reuters Read full article
• Bond yields dropped.
• The loonie initially declined following the CPI report but rebounded shortly thereafter.
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The United Kingdom
1. The February CPI figures came in slightly below expectations, indicating a continued moderation in inflation. We will have more on the UK inflation report tomorrow.
2. Economists still hold a bleak outlook for UK growth this year.
3. Most of the BoE rate hikes have already been factored into existing mortgages.
Source: ING Read full article
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The Eurozone
1. Germany’s ZEW index of expected economic growth topped forecasts this month.
Source: Reuters Read full article
• Germany’s construction slump has been severe.
Source: Capital Economics
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2. Growth in euro-area labor costs slowed last quarter.
Source: @economics Read full article
Slower wage growth should further ease inflationary pressures.
Source: Pantheon Macroeconomics
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3. The ECB will be driving major central banks’ balance sheet reduction after the Fed tapers its QT.
Source: Morgan Stanley Research
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Europe
1. Swiss watch exports softened last month amid weak demand from China.
Source: @markets Read full article
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2. Here is a look at the EU government expenditures by function as a percentage of GDP.
Source: Eurostat Read full article
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Japan
1. Dollar-yen is nearing the November peak after the BoJ’s dovish rate hike.
Source: @TheTerminal, Bloomberg Finance L.P.
• The rate differential with the US favors a stronger yen.
Source: @TheTerminal, Bloomberg Finance L.P.
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2. Who owns Japan’s stocks?
Source: Simon White, Bloomberg Markets Live Blog
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Emerging Markets
1. Brazil’s economy expanded in January.
Source: @economics Read full article
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2. Chile’s economic growth was lower than expected last quarter.
Source: @economics Read full article
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3. Argentina’s trade surplus increased in February as imports slumped.
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Cryptocurrency
The crypto correction continues.
Bitcoin is now almost flat month-to-date.
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Equities
1. Semiconductors have been giving up some of the recent outperformance.
2. Fund managers now see global corporate profits improving.
Source: BofA Global Research
3. Megacaps and tech drove most of the year-over-year earnings growth last quarter.
Source: Deutsche Bank Research
4. Here is a look at the earnings revision divergence between tech and the rest of the market.
Source: UBS Research; @dailychartbook
5. Few companies can deliver consistently high sales growth rates.
Source: Goldman Sachs; @MikeZaccardi
6. S&P 500 margins are rebounding, almost entirely in mega-cap growth (MCG) and tech. (2 charts)
Source: Deutsche Bank Research
Source: Deutsche Bank Research
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7. The market is factoring in greater volatility for individual stocks compared to the index.
Source: Simon White, Bloomberg Markets Live Blog
8. Here is the near-term S&P 500 implied vol curve.
Source: @TheTerminal, Bloomberg Finance L.P.
9. Equity risk premium continues to trend lower.
10. This chart shows the share of the largest sector in the US over time.
Source: Goldman Sachs; @MikeZaccardi
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Credit
1. Bloomberg’s high-yield index average spread dipped below 300 bps.
2. Investors remain concerned about commercial real estate (CRE).
Source: BofA Global Research
• CRE delinquency rates remain elevated.
Source: @markets Read full article
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Rates
1. T-bills trade above OIS, reflecting increased supply.
Source: @markets Read full article
2. Speculative accounts continue to unwind the futures-cash arb trade.
Source: Deutsche Bank Research
3. Treasury coupon issuance is ramping up.
Source: @TheTerminal, Bloomberg Finance L.P.
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Global Developments
1. China’s worsening credit impulse is a tailwind for the US dollar.
Source: Oxford Economics
2. Only a relatively small percentage of fund managers now anticipate a global recession.
Source: BofA Global Research
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Food for Thought
1. BNPL (buy now, pay later) usage over time:
Source: Bank of America Institute
2. China’s rapidly fading economic transparency:
Source: J.P. Morgan Asset Management
3. Global trends in childhood and adult malnourishment and obesity by gender:
Source: The Economist Read full article
• Adult obesity rates:
Source: The Economist Read full article
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4. A warm winter:
Source: @axios Read full article
5. AI usage saturation?
Source: @EconBerger, @uscensusbureau
6. Working-age women labor force participation rates:
Source: @axios Read full article
7. Perceptions on driving frequency by age group in the US:
Source: @YouGovAmerica Read full article
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