Households are growing more concerned about the possibility of job loss

The Daily Shot: 09-Apr-24
• The United States
• The Eurozone
• Europe
• Asia-Pacific
• Emerging Markets
• Cryptocurrency
• Commodities
• Energy
• Equities
• Credit
• Global Developments
• Food for Thought

The United States

1. The rise in consumer credit for February was slightly below forecasts.

• Credit card debt has continued to climb, …

… with its ratio to disposable income approaching pre-COVID levels.

• Household credit/debit card spending has strengthened in the Midwest and weakened considerably in the South. (2 charts)

Source: Bank of America Institute

Source: Bank of America Institute

• The average interest rate on credit card accounts remains near 23%.

– The average rate for a 5-year auto loan has now surpassed 8%.

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2. Next, we have some updates on the labor market.

• The NFIB hiring intentions index points to weaker job growth this quarter.

Source: ING

• US households are growing more concerned about the possibility of job loss.

Furthermore, they are less confident about securing alternative employment if needed.

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3. The Northeast and Midwest regions have underperformed in terms of GDP.

Source: Bank of America Institute

4. Next, we have some updates on inflation.

• The New York Fed’s national consumer survey indicated an increase in three-year inflation expectations, …

… as gasoline prices rebound.

Source: @TheTerminal, Bloomberg Finance L.P.

• Higher crude oil prices are also raising market-based inflation expectations.

Source: @TheTerminal, Bloomberg Finance L.P.

• Could a stronger wealth effect boost inflation?

Source: Gavekal Research

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The Eurozone

1. Euro-area investor confidence continues to strengthen.

Source: RTT News Read full article

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2. Portugal and Italy were impacted the most by the ECB’s contracting balance sheet.

Source: @DanielKral1, @OxfordEconomics

3. Germany’s trade surplus declined sharply in February as imports jumped.

Source: @TheTerminal, Bloomberg Finance L.P.

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Europe

1. Norway’s factory output declined sharply in February.

2. Growth in European earnings per share has outpaced that of US counterparts since 2021.

Source: Goldman Sachs; @MikeZaccardi

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Asia-Pacific

1. Asian currencies are declining against the dollar, influenced by the weakening of the renminbi (below).

• The South Korean won:

• The Tawian dollar:

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2. Next, we have some updates on Australia.

• Business confidence edge higher in March.

• Consumer confidence declined again this month.

• AUD/USD is testing downtrend resistance.

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Emerging Markets

1. The Mexican peso has reached its highest level against the dollar since 2015, a trend that can contribute to inflationary pressures in the US (imports from Mexico become more expensive).

2. Brazil’s vehicle sales were up 44.5% relative to 2023 levels in March.

3. Argenitna’s automobile sales remain depressed.

4. Chile’s car sales were well below last year’s levels.

• Chile’s exports were down relative to 2023 levels in March.

• Chile’s March CPI print was below forecasts. Policymakers’ outlook has been less dovish recently and is likely to remain so despite softer inflation.

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5. South Africa’s F/X reserves are nearing $60 billion.

6. Aggregate dollar-denominated EM sovereign bond spreads are near historic lows.

Source: MRB Partners

• EM debt funds registered some outflows recently.

Source: BofA Global Research

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Cryptocurrency

1. Consumers have become more positive on crypto, according to a Deutsche Bank survey.

Source: Deutsche Bank Research

2. Most of Bitcoin’s supply is held by a few addresses, known as “crypto whales.” (2 charts)

Source: Deutsche Bank Research

Source: Deutsche Bank Research

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3. Crypto funds saw another week of inflows, led by long-Bitcoin products. However, funds holding Ethereum continued to see outflows. (2 charts)

Source: CoinShares Read full article

Source: CoinShares Read full article

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Commodities

1. Iron ore futures are attempting a rebound.

Source: @markets Read full article

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2. Gold prices keep hitting record highs. Silver also continues to rally.

• Holdings of gold and silver ETFs have diverged.

Source: @TheTerminal, Bloomberg Finance L.P. h/t Jake Lloyd-Smith

• Investors have been buying Japan Physical Gold ETF.

Source: Goldman Sachs; @dailychartbook; Gavekal Research

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3. Sugar futures remain in a short-term downtrend.

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Energy

1. The options markets are boosting bets on crude oil prices exceeding $100/bbl.

Source: Goldman Sachs; @MikeZaccardi

2. Global oil stockpiles have been shrinking (2 charts), …

Source: @markets Read full article

Source: Barclays Research

… which could put upward pressure on prices.

Source: Chen Zhao, Alpine Macro

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3. Is crude oil positioning becoming stretched?

Source: @TheTerminal, Bloomberg Finance L.P.; h/t Mark Cranfield, Markets Live

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Equities

1. Goldman’s positioning indicator remains in “stretched” territory.

Source: Goldman Sachs; @dailychartbook; Gavekal Research

But JP Morgan’s clients have been cautious on stocks.

Source: JP Morgan Research; @WallStJesus

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2. Earnings downgrades going into this season have been slightly smaller than usual.

Source: Danske Bank

• Downgrades have been broad-based outside of tech.

Source: Danske Bank

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3. Deutsche Bank expects S&P 500 defensive sector earnings growth to turn positive for the first time in six quarters.

Source: Danske Bank

4. The global stock/bond ratio appears overbought, although the long-term uptrend is intact.

Source: MRB Partners

5. Correlations among global stocks hit a multi-year low.

Source: @GinaMartinAdams

6. US equity market concentration has reached extreme levels.

Source: Goldman Sachs; @MikeZaccardi

7. Here is a look at the S&P 500 sector breakdown over time by market capitalization and net income.

Source: Goldman Sachs; @MikeZaccardi

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Credit

1. Money market funds’ AUM continues to hit record highs.

2. Default rates among US syndicated loan issuers eased last month.

Source: PitchBook

• The US loan default rate is expected to fall in the 1.5%-1.9% range one year from now, which is down from the 2.5%-2.9% prediction in December 2023, according to a survey by PitchBook.

Source: PitchBook

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Global Developments

1. This chart shows the contributions to the first quarter’s gain in the Bloomberg Developed Markets Ex-US Equities Index.

h/t Douglas Lytle, Bloomberg Intelligence

2. Inflation has been surprising to the upside recently.

Source: Simon White, Bloomberg Markets Live Blog

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Food for Thought

1. Rising popularity of “.AI” domains in search trends compared to “.COM” domains:

Source: @chartrdaily

2. Median household wealth in the US by education and union membership:

Source: @axios Read full article

3. Renting trends across education, income, and ethnicity:

Source: Brookings Read full article

4. Evolution of global music industry revenues by format:

Source: Statista

5. Decade-long price performance of luxury goods compared to the S&P 500:

Source: Visual Capitalist Read full article

6. 2024 car models with the highest buyers’ remorse rates:

Source: Visual Capitalist Read full article

7. Households with three or more generations:

Source: USAFacts

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