The Daily Shot: 10-Apr-24
• The United States
• The United Kingdom
• The Eurozone
• Japan
• China
• Emerging Markets
• Commodities
• Energy
• Equities
• Rates
• Global Developments
• Food for Thought
The United States
1. The NFIB’s small business sentiment index hit its lowest level since 2012, …
… as sales expectations deteriorate.
• “Poor sales” remains low on the list of the NFIB’s most pressing business problems, but it saw an uptick in March.
• The index of hiring plans continues to sink, which signals a slowdown in US payrolls growth this quarter.
– Fewer firms are reporting a lack of qualified applicants for job openings as demand for labor eases.
• A higher percentage of companies plan to boost prices.
• It’s important to recognize that other small business surveys appear less pessimistic, partially because NFIB members often represent very small companies.
Source: NFIB
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2. What should we expect from today’s CPI report?
• Wells Fargo sees a 0.33% monthly increase in the core CPI, which is consistent with the consensus estimate of 0.3%.
Source: Wells Fargo Securities
• Nomura expects a 0.275% increase in core inflation, …
Source: Nomura Securities
… and a 0.395% in the supercore CPI.
Source: Nomura Securities
• The pace of declines in rent inflation has been more gradual than economists had anticipated.
Source: Wells Fargo Securities
• The PPI data signals a pickup in the rate of food inflation.
Source: Wells Fargo Securities
• Separately, what is the impact of crude oil prices on core inflation?
Source: BofA Global Research
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3. Which industries have the highest percentage of firms reporting job vacancies?
Source: Oxford Economics
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The United Kingdom
1. Rate differentials point to downside risks for the pound vs. the euro.
Source: @TheTerminal, Bloomberg Finance L.P.; h/t Mary Nicola, MLIV Macro Strategist
2. This chart presents the latest UK voting intention poll results.
Source: @YouGov Read full article
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The Eurozone
1. The French trade deficit continues to narrow.
2. Euro-area wage growth is moderating.
Source: Pantheon Macroeconomics
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Japan
1. Consumer confidence keeps climbing.
2. JGBs remain under pressure.
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China
1. Chinese equities have been recovering at a slower pace than the late-2022 rebound.
Source: Truist Advisory Services
The CSI 300 Index appears to be rolling over.
Source: @TheTerminal, Bloomberg Finance L.P.
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2. Bond yields continue to sink.
3. This chart shows China’s residential real estate transactions.
Source: Arcano Economics
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Emerging Markets
1. Let’s begin with some updates on India.
• Flows into Indian government bonds (IGBs) have been strong in recent months.
Source: Barclays Research
– The 10-year government bond yield is testing downtrend resistance.
– Easing banking liquidity conditions could bode well for IGBs as the market begins to discount the end of the rate hike cycle.
Source: Barclays Research
• The NIFTY 50 Index is attempting another breakout.
• The Indian rupee’s implied volatility has picked up, although realized volatility remains low.
Source: Barclays Research
• The growth in India’s two-wheeler sales has outpaced passenger vehicle sales.
Source: Gavekal Research
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2. Mexican March CPI figures were below forecasts.
3. Rate cuts could support Brazilian equity valuations, which remain historically low.
Source: Numera Analytics (@NumeraAnalytics)
4. Sovereign credit quality improved for LatAm and the Caribbean last year after a long streak of overwhelming downgrades.
Source: ECLAC
– Outside of Ecuador, spreads tightened for LatAm sovereign debt issuers.
Source: ECLAC
• Favorable macro and currency conditions supported LatAm equities last year. (2 charts)
Source: Numera Analytics (@NumeraAnalytics)
Source: ECLAC
• Separately, the establishment of central bank independence in Latin America led to reduced inflation rates.
Source: IMF Read full article
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5. Ukrainian inflation continues to moderate.
6. BofA’s private clients have been buying EM debt.
Source: BofA Global Research
7. EM earnings sentiment for 2024 has been deteriorating.
Source: Goldman Sachs; @AyeshaTariq
8. This chart from Capital Economics illustrates the timeline of the easing cycle among emerging market central banks.
Source: Capital Economics
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Commodities
1. Central banks loaded up on gold after the recent Russia/Ukraine war.
Source: Alpine Macro
• Technicals suggest that gold is overbought.
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2. Coffee futures are surging.
Source: @markets Read full article
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Energy
1. Capital Economics sees OPEC production rising later this year.
Source: Capital Economics
2. This chart depicts the EU’s energy imports by product and trading partner.
Source: Eurostat Read full article
3. Saudi Arabia requires a crude oil price above $85 per barrel to prevent a current account deficit.
Source: @AyeshaTariq
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Equities
1. The short end of the volatility curve inverted sharply ahead of the CPI report.
Source: @TheTerminal, Bloomberg Finance L.P.
2. Momentum stocks’ outperformance hit extreme levels recently.
Source: Simon White, Bloomberg Markets Live Blog
But it has plateaued since February.
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3. S&P 500 tech sector returns are extended on a short-term basis, yet less so longer term. (2 charts)
Source: Truist Advisory Services
Source: Truist Advisory Services
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4. Following the SVB crisis, banks’ performance diverged from the S&P 500. Subsequent to the NYCB debacle, the regional bank index began to underperform the broader bank index.
Source: @TheTerminal, Bloomberg Finance L.P.
5. Macro hedge funds haven’t been this exposed to stocks in years.
Source: Nomura Securities; @dailychartbook
6. Goldman expects S&P 500 margins to trough this quarter.
Source: Goldman Sachs; @MikeZaccardi
7. Companies with strong balance sheets have been outperforming leveraged firms.
8. Return dispersion in the S&P 500 has increased sharply in recent weeks.
Source: @dailychartbook; @dailychartbook
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Rates
1. The 10-year Treasury yield is holding long-term support within an uptrend.
Source: MRB Partners
2. Could we see a breakout in the five-year breakeven rate if inflationary pressures rise?
Source: Aazan Habib, Paradigm Capital
3. On average, the Fed has held the policy rate steady for about nine meetings before cutting rates.
Source: Truist Advisory Services
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Global Developments
1. A recovery in China’s business cycle could bode well for commodity currencies and the euro.
Source: Alpine Macro
2. Here is a look at the share of fixed-rate mortgages in select countries.
Source: Codera Analytics Read full article
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Food for Thought
1. Global crude oil production leaders in 2023:
Source: Visual Capitalist Read full article
2. Trend in New York Citi’s luxury condo construction approvals:
Source: @WSJ Read full article
3. Rising retirement savings targets among Americans:
Source: @wealth Read full article
4. Fall 2023 school attendance report by demographics in the US:
Source: Brookings Read full article
• Rising rates of chronic school absenteeism in 2023 compared to 2019:
Source: The New York Times Read full article
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5. Discretionary spending changes, by US government party control:
Source: Goldman Sachs; @MikeZaccardi
6. Preferred generative AI model providers for business collaboration:
Source: The Economist Read full article
7. Basketball championship game ratings:
Source: @WSJ Read full article
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