The Daily Shot: 08-May-24
• The United States
• The United Kingdom
• The Eurozone
• Europe
• Australia
• China
• Emerging Markets
• Commodities
• Energy
• Equities
• Credit
• Food for Thought
The United States
1. Growth in consumer credit slowed in March, …
… corroborating reports from banks that consumer credit demand has been dropping. Will we see further weakness in consumer credit in the months ahead?
Source: Oxford Economics
• Consumer credit as a share of US GDP continues to drop.
• Real credit card balances declined in March, …
… and so did credit card debt as a share of disposable income.
• Student debt balances rebounded in the first quarter.
This chart shows student debt balances as a share of total consumer credit.
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2. A chart from the San Francisco Fed has been making rounds on social media. It’s over – US households have run out of excess savings …
Source: Federal Reserve Bank of San Francisco, h/t Tatiana Darie, Bloomberg Markets Live
Or maybe not. Much depends on the assumptions about the pre-COVID trend.
Source: Mizuho Securities USA
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3. Wholesale used car prices continue to fall.
Will we see this trend reflected in the CPI?
Source: @SteveRattner
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4. Foreign-born Americans have been the primary driver of growth in the US prime-age population.
Source: Oxford Economics
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The United Kingdom
1. Construction activity is rebounding.
2. Manufacturing price indicators have been rising recently, while upstream price indicators remain above historical norms.
Source: Nomura Securities
3. The current level of house prices appears too high based on price/income ratios relative to interest rates.
Source: Nomura Securities
4. Here is a look at trends in NHS elective care wait times and patient lists.
Source: @financialtimes Read full article
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The Eurozone
1. Let’s begin with Germany.
• Factory orders remained soft in March.
Source: @WSJ Read full article
– Domestic demand continues to sink.
Source: Capital Economics
• After two months of gains, industrial production declined.
• The PMI report shows a persistent recession in Germany’s construction sector.
• The trade surplus increased in March.
Source: @WSJ Read full article
– This chart shows the trade deficits of the US and Germany with China.
Source: @DanielKral1, @OxfordEconomics
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2. Euro-area retail sales increased in March.
3. The French trade deficit continues to narrow.
4. Italy’s construction activity is shrinking again.
Source: Arcano Economics
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Europe
1. The SNB’s balance sheet has been expanding this year.
2. The Czech Republic’s manufacturing output declined in March.
• The nation’s trade surplus hit a record high.
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3. EU governments have been expanding support for domestic companies.
Source: @WSJ Read full article
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Australia
Australian bond yields and the Aussie dollar declined after the RBA eased concerns about the risk of rate hikes.
Source: Reuters Read full article
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China
1. Hong Kong stocks have outperformed mainland shares year-to-date.
Source: @TheTerminal, Bloomberg Finance L.P.
2. China’s firms have been boosting foreign investment.
Source: @economics Read full article
3. This chart illustrates China’s credit growth shift from real estate to the industrial sector.
Source: @JeffreyKleintop
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Emerging Markets
1. Chiles’ trade surplus surprised to the upside, …
… on strong exports.
• The nation’s wage growth is moderating.
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2. Mexican vehicle production hit a record high.
• Consumer sentiment remains strong.
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3. The Philippine trade deficit narrowed as imports declined.
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Commodities
1. China’s currency depreciation typically occurs alongside a rise in gold prices.
Source: Torsten Slok, Apollo
• Gold trading volumes on the Shanghai futures exchange spiked.
Source: Torsten Slok, Apollo
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2. Options markets are underestimating the upside for industrial commodities on 6-12 month holdings.
Source: Numera Analytics (@NumeraAnalytics)
3. The correlation between stocks and commodities has been positive since the GFC. That hasn’t been the case for fixed income.
Source: Wells Fargo Investment Institute
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Energy
1. Brent crude dipped below $83/bbl.
2. US prices at the pump are heading lower.
Source: @TheTerminal, Bloomberg Finance L.P.
3. Most of China’s oil demand increase over the past few years was driven by petrochemicals consumption.
Source: Longview Economics
4. Australia is exporting more coal to China.
Source: Fitch Solutions Macro Research
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Equities
1. The ability of US firms to maintain strong margins continues to exceed expectations.
Source: Deutsche Bank Research
2. Flows into US tech funds persist.
Source: Deutsche Bank Research
3. Goldman expects share buybacks to accelerate.
Source: @markets Read full article
However, companies known for share buybacks have underperformed sharply in recent weeks.
• Dividend growers have also been underperforming.
• Here is the total GS Cash Return Index (companies buying back shares and/or paying above-average dividends).
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4. The improving macro backdrop could keep the global stock/bond ratio uptrend intact.
Source: MRB Partners
5. Is the market frontloading the anticipated start of the easing cycle, given the fact that the first Fed rate cut is still months away?
Source: Oxford Economics
6. Microcaps have outperformed in recent days.
7. This chart shows the percentage of members in each S&P 500 sector that are above their 200-day moving average.
8. VVIX, an implied volatility index based on VIX options (volatility of volatility), is at multi-year lows. This indicates subdued demand for VIX call options, which are typically used to bet on or hedge against significant market declines.
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Credit
1. US and European high-yield financing costs are set to rise further.
Source: Deutsche Bank Research
Although investment-grade companies also face increasing financing costs (chart below), the impact may be delayed due to their longer debt maturities.
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2. Tight credit standards on business loans point to wider high-yield spreads.
Source: Simon White, Bloomberg Markets Live Blog
3. Investment-grade spreads are now at multi-year lows relative to yields.
h/t James Crombie, Bloomberg
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Food for Thought
1. Composition and revenue distribution of US small businesses by employee count:
Source: Pew Research Center Read full article
2. Wealth growth trends by age group in the US since the pandemic’s start:
Source: Center for American Progress Read full article
3. Comparative trends in disability-adjusted life years lost in major countries:
Source: Goldman Sachs
4. Texas solar capacity additions:
Source: @EIAgov Read full article
5. Gender disparity in workplace culture perception based on Glassdoor reviews:
Source: MIT Sloan School of Management Read full article
6. Compensation growth in government and private sectors:
Source: @jonathanjlevin, @opinion Read full article
7. Leading nail art trends on social media in 2024:
Source: Fresha
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