The Daily Shot: 09-May-24
• The United States
• The United Kingdom
• The Eurozone
• Europe
• Japan
• Asia-Pacific
• China
• Emerging Markets
• Cryptocurrency
• Commodities
• Energy
• Equities
• Credit
• Global Developments
• Food for Thought
The United States
1. US wholesale durable goods inventories-to-sales ratio has been rising.
2. The GDPNow model forecasts over 4% growth this quarter (annualized), …
Source: Federal Reserve Bank of Atlanta
… driven by robust consumer spending (“PCE”), inventory rebuilding, and investment.
Source: @TheTerminal, Bloomberg Finance L.P.
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3. The Financial Stress Index has eased after last year’s regional bank crisis.
Source: Alpine Macro
4. Mortgage applications remain well below last year’s levels.
• Some states are seeing an increase in underwater mortgages.
Source: @economics Read full article
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5. Rents for recently signed rental agreements remain stable, slightly below 2023 levels.
Source: Apartment List
6. Market-based inflation expectations have been falling with oil prices.
Source: @TheTerminal, Bloomberg Finance L.P.; h/t Deutsche Bank Research
7. Tax refunds are approximately 3% higher than last year’s levels, but this increase falls below the CPI growth.
Source: Vanda Research
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The United Kingdom
1. The housing market recovery appears to have stalled last month.
2. Declines in permanent placements slowed in April. Temp worker billings continue to contract.
Source: S&P Global PMI
3. This chart shows historical and projected public sector net investment as a percentage of national income.
Source: IFS Read full article
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The Eurozone
1. Dutch manufacturing output continues to trend lower.
2. Here are the contributions to the decline in Germany’s industrial production since 2017.
Source: @DanielKral1, @OxfordEconomics
3. Eurozone inflation surprises have diverged from the US.
Source: @TheTerminal, Bloomberg Finance L.P.
4. The Bundesbank/ECB has previously followed the Fed during easing cycles. (2 charts)
Source: Deutsche Bank Research
Source: Deutsche Bank Research
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Europe
1. Riksbank cut rates for the first time since 2016, …
… sending the krona lower.
Source: @economics Read full article
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2. Norway’s factory output jumped in March.
3. Here are some trends in disability prevalence and self-perceived health among young Europeans.
Source: Eurostat Read full article
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Japan
1. Real wages surprised to the downside, running well below last year’s levels.
2. Tokyo office vacancies have been drifting lower.
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Asia-Pacific
1. Taiwan’s trade surplus dipped below last year’s levels in April as exports softened.
Taiwan is becoming less dependent on China for its exports.
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2. South Korea’s trade surplus is trending higher.
3. Here is a look at office rent changes in some of the largest cities in Asia.
Source: @BW Read full article
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China
1. Exports hit a multi-year high for this time of the year, …
… boosted by autos.
Source: Capital Economics
• Imports were also very strong (well above 2023 levels).
As a result, last month’s trade surplus was below forecasts.
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2. China’s real estate slump mirrors the US GFC experience.
Source: @SteveRattner
3. This chart shows China’s smartphone market share.
Source: Semafor
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Emerging Markets
1. Let’s begin with Brazil.
• The central bank has slowed the pace of rate cuts, with board members divided on the decision.
Source: @economics Read full article
• Exports hit a multi-year high.
• Retail sales remained unchanged in March, holding record levels.
– Vehicle sales surged in April.
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2. Argentina’s recession deepens.
– Industrial production (year-over-year):
– Construction activity:
Source: @economics Read full article
• Argentina introduced a 10k peso banknote currently worth about $9.
Source: Reuters Read full article
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3. The Philippine GDP growth remains robust.
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Cryptocurrency
1. Technicals suggest BTC/USD is not yet oversold. Support remains near the 40-week moving average.
Source: @StocktonKatie Read full article
2. Crypto funds saw outflows for the fourth straight week, particularly among US spot-bitcoin ETFs.
Source: CoinShares
Source: CoinShares
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3. Robinhood’s crypto trading volume surged from year-ago levels.
Source: CoinDesk Read full article
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Commodities
Funds have been rotating between softs and grains, pushing the correlation deeper into negative territory.
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Energy
1. US crude oil inventories declined last week.
– However, stockpiles at Cushing, OK (WTI settlement hub) rose sharply.
– Refined product inventories also increased.
– Here are the inventory levels.
• Oil prices rose modestly
Source: Reuters Read full article
• US gasoline demand has been soft.
Source: Reuters Read full article
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2. Crack spreads have been moving lower.
3. Texas power prices surged on Wednesday.
Source: ERCOT
Source: ERCOT
Source: @business Read full article
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Equities
1. Retail sentiment bounced this week as the market rallied.
• Retail buying has been soft, …
Source: Vanda Research
… but Vanda Research sees a bounce ahead.
Source: Vanda Research
• Retail investors have been loading up on leveraged ETFs, …
Source: @financialtimes Read full article
… particularly single-stock funds.
Source: Vanda Research
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2. The S&P 500 forward P/E ratio is back above 20x. The equal-weight index valuations continue to lag.
Source: @TheTerminal, Bloomberg Finance L.P.
3. Elevated real yields (inverted in the chart below) pose a downside risk for valuations.
Source: @TheTerminal, Bloomberg Finance L.P.
• Here is a comparison with corporate bond yields.
Source: Jack Ablin, Cresset Wealth Advisors
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4. The earnings and sales revision momentum has been strong.
Source: TS Lombard
5. The earnings expectations gap between the S&P 500 and small caps continues to widen.
Source: @TheTerminal, Bloomberg Finance L.P.
6. US goods producers have delivered more earnings beats in the Q1 season.
Source: Oxford Economics
7. Are consumer staples underpriced relative to the consumer discretionary sector?
Source: Morgan Stanley Research; @WallStJesus
8. Here is a look at the S&P 500 near-term implied volatility term structure.
Source: @TheTerminal, Bloomberg Finance L.P.
9. VIX typically rises leading up to US elections and then declines.
Source: Merrill Lynch
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Credit
1. High-yield spreads appear too tight relative to Treasury market implied volatility.
Source: @TheTerminal, Bloomberg Finance L.P.
2. The US distressed credit market is experiencing fewer liquidations and increased reorganizations.
Source: Torsten Slok, Apollo
3. Numera Analytics expects US regional bank earnings to improve, aided by a recovery in commercial real estate prices and lower long-term interest rates.
Source: Numera Analytics (@NumeraAnalytics)
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Global Developments
1. A rebound in global trade could benefit export-driven currencies such as the Australian and Canadian dollars vs. USD.
Source: MRB Partners
2. US market-based interest rate expectations remain elevated versus the Eurozone and Japan.
Source: J.P. Morgan Asset Management
3. This chart shows the size of rate cuts and core inflation at the start of rate-cutting cycles in advanced economies.
Source: Oxford Economics
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Food for Thought
1. Labor regulation stringency and unionization rates in the US and Europe:
Source: BofA Global Research
2. Comparison of wage growth for union and non-union workers in the private sector:
Source: @economics Read full article
3. Political divide in American sentiments towards various concepts:
Source: @axios Read full article
4. Trajectory of US federal spending on Social Security, Medicare, and defense:
Source: USAFacts
5. Health impacts on US labor force engagement over four decades:
Source: Goldman Sachs
6. Young adults’ willingness to fight for their country:
Source: The Economist Read full article
7. Tipping behavior for poor service in various countries:
Source: @chartrdaily
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