The GDPNow model predicts over 4% growth this quarter

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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