Buying conditions for houses hit a record low, according to the U. Michigan survey

The Daily Shot: 13-May-24
• The United States
• Canada
• The United Kingdom
• Europe
• Japan
• China
• Emerging Markets
• Commodities
• Equities
• Credit
• Global Developments
• Food for Thought

The United States

1. Consumer sentiment deteriorated more than expected at the beginning of May, according to the latest U. Michigan survey.

Here are the contributions.

Source: @TheTerminal, Bloomberg Finance L.P.

• Households are increasingly concerned about higher unemployment ahead, which often serves as a leading indicator for the unemployment rate.

Source: Pantheon Macroeconomics

• Inflation expectations jumped with gasoline prices.

However, futures point to lower prices at the pump over the next few days.

Source: @TheTerminal, Bloomberg Finance L.P.

• Real household income expectations tumbled.

• Durables buying conditions are lower.

• Buying conditions for houses hit a record low.

– Homeowners haven’t been this upbeat on longer-term home price appreciation since 2007.

• Households reported a record high value of equity investments.

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2. Google search activity points to higher jobless claims ahead.

Source: Pantheon Macroeconomics

3. Households’ asset accumulation has broadly outpaced debt accumulation since the onset of the pandemic.

Source: IIF

• This chart shows the share of employees tapping their 401k accounts.

Source: Bank of America Institute

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4. The net boost to the federal budget from tax receipts in April was lower than expected but still exceeded last year’s level.

• Individual income taxes paid less refunds are running well above last year’s levels, …

Source: Oxford Economics

… boosted by higher stock prices.

Source: Oxford Economics

• Federal interest expenses continue to rise.

Source: Oxford Economics

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Canada

1. Canada’s April employment gains were well above forecasts.

Source: Reuters Read full article

• The unemployment rate held steady.

• The participation rate ticked higher.

• Wage growth eased but remains elevated.

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2. The probability of a BoC June rate cut dipped below 50% following the strong employment report.

• Bond yields climbed.

The loonie jumped but retreated shortly after.

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2. The Ivey PMI, which measures activity in both private and public organizations, has reached its highest level in two years.

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The United Kingdom

1. As we saw last week (chart), the Q1 GDP growth topped expectations, signaling the country’s exit from recession.

• Consumer spending was soft, …

… but business investment grew faster than expected.

• Weaker imports also boosted growth, …

… as the trade deficit narrowed.

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2. Production activity improved across the board in March.

• Manufacturing production:

• Services output:

• Construction output:

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3. Companies expect slower PPI and CPI growth ahead.

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Europe

1. Sweden’s economic activity improved in March.

– Industrial production:

– Services:

– Consumer spending:

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2. Norway’s CPI growth was higher than expected last month.

3. Here is a look at the EU’s vehicle trade with China.

Source: @DanielKral1, @OxfordEconomics

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Japan

1. Funds sharply reduced their bets against the yen after the BoJ’s interventions.

2. Flows into Japan-focused funds have accelerated.

Source: Goldman Sachs; @WallStJesus

3. Japan’s current account surplus in March was lower than expected but still reached a record high.

4. The Economy Watchers Survey Expectations index continues to fall.

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China

1. China’s credit growth slowed more than expected in April.

Net aggregate financing was negative, …

… as net government debt issuance declined.

Source: @markets Read full article

• The broad money supply growth continues to slow, while the narrow money supply growth was negative on a year-over-year basis.

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2. Inflation remains subdued.

Here is the PPI.

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3. The offshore yuan is weakening, with USD/CNH back at the 200-day moving average.

Source: @TheTerminal, Bloomberg Finance L.P.

4. Hong Kong-listed stocks are up almost 12% year-to-date.

Source: @TheTerminal, Bloomberg Finance L.P.

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Emerging Markets

1. Hedge funds have soured on the Brazilian real.

• Brazil’s inflation continues to moderate.

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2. Mexico’s manufacturing output increased again in March.

Source: MarketWatch Read full article

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3. EM inflation surprises remain mixed.

Source: TS Lombard

4. Here is a look at last week’s performance.

• Currencies:

• Bond yields:

• Equity ETFs:

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Commodities

1. Hedge funds continue to boost their bets on copper.

2. Iron ore prices have sharply diverged from the rise in stocks at Chinese ports.

Source: Capital Economics

3. Wheat futures continue to rally.

4. Sugar prices have been under pressure, …

… with speculative accounts cutting their exposure.

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5. Orange juice prices are surging again.

6. Here is a look at last week’s performance.

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Equities

1. The S&P 500 earnings growth projections look strong.

Source: @markets Read full article

• Improved earnings per share expectations have been driven by stocks in the Nasdaq 100.

Source: Societe Generale Cross Asset Research; @AyeshaTariq

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2. Share buyback activity continues to strengthen.

Source: Yahoo Finance Read full article

3. Companies with low labor costs have been outperforming this month.

4. The GS sentiment index is back in “stretched” territory.

Source: Goldman Sachs; @MikeZaccardi

5. Options traders are betting on defensives.

Source: Deutsche Bank Research

6. Financial Twitter posts point to stronger retail flows ahead.

Source: JP Morgan Research; @WallStJesus

7. Here is a look at sector correlations to high-yield bond spreads and the ISM Manufacturing PMI.

Source: Capital Economics

8. This chart shows the historical performance of “Sell in May and go away.”

Source: Deutsche Bank Research

9. VIX and VVIX (vol of vol) indicators continue to decline.

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10. Here is a look at last week’s performance data.

• Sectors:

• Equity factors:

• Macro basket pairs’ relative performance:

• Thematic ETFs:

• Largest US tech firms:

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Credit

1. Is rising unemployment signaling wider high-yield spreads?

Source: BofA Global Research

2. There was an uptick in ESG debt issuance early this year, largely driven by green bonds. (2 charts)

Source: IIF

Source: IIF

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3. Below is last week’s performance data across credit asset classes.

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Global Developments

1. Bank lending growth in mature markets remains muted, while EM has troughed.

Source: IIF

2. Here is a look at last week’s performance data.

• Currencies:

• Bond yields:

• Equities:

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Food for Thought

1. Price trends for natural and lab-grown diamonds:

Source: @chartrdaily

2. Record earnings in the live-music industry:

Source: Statista

3. Happiness score gains between 2010-2023:

Source: Visual Capitalist Read full article

4. Current and target active-duty military personnel by country:

Source: The Economist Read full article

5. Indebtedness to China:

Source: Visual Capitalist Read full article

6. Babies delivered by cesarean section:

Source: @axios Read full article

7. La Niña sets the stage for more and potentially stronger hurricanes to develop in the Atlantic.

Source: @axios Read full article

8. Global revenue of top media franchises:

Source: Visual Capitalist Read full article

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