The Daily Shot: 21-May-24
• The United States
• The Eurozone
• Japan
• Asia-Pacific
• China
• Emerging Markets
• Cryptocurrency
• Commodities
• Equities
• Alternatives
• Credit
• Rates
• Global Developments
• Food for Thought
The United States
1. Let’s begin with some updates on the labor market.
• According to the Atlanta Fed’s wage growth tracker, US wage gains are slowing but remain above pre-COVID levels.
• The wage gap between unionized and non-union workers has narrowed.
Source: BCA Research
• Job openings continue to trend lower.
Source: Goldman Sachs
• The Kansas City Fed’s Labor Market Conditions Index (LMCI), which is designed to provide a broad measure of labor market activity, has been trending lower.
Source: Arcano Economics
——————–
2. Consumer spending remains above its pre-pandemic trend.
• The Johnson Redbook index of same-store sales continues to rebound.
• Households’ purchasing power relative to wages has improved since 2019 as wage growth outpaces inflation.
Source: The Congressional Budget Office
——————–
3. Small business cash flow has tightened due to higher expenses.
Source: Bank of America Institute
4. The World Economics SMI report indicates that business activity (services and manufacturing) remains in growth mode.
Source: World Economics
5. Corporate earnings growth points to a rebound in business investment.
Source: Deutsche Bank Research
6. This chart displays the changes in US international trade share by trading partner since 2017.
Source: ING
Back to Index
The Eurozone
1. Higher interest rates and tighter credit standards have weighed on loan demand. (2 charts)
Source: ECB
Source: ECB
• Euro-area banks are in a relatively strong position, which could reduce the risk of financial stress. (2 charts)
Source: ECB
Source: ECB
——————–
2. The market expects the ECB to ease more aggressively this year than the Fed.
Source: @TheTerminal, Bloomberg Finance L.P.
3. Here is a look at corporate earnings relative to expectations.
Source: Oxford Economics
Back to Index
Japan
1. JGB yields continue to climb.
• The 10-year yield is nearing 1%.
• The 30-year yield is now above 2%.
The yield curve is steepening.
——————–
2. Japanese small-caps are trading at a valuation discount relative to US small-caps.
Source: Hennessy Funds Read full article
3. BofA’s card spending data shows Japanese households boosting spending this year.
Source: Bank of America Institute
4. Here is a look at electricity generation by fuel type.
Source: @EIAgov Read full article
Back to Index
Asia-Pacific
1. South Korea’s exports eased this month but remained above last year’s levels.
2. Taiwan’s export orders are accelerating.
Source: Reuters Read full article
——————–
3. Australia’s consumer sentiment remains depressed.
Back to Index
China
1. Here is a summary of economic indicators.
Source: Gavekal Research
2. The World Economics SMI report indicates no growth in factory activity, but the services sector continues to expand.
Source: World Economics
3. Next, we have some data on China’s international trade.
• Imports:
Source: Goldman Sachs; @AyeshaTariq
• Exports:
Source: Goldman Sachs; @AyeshaTariq
• Changes in import and export share since 2017:
Source: ING
Back to Index
Emerging Markets
1. Chile’s economy posted solid growth last quarter.
Source: @economics Read full article
——————–
2. Mexico’s retail sales were down in March (year-over-year).
3. India’s business activity growth is accelerating, according to the World Economics SMI report.
Source: World Economics
4. EM corporate earnings revisions have been trending lower.
Source: Goldman Sachs; @MikeZaccardi
Back to Index
Cryptocurrency
1. Hopes of a US spot-ether ETF approval sparked a rally in ETH.
Source: Twitter Read full article
Source: @crypto Read full article
• The rise in ETH/USD above $3,600 saw a sharp spike in short liquidations.
Source: Coinglass
• ETH/BTC broke above its 50-day moving average.
Source: @TheTerminal, Bloomberg Finance L.P.
• Here is the year-to-date relative performance.
Source: @TheTerminal, Bloomberg Finance L.P.
——————–
2. Crypto funds saw the second straight week of inflows.
Source: CoinShares Read full article
• Grayscale suffered a streak of outflows since the January ETF launch and also saw minor inflows last week.
Source: CoinShares Read full article
• Bitcoin-focused funds accounted for most inflows, while investors continued to exit Ethereum-focused funds last week.
Source: CoinShares Read full article
——————–
3. The number of new bitcoin wallets has dropped to the lowest level in years.
Source: Glassnode
Back to Index
Commodities
1. The copper/gold ratio broke above a two-year-long downtrend and is testing initial resistance.
2. The silver/gold ratio broke above initial resistance.
• The global silver market is on course for the fourth straight year of shortages.
Source: @markets Read full article
——————–
3. Steel prices in China are lower than in the US.
Source: Gavekal Research
• China’s steel export volumes are on pace to reach levels last seen in 2015-2016, partly due to competitive prices.
Source: Gavekal Research
Back to Index
Equities
1. The Russell 2000 breadth has diverged from Treasury yields.
Source: @TheTerminal, Bloomberg Finance L.P.
2. Small caps’ margins have been deteriorating.
Source: Oxford Economics
3. The S&P 500 tech index valuations are nearing resistance near 29x.
h/t @tatianadariee, @business
4. Companies with low operating leverage have been outperforming over the past month.
5. Companies focused on US domestic sales have been lagging behind those with substantial international sales.
6. The global stock rally is inconsistent with a stronger US dollar this year.
Source: Capital Economics
7. The Dow Jones Industrial Average is price-weighted, meaning its components are weighted based on their stock prices rather than market capitalization.
Source: @johnauthers, @opinion Read full article
8. Macro hedge funds are cautious on stocks.
Source: Simon White, Bloomberg Markets Live Blog
9. Healthcare funds are seeing substantial outflows.
Source: Deutsche Bank Research
Back to Index
Alternatives
1. US venture capital valuations are growing at some of the slowest rates seen over the past decade.
Source: PitchBook
2. FinTech M&A activity across the US and Canada has increased in recent quarters.
Source: PitchBook
3. PitchBook forecasts a more tempered annual growth rate of private capital closed-end funds’ AUM through 2028 than in recent years.
Source: PitchBook
Back to Index
Credit
1. Corporate bond spreads continue to trend lower.
2. Here is a look at sector distributions for A- and BBB-rated bonds.
Source: @Sebaboyd, @business
3. The total fund assets deployed in systematic credit strategies have recently surged.
Source: @markets Read full article
Back to Index
Rates
1. Treasury market implied volatility keeps falling.
2. Mutual funds have been boosting duration.
Source: @markets Read full article
3. The market continues to view the Fed’s policy rate as fairly restrictive.
Source: @TheTerminal, Bloomberg Finance L.P.
Back to Index
Global Developments
1. Here are Morgan Stanley’s projections for key policy rates.
Source: Morgan Stanley Research
2. Oxford Economics expects non-US growth to overtake the US in the second half of the year.
Source: Oxford Economics
3. Productivity growth in the US and UK remains low, although recent technological advances could provide a boost.
Source: TS Lombard
——————–
Food for Thought
1. Use of AI in the M&A process:
Source: Bain Read full article
2. West Virginia’s demographics:
Source: @WSJ Read full article
3. Countries with the highest rates of skin cancer:
Source: Statista
4. IVF babies born in 2021:
Source: USAFacts
5. Billion-dollar disasters in the US:
Source: Bank of America Institute
6. Congestion in Earth’s orbit:
Source: @axios Read full article
7. Global donkey population:
Source: Reuters Read full article
——————–
Back to Index