The Daily Shot: 28-May-24
• The United States
• Canada
• The United Kingdom
• The Eurozone
• Europe
• Japan
• China
• Emerging Markets
• Cryptocurrency
• Commodities
• Equities
• Credit
• Global Developments
• Food for Thought
The United States
1. Let’s begin with Bloomberg’s latest US economic survey results for 2024.
• Economists are increasingly bullish on consumer spending growth this year.
• Business investment projections are also getting upgraded.
• The average monthly job gains estimates for this year are nearing 180k.
• Estimates for growth in imports and exports have diverged.
Source: @TheTerminal, Bloomberg Finance L.P.
• Economists keep increasing their projections for this year’s core PCE inflation.
• Forecasters now see only two Fed rate cuts this year, …
… and they continue to move up their projections for the 10-year Treasury yield.
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2. Durable goods orders increased last month, but the March figures were revised lower.
• Wholesale vehicle orders have been up for six months in a row.
• Defense capital goods shipments have been rising.
Source: @RenMacLLC
• Are real capital goods orders bottoming?
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3. The updated U. Michigan sentiment index shows a smaller decline in May compared to an earlier estimate.
• Inflation expectations eased relative to the previous estimate amid a pullback in gasoline prices.
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4. The recent boost in government consumption and investment is starting to slow.
Source: MRB Partners
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Canada
1. Economists have started to upgrade their estimates for Canada’s consumer spending growth this year.
• There is more optimism about housing starts in 2024.
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2. Retail sales declined in March, …
… but estimates suggest a bounce in April.
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3. Hedge funds haven’t been this bearish on the loonie since 2017.
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The United Kingdom
1. Retail sales declined more than expected last month.
Source: Reuters Read full article
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2. Shop price inflation continues to moderate.
• Was the April hot CPI report a fluke?
Source: Pantheon Macroeconomics
• PMI indices show further moderation in price pressures.
Source: Capital Economics
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The Eurozone
1. Germany’s Ifo expectations index edged higher this month.
Source: ifo Institute
• The decline in Q1 consumption was more severe than initially estimated.
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2. French retail sales were unchanged last month.
• Manufacturing sentiment declined further.
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3. Wage pressures are easing.
Source: Nordea Markets
4. Implied volatility in the rates markets has been trending lower.
Source: @TheTerminal, Bloomberg Finance L.P.
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Europe
1. Norway’s unemployment keeps trending higher.
• The Norwegian krone outperformed last week.
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2. Sweden’s unemployment rate remains elevated.
3. Next, we have some updates on Poland.
• Industrial production (a sharp rebound):
• Retail sales (a pullback):
Source: ING
• Employment (down on a year-over-year basis):
– The unemployment rate (multi-year lows):
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4. EU new vehicle registrations were well above last year’s levels in April.
5. Here is a look at the impact of the pandemic on employment due to illness or disability in the EU.
Source: @financialtimes Read full article
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Japan
1. JGB yields continue to climb.
2. Wholesale services inflation is still rising.
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China
1. Industrial profits were back above 2024 levels in April.
2. Utilized foreign direct investment is at multi-year lows.
3. Next, we have some updates on Hong Kong.
• The trade balance (multi-year highs):
• Government land sales:
Source: @financialtimes Read full article
• Office availability:
Source: @financialtimes Read full article
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Emerging Markets
1. Economists are boosting their forecasts for Brazil’s GDP growth this year, …
… and lowering projections for the nation’s unemployment.
– Forecasters now see 88 bps of rate cuts before the end of the year (average projection).
• Brazil’s consumer confidence eased this month.
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2. Last week, the Argentine peso took a hit in the unofficial market.
Source: @TheTerminal, Bloomberg Finance L.P.
Source: @financialtimes Read full article
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3. The Vietnamese dong has been under pressure.
Source: @markets Read full article
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4. The difference in equity risk premia between EM and DM has grown to its widest level in four years, reflecting cheaper relative EM valuations.
Source: BlackRock Investment Institute
5. Next, we have some performance data from last week.
• Currencies:
• Bond yields:
• Equity ETFs:
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Cryptocurrency
1. Blockchain activity within the Ethereum ecosystem continues to rise.
Source: Grayscale Read full article
2. Ether open interest surged last week on hopes of a spot-ETF approval. Funding rates also flipped positive from yearly lows, reflecting bullish sentiment.
Source: @KaikoData
3. ETH/USD and ETH/BTC are testing initial resistance. (2 charts)
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4. The Bitcoin/S&P 500 price ratio is also approaching resistance with slowing momentum.
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Commodities
1. Speculative accounts continue to boost their bets on copper.
• Major copper miners have been steadily increasing CapEx, albeit at a modest pace relative to previous cycles.
Source: PGM Global
– There is a growing divergence in the performance of copper mining equities and the spot price.
Source: PGM Global
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2. Speculative gold positioning continues to rise in the futures market.
• More gold mining stocks are reaching new one-year price highs.
Source: SentimenTrader
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3. US wheat futures continue to climb.
• Here are Bloomberg’s agriculture and grains indices.
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4. Hedge funds have almost flattened their futures bets on sugar.
5. Finally, we have last week’s performance data.
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Equities
1. The rally is increasingly dominated by tech/growth stocks, with the rest of the market lagging.
• Last week’s performance by sector:
• The equal-weight index:
• Small caps:
• Growth vs. value:
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2. Cyclicals’ relative performance hit the highest level since early 2022.
But hedge funds have been cautious on cyclicals vs. defensives.
Source: BofA Global Research; @dailychartbook
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3. The Economist reports that the anticipated spending surge from retiring baby boomers is yet to materialize. The index tracking stocks expected to benefit from this boomer splurge has underperformed.
Source: The Economist Further reading
4. Equity fund flows are holding up.
Source: BofA Global Research; @dailychartbook
5. Developed market equity breadth is improving and not yet stretched.
Source: Longview Economics
6. The volume of single-stock call options is not extreme.
Source: Longview Economics
7. Transport stocks have not yet confirmed the breakout in the Dow Industrial Average.
Source: Aazan Habib, Paradigm Capital
8. Tight credit spreads and low equity volatility have supported a risk-on environment.
Source: Aazan Habib, Paradigm Capital
9. Finally, we have some performance data from last week.
• Equity factors/styles:
• Macro basket pairs’ relative performance:
• Thematic ETFs:
• The largest US tech firms:
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Credit
1. For the first time since the financial crisis, a AAA-rated tranche of a commercial mortgage-backed security experienced a credit loss.
Source: @markets Read full article
2. Munis sold off sharply last week, driven by a surge in supply, as issuers brought over $180 billion in long-term municipal bonds to market this year.
Source: @markets Read full article
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3. Here is last week’s performance data for select credit asset classes.
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Global Developments
1. Currency market carry trades have been very lucrative.
Source: @markets Read full article
2. This chart shows projected government gross debt by 2040 if policies remain unchanged.
Source: OECD Read full article
3. Finally, we have some performance data from last week.
• Currencies:
• Bond yields:
• Equities:
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Food for Thought
1. Value of investments in pandemic winners in the post-pandemic world:
Source: Statista
2. Billionaires:
Source: Visual Capitalist Read full article
3. Public companies with the highest gaming revenues:
Source: Statista
4. Concentration of secondary teachers and doctors per 100,000 population by country:
Source: Codera Analytics
5. Cross-state migration:
Source: Bank of America Institute
6. Effective tax rates of the richest Americans and bottom half of income earners:
Source: The New York Times Read full article
7. Marital trends by state:
Source: Schmidt & Clark; US Census Bureau
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