The Daily Shot: 05-Jun-24
• The United States
• Canada
• The Eurozone
• Europe
• Japan
• Asia-Pacific
• China
• Emerging Markets
• Commodities
• Energy
• Equities
• Credit
• Global Developments
• Food for Thought
The United States
1. Job openings declined significantly in March and April, suggesting an easing of labor market imbalances. The April figure was below forecasts.
Source: @TheTerminal, Bloomberg Finance L.P.
• The ratio of job openings to unemployed persons is near pre-COVID levels.
Here is the Beveridge Curve.
Source: @TheTerminal, Bloomberg Finance L.P.
• The contraction in vacancies has been broadening.
• Business services registered an increase in openings, …
… but a number of other sectors continue to see declines (3 charts).
Vacancies for public school teachers are well below last year’s levels.
• The rate of layoffs remains below pre-pandemic levels.
Source: @TheTerminal, Bloomberg Finance L.P.
• Quits and the ratio of vacancies to unemployed persons signal slower wage growth ahead.
Source: Capital Economics
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2. Bloomberg’s economic surprise index hit its lowest level since 2019. The index of growth indicators is in contraction territory.
• The odds of two Fed rate cuts this year have been rising in recent days.
• Treasury yields fell again on Tuesday.
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3. The Phillips Curve is nearing pre-pandemic levels.
Source: BofA Global Research
4. Factory orders were up for the third month in a row in April.
5. S&P 500 companies are becoming less dependent on imports from China.
Source: BofA Global Research; @MikeZaccardi
6. Real household net wealth has returned to its long-term trend.
Source: BCA Research
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Canada
1. Bias-adjusted core inflation measures are now well inside the BoC’s target range.
Source: Desjardins
2. Higher commodity prices should be a tailwind for Canadian stocks.
Source: Hugo Ste-Marie, Portfolio & Quantitative Strategy Global Equity Research, Scotia Capital
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The Eurozone
1. The number of unemployed individuals in Germany continues to increase.
Source: @economics Read full article
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2. This chart shows total employment trends in the largest euro-area economies.
Source: @DanielKral1, @OxfordEconomics
3. Here is the Eurozone’s trade balance by product.
Source: Eurostat Read full article
4. Euro-area bank valuations generally remain below those of international peers.
Source: ECB
5. Low volatility can lead to a substantial compression in risk premia.
Source: ECB
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Europe
1. Container shipping costs continue to climb.
Source: @TheTerminal, Bloomberg Finance L.P.
2. The average European stock is now outperforming US counterparts.
Source: @johnauthers, @opinion Read full article
3. Swiss core inflation was slightly below forecasts.
4. Here is a look at the European Union’s trade in raw materials.
Source: Eurostat Read full article
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Japan
1. Real wages are showing signs of stabilization.
2. The Japanese “permanent portfolio” (25% gold, stocks, government bonds, cash) had relatively steady performance in real terms versus individual assets. (2 charts)
Source: Gavekal Research
Source: Gavekal Research
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Asia-Pacific
1. South Korea’s GDP growth picked up momentum last quarter.
2. Singapore’s business activity continues to expand.
3. Australia’s GDP growth slowed further in the first quarter.
Source: Nikkei Asia Read full article
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China
1. Services activity accelerated in May, boosted by stronger demand.
Companies are hiring again, …
… and boosting prices. Are China’s deflationary pressures ebbing.
Source: South China Morning Post Read full article
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2. Hedge funds have been dumping Chinese stocks.
Source: Goldman Sachs; @WallStJesus
3. GDP per capita varies significantly across different regions in China.
Source: The Economist Read full article
4. Hong Kong’s business activity is back in contraction territory.
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Emerging Markets
1. Let’s begin with Chile.
• Economic activity was firmer in April but below forecasts.
• Industrial production was below expectations.
• Copper production hit a multi-year low.
• Retail sales are rebounding.
• Vehicle sales were below last year’s levels in May.
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2. Next, we have some updates on Brazil.
• The economy returned to growth last quarter.
Source: Reuters Read full article
• Vehicle sales slowed in May.
• The Brazilian real has been weakening vs. the US dollar.
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3. The Mexican peso appears to be oversold.
Implied volatility for the peso surged following the election results.
• Vehicle sales are running well above last year’s levels.
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4. The Colombian peso took a hit on Tuesday amid soft crude oil prices.
5. Implied volatility in India’s stock market surged following the election results.
Source: Reuters Read full article
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6. The relative returns of growth versus value stocks have diverged between EM and DM.
Source: Variant Perception
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Commodities
1. The rally in industrial commodities is fading.
• Copper:
• Iron ore:
• Bloomberg’s metals index:
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2. Chicago lean hog futures are under pressure amid concerns about sustained domestic demand.
3. Broad commodity prices have been improving and do not appear overbought.
Source: BCA Research
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Energy
1. Brent crude dropped below $78/bbl, …
… with energy shares widening their underperformance.
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2. Here is Bloomberg’s model illustrating the drivers of crude oil prices.
Source: @TheTerminal, Bloomberg Finance L.P.
3. US drilling activity remains subdued.
• Rig count:
• Frac spread count:
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Equities
1. Tech funds are seeing outflows (2 charts).
Source: Deutsche Bank Research
Source: BofA Global Research; @dailychartbook
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2. The market continues to reward companies that pursue onshoring strategies.
Source: Goldman Sachs
3. How correlated are S&P 500 sectors to the index?
Source: BMO Capital Markets; @carlquintanilla
4. Here’s what the options market tells us about the likelihood of a 10% gain or drop in the S&P 500 by late September and by the end of the year.
5. Correlations among S&P 500 stocks have reached multi-year lows. A stock picker’s paradise?
6. Penny stock trading surged over the past couple of years.
Source: @financialtimes Read full article
7. Next, let’s take a look at forward earnings yields vs. implied volatility (expected performance vs. perceived risk).
• Factors/styles:
• S&P 500 sectors:
• International markets:
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Credit
1. US private sector credit growth has been slowing.
Source: JP Morgan Research; @economics Read full article
2. Small banks have reduced their bond holdings …
Source: Simon White, Bloomberg Markets Live Blog
… and are rebuilding their deposit base.
Source: Simon White, Bloomberg Markets Live Blog
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Global Developments
1. The ECB and the BoC are set to cut rates this month. The Fed and the BoE will take longer to get there.
Source: @JeffreyKleintop
2. Tanker prices have been surging.
3. The disinflation trend is continuing outside of the US.
Source: BofA Global Research
4. Here is a look at output loss after GFC and COVID.
Source: Federal Reserve Board
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Food for Thought
1. 401-k millionaires at Fidelity:
Source: @wealth Read full article
2. Lowest 10 states by real GDP growth in 2023:
Source: Visual Capitalist Read full article
3. Electricity from renewable sources (global):
Source: Our World in Data Read full article
4. Media coverage of gasoline prices by price per gallon:
Source: @financialtimes Read full article
5. Companies mentioning AI on earnings calls:
Source: Goldman Sachs
6. Return-to-office rates:
Source: @thefuture Read full article
7. Major movie release count this summer:
Source: See It Market Read full article
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