June 18, 2024June 18, 2024 by The Daily Shot Editor: Lev Borodovsky

US freight rates are stabilizing

The Daily Shot: 18-Jun-24
• The United States
• Canada
• The United Kingdom
• The Eurozone
• Europe
• Japan
• Asia-Pacific
• China
• Emerging Markets
• Cryptocurrency
• Commodities
• Energy
• Equities
• Alternatives
• Global Developments
• Food for Thought

The United States

1. The first regional manufacturing report of the month (from the NY Fed) shows signs of improvement as demand stabilizes.

– Unfilled orders:

– Expected orders:

• However, the factory employment indicator for the region points to a contracting workforce.

• Fewer firms are reporting rising prices.

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2. The World Economics SMI measure shows US business activity (services and manufacturing) holding in growth territory this month.

Source: World Economics

3. The Citi Economic Surprise Index is sinking again, …

… driven by “hard data.”

Source: @TheTerminal, Bloomberg Finance L.P.

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4. Last week, Bloomberg’s inflation surprise index registered a pullback as the CPI and PPI came in below expectations.

5. The federal deficit was wider than expected in May.

• Federal interest payments now exceed the defense budget.

• Here is a look at the fiscal effect of election scenarios, according to Goldman.

Source: Goldman Sachs

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6. US freight activity has been trending lower, …

Source: Cass Information Systems

… but freight rates are stabilizing.

Source: Cass Information Systems

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7. Many investors anticipate the first Fed rate cut to occur in September, …

Source: BofA Global Research

… with the market assigning approximately a 66% probability to a rate reduction that month.

Canada

1. Existing home sales declined less than expected last month.

2. Housing starts jumped in May, topping forecasts.

Source: @economics Read full article

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3. Hedge funds have been boosting their bets against the Canadian dollar.

4. Foreign investors pounced on Canadian securities in April, …

… buying bonds and stocks/funds.

Source: Investment Executive Read full article

The United Kingdom

1. Economists have been upgrading their estimates for the UK’s GDP growth in 2024.

2. Is disinflation over for now?

Source: Simon White, Bloomberg Markets Live Blog

The Eurozone

1. Economists remain skeptical about the prospects for consumer spending growth in Germany this year.

2. Economists continue to upgrade their estimates for Spain’s economic growth in 2024.

3. Here is a look at the latest French polls.

Source: Barclays Research

4. Forecasters increasingly see Italy’s unemployment rate easing this year.

• Italy’s budget deficit is wider than in other euro-area economies …

Source: @DanielKral1, @OxfordEconomics

… and will take some time to narrow back to 3%.

Source: @s_dellechiaie; @TheTerminal, Bloomberg Finance L.P. Read full article

– This scatterplot shows EU countries’ public debt and budget balance.

Source: @DanielKral1, @OxfordEconomics

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5. Finland’s economy has been contracting.

Europe

1. The Swiss franc continues to strengthen vs. the euro.

• For now, the SNB isn’t selling the Swiss franc despite its recent strength.

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2. Poland’s inflation continues to moderate.

• Poland’s government budget deficit has blown out this year.

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3. Here is a look at GDP growth and change in public debt.

Source: @DanielKral1, @OxfordEconomics

Japan

1. Economists now see the BoJ rate at 0.3% by the end of the year and 0.5% by the end of 2025.

2. Machinery orders remained strong.

3. Net flows into foreign bonds are sensitive to interest rates.

Source: Torsten Slok, Apollo

Asia-Pacific

1. Singapore’s electronics exports surged last month.

2. The RBA held rates unchanged (as expected).

Source: Reuters Read full article

The market is no longer pricing an RBA rate hike.

China

1. The World Economics SMI report shows China’s service sector growth holding up in June, …

Source: World Economics

… but manufacturing remains in contraction territory.

Source: World Economics

This chart illustrates the divergence.

Source: World Economics

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2. Demand remains high for emerging market equity funds that exclude China.

Source: @markets Read full article

3. Mainland investors have been moving more of their capital to Hong Kong and Macau.

Source: Reuters Read full article

Emerging Markets

1. LatAm-focused equity ETFs continue to underperform.

• Mexico:

• Brazil:

2. The Mexican peso looks undervalued (chart shows the USD/MXN trend).

Source: Alpine Macro

3. In contrast to LatAm trends, here is an India-focused ETF.

• India’s rising capital spending has significantly boosted the country’s transport infrastructure.

Source: Alpine Macro

• The World Economics SMI report shows robust growth in India’s business activity this month.

Source: World Economics

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4. Romania’s industrial sales are rebounding.

Cryptocurrency

1. Major cryptos continue to struggle this month, with Bitcoin Cash (BCH) and Litecoin (LTC) underperforming top peers.

Source: FinViz

2. Last week, crypto funds experienced the largest amount of outflows since March, led by long-Bitcoin products. However, Ethereum-focused funds continued to attract fresh capital. (2 charts)

Source: CoinShares Read full article

Source: CoinShares Read full article

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3. The Crypto Fear & Greed Index has remained in “greed” territory over the past few weeks.

Source: Alternative.me

4. Only 22% of altcoins have outperformed bitcoin over the past three months.

Source: Blockchain Center

5. Several altcoins have weakened in absolute terms. For example, Cardano (ADA/USD) remains in a downtrend with negative momentum. The next support is at $0.36.

Source: @StocktonKatie

Commodities

1. The gold/silver ratio has sharply diverged from the gold/platinum ratio.

Source: @ANZ_Research

• Gold has moved in tandem with the S&P 500 over the past year, although the two have diverged recently as the rally in precious metals fades.

Source: @ANZ_Research

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2. A new copper fund by Sprott, a Canadian investment firm, has a growing stockpile of the physical metal that has sparked concerns about a copper squeeze.

Source: @JavierBlas, @opinion Read full article

3. China’s economy, especially housing, has a tremendous impact on industrial commodities.

Source: Economics and Strategy Group, National Bank of Canada

4. Roughly 75% of the US corn crop is in good/excellent condition thanks to ample rainfall and moderate temperatures.

Source: @markets Read full article

Energy

Data centers are estimated to have a significant contribution to power demand by 2030. (2 charts)

Source: Goldman Sachs

Source: Goldman Sachs

Equities

1. Investor positioning remains bullish.

• Deutsche Bank’s aggregate equity positioning indicator:

Source: Deutsche Bank Research

• Goldman’s positioning-based sentiment index:

Source: Goldman Sachs; @MikeZaccardi

• BofA’s fund manager survey (FMS):

Source: BofA Global Research

However, JP Morgan’s clients are less inclined to increase their equity positions.

Source: JP Morgan Research; @dailychartbook

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2. Insiders have been buying.

Source: Barron’s

3. How much cash will companies return to investors?

Source: Goldman Sachs; @MikeZaccardi

4. S&P 500 low-volatility stocks are starting to improve vs. value stocks.

Source: Aazan Habib, Paradigm Capital

5. Revenue growth expectations for software firms have been decelerating.

Source: Jefferies

6. Flows into tech funds have picked up again (2 charts).

Source: Deutsche Bank Research

Source: Reuters Read full article

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7. Investors view the Magnificent 7 bets as the most crowded trade.

Source: BofA Global Research

8. Equity analysts tend to chase the market.

Source: Chen Zhao, Alpine Macro

Alternatives

1. Here is a look at holding periods for buyout investments.

Source: PitchBook

2. PE fundraising has been slowing after the 2021 peak.

Source: J.P. Morgan Asset Management

3. This chart shows the dry powder over time across alternative asset classes.

Source: J.P. Morgan Asset Management

Global Developments

1. What do investors see as the biggest tail risk?

Source: BofA Global Research

2. US growth is expected to outpace the rest of the G10, which will support the US dollar.

Source: Goldman Sachs

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Food for Thought

1. Distribution of 401k matching contributions by income level:

Source: @WSJ Read full article

2. History and forecast of ocean-going cruise passengers:

Source: @financialtimes Read full article

3. Trends in downtown NYC office rent and availability:

Source: @WSJ Read full article

4. Decline in immediate college enrollment for male high-school graduates in the US:

Source: The Economist Read full article

5. Capital raised by AI startups:

Source: The Economist Read full article

6. Food insecurity:

Source: @axios Read full article

7. US professional women’s sports teams:

Source: @axios Read full article

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