A new low in buying conditions for houses

The Daily Shot: 19-Jun-24
The United States
The Eurozone
Japan
China
Emerging Markets
Commodities
Energy
Equities
Credit
Rates
Food for Thought



 

The United States

1. US retail sales growth was well below forecasts in May.
 

 
Source: @economics   Read full article  
 
Weak housing market activity is taking a toll on spending.
 
Source: @GregDaco  
 
Vehicle sales were higher.
 

 
Restaurant spending declined.
 

 
Here is a look at real retail sales.
 

 
Source: @GregDaco  
 
“Core” retail sales (Control Group) continue to trend higher when adjusted for inflation.
 

——————–

 
2. Last month, manufacturing output exceeded forecasts, rebounding after two consecutive months of declines.
 

 
Here is the manufacturing capacity utilization rate.
 

——————–

 
3. This month, the University of Michigan’s survey recorded a new low in buying conditions for houses, …
 

 
… amid depressed affordability.
 
Source: @TheTerminal, Bloomberg Finance L.P.  
 
However, households are upbeat on house prices over the next five years.
 

 
Home equity has risen in recent years, which could keep savings rates low. (2 charts)
 
Source: SOM Macro Strategies  
 
Source: SOM Macro Strategies  

——————–

 
4. This diagram bridges nominal and real hourly earnings.
 
Source: Arcano Economics  
 
5. There has been a rise in middle-aged Americans behind on their rent payments. (2 charts)
 
Source: Quill Intelligence  
 
Source: Quill Intelligence  

——————–

 
6. A majority of investors do not expect a US recession over the next 18 months.
 
Source: BofA Global Research  


Back to Index

 

The Eurozone

1. The increases in Germany’s ZEW measure of expected economic growth stalled this month.
 

 
The same index at the Eurozone level continues to climb.
 

——————–

 
2. Next, we turn to France, where recent political uncertainties have heightened concerns regarding the nation’s fiscal health.
 
Relative to its euro-area counterparts, France’s debt-to-GDP ratio has increased more rapidly over the past three decades. The accompanying chart includes forecasts from the IMF.
 
Source: @TheTerminal, Bloomberg Finance L.P.  
 
The trend continued over the past five years.
 
Source: Simon White, Bloomberg Markets Live Blog  
 
The French 10-year sovereign yield now exceeds that of its Portuguese counterpart.
 

 
Here is the spread to Spain’s bond.
 

 
French financial stocks have been under pressure relative to European peers.
 

 
It should be noted that under Emmanuel Macron’s leadership, France has achieved lower inflation, stronger employment growth, and reduced poverty rates compared to many of its EU counterparts.
 
Source: @DanielKral1, @OxfordEconomics  

——————–

 
3. Economists have been lowering their 2024 growth forecasts for Ireland, …
 

 
… and boosting estimates for Portugal.
 

——————–

 
4. Here is a look at the drivers of the euro-area CPI (year-over-year).
 
Source: @TheTerminal, Bloomberg Finance L.P.  
 
5. Investors have been rotating into euro-area stocks this month.
 
Source: BofA Global Research  


Back to Index

 

Japan

1. The trade deficit was narrower than expected, …
 

 
… as exports jumped.
 

 
Source: @markets   Read full article  

——————–

 
2. The number of shareholder proposals has increased in recent years.
 
Source: Torsten Slok,¬†Apollo  


Back to Index

 

China

1. Hong Kong stocks are rebounding, but mainland shares continue to drift lower.
 
Source: @TheTerminal, Bloomberg Finance L.P.  
 
2. Business sector output momentum has been soft.
 
Source: Gavekal Research  
 
3. China’s overall R&D expenditure has surpassed Japan and Europe and is on par with the US.
 
Source: BCA Research  


Back to Index

 

Emerging Markets

1. The Brazilian real continues to sink relative to the US dollar.
 

 
2. Chile’s central bank slowed the pace of rate cuts.
 

 
Source: @economics   Read full article  

——————–

 
3. Argentina’s government budget surplus hit a record high last month. Based on the blue-chip (unofficial) exchange rate, the surplus was USD 1.84 billion.
 

 
4. Colombia’s economic growth accelerated in April.
 

——————–

 
5. India’s opposition parties performed surprisingly well in the latest election.
 
Source: The Economist   Read full article  
 
6. The Philippine trade deficit widened sharply in April.
 


Back to Index

 

Commodities

1. Aluminum has been reversing the recent rally as industrial metals weaken.
 

 
This chart show the year-to-date performance for industrial metals.
 
Source: ING  

——————–

 
2. Gold tends to be a good inflation hedge only when inflation is very high.
 
Source: Goldman Sachs; @MikeZaccardi  
 
3. Silver is holding support at the 50-day moving average.
 

 
4. US soft red winter wheat futures dipped below $6 per bushel.
 

 
Source: VettaFi ETF Trends   Read full article  
 
Soybeans have been under pressure as well.
 


Back to Index

 

Energy

1. Brent crude is testing resistance at $85/bbl.
 
Source: @TheTerminal, Bloomberg Finance L.P.  
 
2. Energy tends to be the best inflation hedge.
 
Source: Goldman Sachs; @MikeZaccardi  


Back to Index

 

Equities

1. US indices look overbought. Are we due for a pullback?
 

 
The sharp rebound in the S&P 500 over the past year appears stretched …
 
Source: MRB Partners  
 
… and the rally has been increasingly narrow.
 
Source: PGM Global  
 
The top-weighted S&P 500 stocks continue to make new highs while the majority of constituents are losing upside momentum.
 
Source: Aazan Habib, Paradigm Capital  

——————–

 
2. The US growth premium vs. G10 peers widened during the recent hiking cycle. Numera Analytics expects this premium to narrow next year, …
 
Source: Numera Analytics (@NumeraAnalytics)  
 
… which could reduce the appeal of US stocks vs. DM stocks.
 
Source: MRB Partners  

——————–

 
3. The S&P 500 dividend yield continues to decline.
 

 
Here is the implied dividend yield compared to other markets.
 
Source: Goldman Sachs; @MikeZaccardi  

——————–

 
4. The implied correlation among large-cap stocks keeps sinking.
 

 
5. Investors are less concerned about companies improving their balance sheets and would like to see more cash returned as well as CapEx spending.
 
Source: BofA Global Research  
 
6. Foreign investors bought $67.6 billion worth of US shares in April.
 

 
Foreign investors are increasingly favoring US equities over other US financial assets.
 
Source: @Callum_Thomas, @topdowncharts  

——————–

 
7. Here is a look at the year-end forecasts for the S&P 500 (currently at 5,487).
 
Source: Yahoo Finance   Read full article  
 
8. NVIDIA’s market capitalization has surpassed that of both the UK and France.
 
Source: @DavidInglesTV  


Back to Index

 

Credit

1. The bulk of European refinancing requirements will be in the investment-grade space, mostly in the B and BB-rated bonds. According to PGM Global, a fast pace of rate cuts could ease refinancing pressure since roughly half of speculative-grade debt has a floating rate.
 
Source: PGM Global  
 
2. Commercial real estate is still seen as the most likely source of a systemic credit event.
 
Source: BofA Global Research  
 
By the way, this chart shows US office leasing activity.
 
Source: J.P. Morgan Asset Management  


Back to Index

 

Rates

1. Foreign investors and governments continue to buy US coupon Treasuries, with $75 billion purchased in April.
 

 
2. Treasury term premium has been moving lower.
 


——————–

Back to Index

 

Food for Thought

1. Performance of “Tesla killer” EV companies compared to their all-time highs:
 
Source: @Marlin_Capital  
 
2. Planned changes in social media usage among PR professionals, by platform:
 
Source: @axios   Read full article  
 
3. Declining birth rates:
 
Source: Visual Capitalist   Read full article  
 
4. 2024 has been a warm year so far.
 
Source: @axios   Read full article  
 
5. Perceptions of Indian identity among different religious groups:
 
Source: Pew Research Center   Read full article  
 
6. AI tool usage:
 
Source: Statista  
 
7. Juneteenth celebration plans:
 
Source: @CivicScience   Read full article  
 
Support for including Juneteenth in public school history curriculums:
 
Source: YouGov   Read full article  
 

——————–


Back to Index