First-time homebuyer share has been rising

The Daily Shot: 20-Jun-24
The United States
The United Kingdom
The Eurozone
Europe
Asia-Pacific
China
Emerging Markets
Energy
Equities
Food for Thought



 

The United States

1. Let’s begin with the housing market.
 
Homebuilder sentiment continues to deteriorate as construction firms anticipate declines in new home sales in the coming months.
 

 
Source: @economics   Read full article  
 
Mortgage applications remain below last year’s levels.
 

 
The total mortgage activity has been down sharply from the 2021 levels, but first-time buyer share has been rising.
 
Source: AEI Housing Center  
 
Metropolitan areas that have experienced an influx in population growth since mid-2022 have responded with an increase in housing supply, …
 
Source: Bank of America Institute  
 
… although rental affordability has deteriorated in some of these areas.
 
Source: Bank of America Institute  

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2. Growth in household wealth could support consumption.
 
Source: Barclays Research; @WallStJesus  
 
US money market funds are disbursing record amounts of cash, boosting household wealth.
 
Source: Torsten Slok,¬†Apollo  
 
Younger generations are experiencing a rise in deposit inflows vs. outflows, according to BofA client data.
 
Source: Bank of America Institute  

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3. Goldman’s Twitter Economic Sentiment Index has diverged from the U. Michigan consumer sentiment indicator.
 
Source: Goldman Sachs; @MikeZaccardi  
 
4. The US labor force is not growing without the contribution of immigration.
 
Source: Torsten Slok,¬†Apollo  
 
5. What policy areas do investors believe will be impacted by the upcoming US election?
 
Source: BofA Global Research  


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The United Kingdom

1. For the first time since 2021, the year-over-year growth in UK CPI has returned to 2%, …
 

 
… amid goods deflation.
 


 
Here are the contributions.
 
Source: @TheTerminal, Bloomberg Finance L.P.  
 
The declines in core inflation have been much slower, …
 

 
… as services inflation remains sticky.
 

 
Housing inflation continues to run hot.
 

 
Retail sector inflation is still slowing.
 

 
Producer prices are rising again.
 

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2. UK home price appreciation remains tepid.
 


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The Eurozone

1. Investors remain nervous about French assets ahead of the elections.
 
France – Germany 10-year bond spread:
 

 
French sovereign yield vs. the EUR interest rate swap:
 

 
Greek spread to France (now only 10 basis points).
 

 
The CAC/DAX ratio:
 

 
CAC vs. DAX implied volatility:
 
Source: @TheTerminal, Bloomberg Finance L.P.  
 
French financial companies:
 

 
This chart displays the trends in French government revenue and expenditures.
 
Source: @DanielKral1, @OxfordEconomics  

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2. Option traders now demand the largest premium to protect against EUR/USD downside since late-2022.
 
Source: Convera  
 
The V2X/VIX ratio remains elevated (V2X refers to the Euro STOXX 50 Volatility Index).
 

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3. The Dutch unemployment rate surprised to the downside.
 

 
4. Euro-area construction output continues to run below last year’s levels.
 


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Europe

1. The SNB unexpectedly cut rates, …
 

 
… sending the Swiss franc and Swiss bond yields lower.
 

 

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2. Sweden’s unemployment rate surprised to the downside.
 

 
3. Here is a look at early leavers from education and training in the EU.
 
Source: Eurostat   Read full article  


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Asia-Pacific

1. The yen continues to weaken, …
 

 
… with dollar-yen diverging from the yield differentials. Is the yen oversold?
 
Source: @TheTerminal, Bloomberg Finance L.P.  

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2. New Zealand’s economy returned to growth last quarter.
 


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China

1. The renminbi continues to weaken.
 

 
2. The market is increasingly pricing monetary easing in China as the 2-year government bond yield keeps drifting lower.
 

 
3. The rally in China’s domestic shares has fizzled out.
 

 
4. Steel prices are softer amid weakness in the housing market.
 

 
5. Developers continue to struggle to raise capital.
 
Source: Eric Zhu, @TheTerminal, Bloomberg Finance L.P.   Read full article  
 
6. Consumer sentiment regarding spending and house prices remains depressed.
 
Source: Longview Economics  


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Emerging Markets

1. Brazil’s central bank held rates unchanged despite mounting political pressures to ease more aggressively.
 

 
Source: Barrons   Read full article  

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2. Argenitna’s leading index jumped in May.
 

 
The trade surplus hit a record high as exports strengthened.
 

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3. According to the Russian government, consumer sentiment has reached a multi-year high. Be happy or else …
 

 
4. Here is a look at the average salary for production managers across selected countries.
 
Source: Matthews Asia   Read full article  


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Energy

1. The options market does not assign a high probability to a $100 oil this year.
 

 
2. The EIA expects a modest global oil surplus next year, which could trigger a gradual decline in prices.
 
Source: @EIAgov  
 
3. US natural gas prices are forecasted to rise in the summer mainly because of relatively flat production and a seasonal increase in demand from the power sector.
 
Source: @EIAgov  
 
However, the EIA expects US natural gas storage inventories to remain above the five-year average, which could eventually limit the rise in prices.
 
Source: @EIAgov  

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4. US electric power coal inventories remain at the top of the prior five-year range.
 
Source: @EIAgov  


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Equities

1. It has been 333 trading sessions since the S&P 500 last experienced a 2% decline in a single day., …
 

 
… or a 2.5% decline in the Nasdaq Composite.
 

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2. Technical indicators are increasingly signaling a market pullback.
 
Source: @MacroCharts  
 
3. Tech valuations are at the highest level since the dot-com bubble.
 

 
Here is a look at mega-cap valuations.
 
Source: Goldman Sachs; @MikeZaccardi  
 
Fund managers have been reducing their tech exposure.
 
Source: BofA Global Research  

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4. Earnings growth for mega-caps is expected to decelerate, aligning closer to the S&P 500 median.
 
Source: Goldman Sachs; @MikeZaccardi  
 
The correction in ISM new orders could weigh on S&P 500 real earnings growth.
 
Source: Numera Analytics (@NumeraAnalytics)  

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5. The momentum factor outperformance has been remarkable.
 


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Food for Thought

1. Completed US apartment conversions by source:
 
Source: @axios   Read full article  
 
2. Carnival’s income statement per passenger:
 
Source: @chartrdaily  
 
3. Population growth in US cities with over 250k residents:
 
Source: Brookings   Read full article  
 
4. Population pyramids:
 
Source: @financialtimes   Read full article  
 
5. Illegal drug seizures in Europe:
 
Source: @financialtimes   Read full article  
 
6. States with abortion ballot measures in 2024:
 
Source: @axios   Read full article  
 
7. The US political landscape based on Twitter content (each circle represents an account; size is based on the number of followers):
 
Source: BofA Global Research  
 
8. Burger prices:
 
Source: Goldman Sachs; @MikeZaccardi  
 

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