Multifamily housing starts are down over 50% from last year

The Daily Shot: 21-Jun-24
The United States
The United Kingdom
The Eurozone
Europe
Japan
Asia-Pacific
China
Emerging Markets
Cryptocurrency
Commodities
Energy
Equities
Credit
Food for Thought



 

The United States

1. Initial jobless claims have been a bit firmer lately.
 

 
Source: Pantheon Macroeconomics  
 
Continuing claims keep diverging from the trends we’ve seen in recent years.
 

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2. The Philly Fed’s regional manufacturing report showed a mixed picture.
 
The headline index registered a slowdown.
 

 
Demand appears to be firmer.
 

 
Employee hours improved.
 

 
The index of expected shipments hit the lowest level since the GFC.
 

 
More firms are reporting higher prices.
 

 

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3. US real hourly wages have been trending higher.
 

 
4. Housing starts dipped well below last year’s levels in May.
 

 

 
Here is the seasonally adjusted index.
 

 
Source: @economics   Read full article  
 
While construction activity has declined across the board, multifamily housing has been particularly hard hit. Starts are at multi-year lows, …
 

 
… down almost 52% from a year ago.
 

 
Multifamily building permits are also at multi-year lows, …
 

 
… amid a softer rental market.
 
Source: Pantheon Macroeconomics  
 
This chart illustrates the trends in single-family and multifamily housing permits, seasonally adjusted.
 
Source: @TheTerminal, Bloomberg Finance L.P.  

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5. The Citi Economic Surprise Index hit its lowest level since 2022.
 

 
Bloomberg’s economic surprise index is also at multi-year lows.
 

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6. The US dollar continues to strengthen. Bloomberg’s dollar index reached its highest level of the year.
 


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The United Kingdom

1. The BoE left rates unchanged, striking a somewhat dovish tone. The market expects a rate cut in August.
 

 
Source: CNBC   Read full article  
 
Here is the market expectation for the year-end base rate.
 

 
The pound weakened
 

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2. Consumer sentiment has been improving.
 


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The Eurozone

1. Consumer confidence improvements have been slower than expected.
 

 
2. Over the next 12 months, a large share of European consumer loans will reset to higher interest rates.
 
Source: BCA Research  
 
3. Spain’s mortgage approvals hit a multi-year high in April.
 

 
4. This chart shows the negative impact of policy tightening on the euro area economy, particularly housing and business investment.
 
Source: TS Lombard  


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Europe

1. Norway’s central bank struck a hawkish tone.
 
Source: @WSJ   Read full article  
 
The Norwegian krone and Norway’s bond yields moved higher.
 

 

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2. New vehicle registrations in the EU dipped below last year’s levels.
 

 
3. Next, we have the EU-China trade in new electric vehicles.
 
Source: PIIE   Read full article  
 
4. Here is a look at changes in livestock populations in the EU.
 
Source: Eurostat   Read full article  


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Japan

1. The yen continues to weaken, causing unease in both Tokyo and Washington.
 

 
Source: Reuters   Read full article  
 
Source: @markets   Read full article  

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2. The headline CPI increased, driven by higher fuel and utilities costs, yet it remained below forecasts. Meanwhile, core inflation continues to moderate.
 

 

 
Source: @WSJ   Read full article  

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3. The manufacturing activity barely grew in June as price increases accelerated.
 

 

 
Source: Reuters   Read full article  
 
Services moved into contraction for the first time since 2022.
 


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Asia-Pacific

1. Taiwan’s export orders remain well above last year’s levels.
 

 
2. South Korea’s exports hit a new high for the month of June.
 

 
Here is South Korea’s current account balance with the US and China.
 
Source: @economics   Read full article  

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3. Australia’s manufacturing activity moved deeper into contraction territory.
 

 
Service sector growth slowed.
 


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China

1. Foreigners have been selling mainland shares.
 
Source: @markets   Read full article  
 
2. The credit impulse has turned negative again, largely reflecting the slowdown in social financing.
 
Source: Longview Economics  


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Emerging Markets

1. The Indian rupee hit a record low vs. USD.
 

 
Source: @markets   Read full article  

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2. Mexican retail sales strengthened in April.
 

 
3. There have been wide divergences within the EM currency space.
 
Source: MRB Partners  


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Cryptocurrency

1. So far, it has been a mixed quarter for cryptos, with Ether (ETH) outperforming and XRP underperforming top peers.
 
Source: FinViz  
 
2. ETH/USD remains stuck below resistance, which prevented a swift retest of the 2021 all-time-high.
 

 
3. There has been a pickup in ETH long liquidations as the crypto pulled back from the $3,983 resistance level.
 
Source: Coinglass  
 
4. Liquidity among memecoins reached an all-time high earlier this month before retreating slightly.
 
Source: @KaikoData  
 
5. Stablecoin issuers have become an emerging source of demand for Treasury notes.
 
Source: CoinDesk   Read full article  


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Commodities

1. Here are some updates on copper.
 
Investors remain bullish.
 
Source: @markets   Read full article  
 
China is importing scrap copper …
 
Source: @markets   Read full article  
 
… and flooding the market with cheap copper exports.
 
Source: Yahoo Finance, @markets   Read full article  

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2. Wheat prices remain under pressure.
 

 
Russia has been gaining wheat market share at Ukraine’s expense.
 
Source: @JLeeEnergy, @markets   Read full article  


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Energy

US inventories of crude oil and refined products declined last week.
 

 
Here are the levels.
 

 
US gasoline demand has firmed up.
 

 
Refinery runs eased last week.
 


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Equities

1. A lot of options contracts are expiring today
 
Source: Goldman Sachs; @WallStJesus  
 
2. This chart shows the cumulative count of record highs by year for the S&P 500 and the S&P 500 Equal Weight Index.
 

 
3. The current bull market has caught up to the average trend.
 
Source: Simon White, Bloomberg Markets Live Blog  
 
4. There has been talk of the S&P 500 hitting 6,000.
 
Source: @markets   Read full article  
 
The options market estimates roughly a 20% probability that the S&P 500 will exceed 6000 by year-end. The index is similarly likely to fall below 5000.
 

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5. Retail investors are relatively bullish.
 

 
But retail stock purchases have slowed in recent months.
 
Source: Vanda Research  
 
Meme stocks have been sinking.
 

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6. The Treasury’s cash balance at the Fed has increased, …
 

 
… which tends to reduce liquidity. This chart shows the Fed reserve balances.
 
Source: @TheTerminal, Bloomberg Finance L.P.  
 
And broader liquidity growth has been tepid. Will this create a drag on stocks?
 

 
Perhaps global liquidity will help?
 
Source: Simon White, Bloomberg Markets Live Blog  
 
What happens when short-term rates decline and investors in money market funds begin searching for the next destination for their capital?
 
Source: BofA Global Research  

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7. The average SP 500 stock valuation discount to the index continues to widen.
 
Source: @TheTerminal, Bloomberg Finance L.P.  
 
8. Here is a look at the trajectory of consensus earnings revisions.
 
Source: Goldman Sachs; @MikeZaccardi  
 
9. Earnings expectations for small caps have recently increased, yet they continue to lag behind the trend for large caps.
 
Source: @TheTerminal, Bloomberg Finance L.P.  


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Credit

1. Investors have started getting out of leverage loans as the market expects Fed rate cuts ahead (leverage loans are a floating rate product).
 
Source: BofA Global Research  
 
Source: BofA Global Research  

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2. Here is a look at US corporate bond issuance.
 
Source: Torsten Slok,¬†Apollo  


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Food for Thought

1. US Employee Motivation and Commitment Index:
 
Source: ADP   Read full article   Further reading  
 
2. Countries offering digital nomad visas and length of stay allowed:
 
Source: Visual Capitalist   Read full article  
 
3. Police and sheriff’s patrol officer wages adjusted for cost of living:
 
Source: USAFacts  
 
4. Youth voter sentiment on election impact in the US:
 
Source: Semafor  
 
5. Change in crime rates:
 
Source: @Crimealytics  
 
6. Percentage of households renting in selected countries:
 
Source: The Economist   Read full article  
 
7. Density of hail events:
 
Source: @bbgvisualdata   Read full article  
 

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Have a great weekend!


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