June 25, 2024June 25, 2024 by The Daily Shot Editor: Lev Borodovsky

CapEx spending has been tepid despite high profits

The Daily Shot: 25-Jun-24
• The United States
• The United Kingdom
• The Eurozone
• Europe
• Asia-Pacific
• China
• Emerging Markets
• Cryptocurrency
• Commodities
• Energy
• Equities
• Alternatives
• Credit
• Global Developments
• Food for Thought

The United States

1. For the first time, the average economist’s forecast (compiled by Bloomberg) shows less than two full Fed rate cuts by the end of the year.

2. The Dallas Fed’s regional manufacturing index remains in contraction territory.

However, the outlook is improving.

Source: @RenMacLLC

Below is the index of expected new orders.

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3. The “hard” data component of the Citi Economic Surprise Index continues to move lower.

Source: @TheTerminal, Bloomberg Finance L.P.

• Related to the above, Goldman’s Q2 GDP growth tracker dipped below 2% (annualized).

Source: Goldman Sachs; @MikeZaccardi

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4. CapEx spending has been tepid despite high profits.

Source: TS Lombard

5. Household balance sheets are holding up well.

Source: Goldman Sachs; @MikeZaccardi

6. Air travel has been strong relative to previous years.

Source: @ANZ_Research

7. Next, let’s take a look at the US fiscal situation.

• CBO’s new deficit projection:

Source: Oxford Economics

• Slower government spending next year?

Source: BofA Global Research

• The impact of tax cut extensions:

Source: Morgan Stanley Research

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8. The current account deficit unexpectedly widened last quarter.

The United Kingdom

1. The slump in industrial orders eased this month, …

… but exports continue to soften.

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2. The number of UK farm businesses declined since the start of the pandemic.

Source: @financialtimes Read full article

The Eurozone

1. The recovery in German business expectations has stalled.

Here are the trends by sector.

Source: ifo Institute

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2. Dutch house price gains are accelerating.

3. Below is the Citi Economic Surprise Index for the Eurozone and the US.

4. Here is an overview of government debt trends, highlighting the impact of the ECB’s holdings.

Source: @DanielKral1, @OxfordEconomics

Europe

1. Unlike in prior years, the SNB has been avoiding selling the Swiss franc to curb its rapid appreciation, opting to use rate cuts instead. Falling Swiss franc deposits suggest that the SNB is not buying foreign currency.

2. The Czech Republic’s business confidence is recovering.

3. Poland’s employment continues to contract.

4. Here is a look at the EU’s goods trade balance.

Source: Eurostat Read full article

Asia-Pacific

1. Labor force participation has increased among women and the elderly in Japan.

Source: Capital Economics

2. Taiwan’s industrial production was up 16% in May relative to 2023 levels.

• This chart shows Oxford Economics’ forecast for Taiwan’s goods exports.

Source: Oxford Economics

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3. Traders are boosting their bets on the Kiwi dollar.

China

1. Mainland shares are rolling over again. Will we see more buying from government entities?

2. Bond yields continue to sink.

3. Is the weakening of the renminbi acting as a stealth stimulus?

4. Here is a look at China’s EV exports.

Source: S&P Global Market Intelligence

Emerging Markets

1. Mexico’s economic activity registered a pullback in April.

2. Thai exports hit a record high (for May).

3. How correlated are EM equities to US assets?

Source: Oxford Economics

4. A pullback in US bond yields is a tailwind for EM currencies.

Source: Capital Economics

Cryptocurrency

1. Bitcoin tumbled this week but held support at $60k.

• The next major support is near $51.6K.

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2. Bitcoin saw the largest spike in long liquidations since April as the crypto’s price dipped below $63K.

Source: Coinglass

3. The Crypto Fear & Greed Index fell sharply into “fear” territory.

Source: Alternative.me

4. The magnitude of volume being processed and transferred on the Bitcoin network significantly declined after the crypto’s price made an all-time high in March.

Source: Glassnode

5. Crypto funds saw another week of outflows led by long-Bitcoin and Ethereum-focused funds. However, multi-asset funds continued to attract fresh capital. (2 charts)

Source: CoinShares Read full article

Source: CoinShares Read full article

Commodities

1. Traders continue to boost their bets on gold futures.

• Could we see gold at $3,000/oz in the near future?

Source: CNBC Read full article

The options market assigns a 5% probability that gold will reach $3,000 by the end of the year.

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2. Coffee futures are surging again.

3. Cocoa futures saw a massive drop on Monday.

4. Speculators have turned bearish on cotton.

5. Chicago hog futures have been under pressure, …

… as traders unwound their long bets.

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6. US frozen concentrated orange juice prices have accelerated amid reduced production.

Source: Merrill Lynch

Source: CNBC Read full article

• So far, orange juice futures are holding uptrend support after a significant long-term breakout. (2 charts)

Energy

1. US drilling activity has been slowing.

• Rig count:

• Frac spread count:

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2. Could we see a short squeeze in Brent oil futures?

Source: @ANZ_Research

3. The recent decline in US retail gasoline prices has come to an end.

Source: @TheTerminal, Bloomberg Finance L.P.

Equities

1. Tech and semiconductor indices have declined in recent days, driven by a pullback in Nvidia.

• Nvidia’s recent market-cap growth has been massive, …

Source: Deutsche Bank Research

… fueled in part by leveraged plays such as this one.

– The drop has been painful.

– The options market assigns a 30% probability of NVIDIA returning to its highs (of around $140) by the end of the year.

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2. The drop in tech megacaps has been painful for hedge funds.

3. The Fed’s regional manufacturing surveys suggest that the equity rally has been too rapid.

Source: Simon White, Bloomberg Markets Live Blog

4. How do small caps perform around the Fed’s easing?

Source: RBC Capital Markets

5. The range of S&P 500 returns is widest over the 12 months preceding a presidential election.

Source: Merrill Lynch

• VIX typically increases during the three months before election day.

Source: Merrill Lynch

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6. Short interest in the largest ETFs has been crashing.

Source: JP Morgan Research; @GunjanJS

7. The share buyback blackout period is here.

Source: Deutsche Bank Research

Alternatives

1. While the global exit deal count remains weak, exit value is on track to rise this year. (2 charts)

Source: Bain & Company

Source: Bain & Company

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2. Fewer startups have made it from Seed to Series A in under two years.

Source: Carta

Credit

1. There has been a pickup in news stories mentioning US Chapter 11 bankruptcies.

Source: @TheTerminal, Bloomberg Finance L.P.

2. Private credit borrowers’ financial metrics have weakened.

Source: PitchBook

Global Developments

1. Here are the global GDP rankings by Purchasing Power Standard.

Source: Eurostat Read full article

2. Next, let’s take a look at productivity growth since 2010.

Source: Codera Analytics Read full article

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Food for Thought

1. States with the most unemployment benefits claims per 100k workers:

Source: Plus, US Department of Labor

2. “.AI” domain name registrations:

Source: IMF Read full article

3. Global child labor trends from 2000 to 2020 for children aged 5 to 17 in hazardous and other work:

Source: Statista

4. Lyme disease cases:

Source: USAFacts

5. Map of the US resized by the market cap of the largest 100 companies:

Source: BofA Global Research

6. The most visited countries:

Source: Visual Capitalist Read full article

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