Older Americans increasingly worry about job loss

The Daily Shot: 09-Jul-24
The United States
Canada
The United Kingdom
The Eurozone
Japan
China
Emerging Markets
Cryptocurrency
Commodities
Equities
Credit
Food for Thought



 

The United States

1. The NY Fed’s consumer survey showed easing 1-year US inflation expectations, while the 3-year index increased.
 

 
Households’ earnings expectations rebounded.
 

 
Fewer households expect to be worse off financially over the next 12 months.
 

 
Some middle-class families are concerned about not being able to make the minimum payments on their debt.
 

 
Older Americans are increasingly worried about losing their jobs.
 
Source: @TheTerminal, Bloomberg Finance L.P.  

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2. Next, we have some updates on the labor market.
 
Here is an overview of the contribution to the US unemployment rate by status and age.
 
Source: @TheTerminal, Bloomberg Finance L.P.  
 
Source: @TheTerminal, Bloomberg Finance L.P.  
 
Is the recent increase in the US unemployment rate signaling a higher risk of recession? Here is the Sahm Rule Recession Indicator.
 

 
The employment decline in temp help services has accelerated in recent months.
 

 
This chart shows how many Americans work part-time for “economic” reasons.
 

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3. Consumer credit growth in May exceeded forecasts.
 

 
Nominal and real credit card balances climbed.
 

 
Credit card debt as a share of disposable income remains below pre-COVID levels.
 

 
The average credit card rate is holding near 23%.
 

 
Student debt held by the federal government remains below last year’s levels.
 

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4. Bloomberg’s US economic surprise index remains near the lowest levels since 2015.
 

 
5. Apartment vacancy rates are holding above pre-COVID levels.
 
Source: Apartment List  
 
6. Younger investors made more financial adjustments amid higher rates, according to a BofA survey of wealthy Americans.
 
Source: Bank of America Institute  
 
Survey respondents have a brighter outlook on stocks than inflation and GDP growth.
 
Source: Bank of America Institute  


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Canada

1. Services PMI suddenly moved into contraction territory last month.
 

 
Price pressures are easing.
 

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2. The Ivey PMI, which includes public organizations, showed robust activity in June.
 

 
3. Here is a look at GDP per capita (2 charts).
 
Source: Economics and Strategy Group, National Bank of Canada  
 
Source: Economics and Strategy Group, National Bank of Canada  


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The United Kingdom

1. Retail sales slowed last month.
 

 
Source: Reuters   Read full article  

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2. Temp agency billings stabilized in June, but permanent placements continued to slow.
 
Source: S&P Global PMI  
 
3. This chart displays UK firms’ expectations for output price gains.
 

 
4. Home prices are now drifting lower.
 
Source: S&P Global PMI  
 
5. London has been a drag on UK productivity growth.
 
Source: @financialtimes   Read full article  


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The Eurozone

1. Here is a look at French election results since 2012.
 
Source: @bpolitics   Read full article  
 
French stocks resumed their underperformance vs. Germany amid political uncertainty.
 

 
However, large French firms derive the bulk of their income from abroad.
 
Source: @JeffreyKleintop  
 
French manufacturing output tumbled in May.
 

 
France’s trade deficit widened in May.
 

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2. German trade surplus exceeded expectations, …
 

 
… as imports dropped more than exports.
 
Source: @TheTerminal, Bloomberg Finance L.P.  
 
Germany’s trade surplus in goods returned to pre-pandemic levels in real terms, while the manufacturing base has declined.
 
Source: Deutsche Bank Research  

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3. The Sentix index of investor confidence declined this month.
 


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Japan

1. The Nikkei hit a record high.
 

 
2. The Economy Watchers Expectations index improved last month.
 

 
3. The broad money supply growth continues to slow.
 


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China

1. Tax revenue from individuals and corporations remains weak. (2 charts)
 
Source: Barclays Research  
 
Source: Barclays Research  
 
2. Hong Kong’s business activity is contracting.
 


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Emerging Markets

1. Let’s begin with some updates on Chile.
 
Manufacturing production (unexpected decline in May):
 

 
Copper production (above 2023 levels):
 

 
Retail sales (softer than expected):
 

 
Economic activity (drifting lower):
 

 
CPI (unexpected decline in June):
 

 
Business confidence (softer):
 

 
Trade balance (higher than expected surplus):
 

 
Unemployment (below 2023 levels):
 

 
Vehicle sales (soft):
 

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2. Mexican formal job creation has been weak.
 

 
Capital investment is near record highs.
 

 
The Mexican budget deficit has been much wider than in previous years.
 

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3. South Africa’s electricity production is running above last year’s levels.
 

 
4. Turkey’s core inflation has finally peaked.
 


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Cryptocurrency

1. Crypto funds saw inflows last week, mostly via US bitcoin ETFs. (2 charts)
 
Source: CoinShares   Read full article  
 
Source: CoinShares   Read full article  

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2. The magnitude of unrealized gains vs. losses among BTC traders sharply declined after reaching extreme levels earlier this year – consistent with prior cyclical price peaks.
 
Source: @glassnode  


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Commodities

1. Corn and soybean futures have been under pressure.
 

 

 
Source: @markets   Read full article  
 
Speculative accounts boosted their bets against corn.
 

 
Wheat futures have also been moving lower.
 

 
Here is a look at US wheat exports.
 
Source: USDA   Read full article  

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2. Coffee futures have been surging.
 

 

Reuters: – Robusta and arabica coffee futures on ICE rose sharply on Monday, buoyed by supply tightness driven by slow exports from Vietnam and weather issues …

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3. Gold and copper are entering a seasonally strong period. (2 charts)
 
Source: Aazan Habib, Paradigm Capital  
 
Source: Aazan Habib, Paradigm Capital  
 
Gold funds are seeing strong inflows.
 
Source: BofA Global Research  


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Equities

1. Some analysts are beginning to talk about a correction in stocks.
 
Source: @markets   Read full article  
 
The options implied probability of a 10% correction in the S&P 500 by late September is less than 8%. That’s good news for those who want to buy some downside protection.
 

 
The 60-day S&P 500 put implied volatility for a 10% correction is at its lowest level since early 2018.
 

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2. How stretched could valuations get for the SP 500? The long-term PE ratio top appears to be around 38.5x (we are currently at 34x).
 

 
Based on its long-term P/E ratio, the S&P 500 valuation premium to its average member is the highest since the dot-com bubble.
 

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3. How much of the S&P 500 returns can be attributed to the Magnificent 7 stocks?
 

 
The S&P 500 equal-weight index has recently been underperforming the S&P 500 ex Magnificent 7. It’s not all about the tech megacaps.
 

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4. Here is another look at market concentration.
 
Source: @biancoresearch  
 
The S&P 500 has decoupled from market breadth.
 
h/t @LizThomasStrat  

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5. Correlations among S&P 500 members continue to trend lower.
 
Realized:
 

 
Implied:
 

 
That’s causing the divergence between the implied volatility of individual stocks and the index vol.
 
Source: CBOE; @WallStJesus  

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6. Summer months are typically positive for the S&P 500 during election years.
 
Source: @RyanDetrick  
 
7. Retail investors’ share of trading activity remains elevated.
 
Source: @BW   Read full article  
 
Retail investors’ overall buying activity has been subdued.
 
Source: Vanda Research  
 
But they continue to buy the dip.
 
Source: Vanda Research  


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Credit

1. Large US banks accumulated a growing amount of commercial real estate (CRE) in off-balance sheet exposure, including many loans to REITs.
 
Source: PGM Global  
 
2. IG bond fund flows have been strong.
 
Source: BofA Global Research  
 
3. Leveraged loan funds are also seeing substantial inflows (2 charts).
 
Source: BofA Global Research  
 
Source: BofA Global Research  


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Food for Thought

1. Global data centers’ electricity use:
 
Source: @bbgvisualdata   Read full article  
 
2. Percentage of webpages no longer accessible:
 
Source: Pew Research Center   Read full article  
 
3. Projections for global semiconductor revenue:
 
Source: @WSJ   Read full article  
 
The semiconductor industry market share by activity and region:
 
Source: @WSJ   Read full article  

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4. Who uses TikTok as a news source?
 
Source: Statista  
 
5. Percentage of jobs within each industry that have a higher potential for automation:
 
Source: @business   Read full article  
 
6. Global sea temperatures:
 
Source: Deutsche Bank Research  
 
7. 2024 US presidential election poll results in swing states:
 
Source: @bpolitics   Read full article  
 
US presidential election probabilities in the betting markets:
 
Source: @TheTerminal, Bloomberg Finance L.P.  

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8. Evolution of Pepsi’s logo:
 
Source: Webflow   Read full article  
 

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