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 GlobalĀ PMI
3. This chart displays UK firms’ expectations for output price gains.
4. Home prices are now drifting lower.
Source: S&P GlobalĀ 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 ā¦
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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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