The recent rise in unemployment has not coincided with increased layoffs

The Daily Shot: 23-Jul-24
The United States
The United Kingdom
The Eurozone
Europe
Asia-Pacific
China
Cryptocurrency
Commodities
Equities
Alternatives
Credit
Food for Thought



 

The United States

1. Let’s begin with some updates on inflation.
 
Supply-driven inflation continues to trend down.
 
Source: Variant Perception  
 
Economists expect housing inflation to ease further in the second half of the year.
 
Source: Reuters   Read full article  
 
Here is Nomura’s projection for owners’ equivalent rent inflation.
 
Source: Nomura Securities  
 
Market-based inflation expectations have been moving lower.
 

 
This chart illustrates the Fed’s changing statements on inflation during the current cycle.
 
Source: Reuters   Read full article  

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2. The recent rise in unemployment has not coincided with increased layoffs.
 
Source: MRB Partners  
 
This chart shows the contributions to the unemployment rate by status.
 

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3. Many renters are struggling to pay their bills.
 
Source: @WSJ   Read full article  
 
Unemployment is increasingly cited as the reason for consumer delinquency.
 
Source: III Capital Management  

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4. Household formation is running below its multi-year trend.
 
Source: Torsten Slok, Apollo  
 
5. Leading indicators point to improvements in US factory activity.
 
Source: BofA Global Research; @MikeZaccardi  


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The United Kingdom

1. Persistent services inflation is complicating the Bank of England’s efforts to lower rates.
 
Source: @economics   Read full article  
 
For now, the market doesn’t see a rate cut in August.
 
Source: @TheTerminal, Bloomberg Finance L.P.  

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2. Public sector investment is expected to slow over the next few years.
 
Source: @financialtimes   Read full article  
 
3. The number of companies listed in London has been trending lower.
 
Source: @financialtimes   Read full article  
 
4. Here is a look at UK voter shifts between 2019 and 2024.
 
Source: YouGov   Read full article  


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The Eurozone

1. French retail sales were well below last year’s levels in June.
 

 
2. Dutch house price appreciation continues to gain momentum.
 

 
3. German building starts remain subdued.
 
Source: Reuters   Read full article  
 
4. Euro-area hiring intentions have decreased, which could point to slower job growth ahead.
 
Source: Capital Economics  
 
5. Forecasters have lowered their projections for the euro-area unemployment rate.
 
Source: ECB  
 
6. The Eurozone household saving rate has risen in recent quarters.
 
Source: Eurostat   Read full article  


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Europe

1. The Swiss broad money supply has returned to growth.
 

 
2. Here is a look at electricity production by source in the EU.
 
Source: Eurostat   Read full article  
 
3. This chart displays EU imports and exports categorized by the invoicing currency.
 
Source: Eurostat   Read full article  


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Asia-Pacific

1. Taiwan’s export orders slowed last month.
 

 
The nation’s unemployment rate continues to trend lower.
 

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2. This chart provides the contributions to South Korea’s exports.
 
Source: Pantheon Macroeconomics  
 
3. Australia’s consumer confidence improved last week and seems to be on an upward trend.
 
Source: @ANZ_Research  


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China

1. The CSI 300 index faced resistance at its 50-day moving average, with the PBoC’s rate cuts seemingly insufficient to drive prices higher.
 
Source: @TheTerminal, Bloomberg Finance L.P.  
 
Beijing has intensified its attempts to boost stock prices.
 
Source: April Ma; @TheTerminal, Bloomberg Finance L.P.   Read full article  

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2. China’s forward-looking survey data indicate heightened uncertainty for businesses and households.
 
Source: Alpine Macro  
 
3. Local government debt continues to rise, …
 
Source: @WSJ   Read full article  
 
… as deficits widen.
 
Source: @economics   Read full article  

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4. An increasing number of China’s domestically-listed firms are reporting losses (2 charts).
 
Source: @WSJ   Read full article  
 
Source: @WSJ   Read full article  


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Cryptocurrency

1. Here is a look at AUM among the largest US spot-bitcoin ETFs.
 
Source: Semafor  
 
2. US spot-Ether ETFs could begin trading on Tuesday.
 
Source: CoinDesk   Read full article  
 
Source: @JSeyff  

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3. Crypto funds saw another week of inflows led by Bitcoin and Ethereum-focused products.
 
Source: CoinShares   Read full article  
 
4. XRP held long-term support with improving momentum.
 
Source: @StocktonKatie  


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Commodities

China’s rate cuts were insufficient to halt the decline in industrial commodities.
 
Iron ore:
 

 
Steel:
 

 
Aluminum:
 

 
Copper:
 

 
By the way, China continues to flood the markets with cheap copper.
 
Source: Simon White, Bloomberg Markets Live Blog  


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Equities

1. More stocks in the Russell 3000 Index (broad US market) have made new monthly highs vs. lows – the best reading since 2020.
 
Source: Aazan Habib, Paradigm Capital  
 
2. Expectations for tech profit margins continue to increase.
 
h/t @KevRGordon  
 
The market has been increasingly focused on margins rather than growth.
 

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3. Deutsche Bank expects tech earnings to exceed the trend channel during the current earnings season.
 
Source: Deutsche Bank Research  
 
4. S&P 500 forward EPS revisions are adhering to the typical trajectory observed outside of recessions.
 
Source: BofA Global Research  
 
5. The earnings growth differential between the tech mega-caps and the S&P 500 is anticipated to diminish.
 
Source: Goldman Sachs; @WallStJesus  
 
6. Here are the most shorted stocks in the US.
 
Source: S&P Global Market Intelligence  
 
7. This chart shows the projected returns by region according to Capital Economics.
 
Source: Capital Economics  
 
8. US actively-managed large-cap ETFs are underweight tech and overweight industrial and consumer staples sectors.
 
Source: @JSeyff  


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Alternatives

1. Private debt fundraising has slowed.
 
Source: Bloomberg Law   Read full article  
 
However, direct lending remains popular with institutional investors.
 
Source: Private Debt Investor; @theleadleft  

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2. Here is a look at PE dry powder.
 
Source: VRC  
 
3. Private equity EV-to-revenue multiples became less aggressive as the Fed hiked rates.
 
Source: @theleadleft  
 
Median valuations for smaller private equity-backed company transactions have been trending lower.
 
Source: VRC  

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4. The “investor-friendly” US startup environment is starting to tip in favor of startups, driven by a reduction in capital demand vs. supply and a trough in valuation step-ups. (3 charts)
 
Source: PitchBook  
 
Source: PitchBook  
 
Source: PitchBook  

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5. This chart shows the median current and target PE allocations by investor type.
 
Source: Torsten Slok, Apollo  
 
6. PE exits have been weak, …
 
Source: @PaulJDavies, @opinion   Read full article  
 
… depressing cash flow.
 
Source: @PaulJDavies, @opinion   Read full article  

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7. Add-on deals increasingly dominate PE transactions.
 
Source: VRC  
 
8. Here is an overview of the asset mix for state and local government pensions.
 
Source: @WSJ   Read full article  
 
9. This chart shows hedge fund investment by publicly reporting institutions.
 
Source: @TheTerminal, Bloomberg Finance L.P.   Read full article  


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Credit

1. In a sign of increased risk appetite, the spread between Ba and Baa (BB vs. BBB) bonds has reached its lowest level since before the pandemic.
 

 
2. Leveraged loan spreads are tightening but remain above the 2022 lows.
 

 
3. Secondary CLO debt spreads have been tightening.
 
Source: Deutsche Bank Research  
 
4. CMBS issuance is running well ahead of last year’s levels.
 
Source: Deutsche Bank Research  


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Food for Thought

1. The cost of energy by state:
 
Source: Visual Capitalist   Read full article  
 
2. Mattress sales:
 
Source: @axios   Read full article  
 
3. Wildfire risk map:
 
Source: Barclays Research  
 
4. Wealth inequality index scores in 2023 and changes since 2008 in selected countries:
 
Source: Statista  
 
5. Isis attacks:
 
Source: @financialtimes   Read full article  
 
6. The betting market probabilities for the 2024 Democratic vice presidential nomination:
 

 
7. The world’s ten most endangered animals:
 
Source: Visual Capitalist   Read full article  

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