The Daily Shot: 29-Jul-24
• The United States
• Canada
• The Eurozone
• Europe
• China
• Emerging Markets
• Commodities
• Energy
• Equities
• Credit
• Global Developments
• Food for Thought
The United States
1. The June PCE inflation report was in line with forecasts, boosting rate cut expectations.
Source: Reuters Read full article
• Housing inflation slowed.
• Here are the contributions to the supercore PCE inflation measure.
Source: @TheTerminal, Bloomberg Finance L.P.
• The gap between the proportions of items experiencing price increases and decreases has significantly narrowed.
Source: Deutsche Bank Research
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2. The market is now pricing over 70 bps of Fed rate cuts this year, …
… with a chance of a 50 bps rate reduction in September.
• Here is the market-based distribution of rate outcomes at the end of the year.
– Below is Morgan Stanley’s estimate of rate outcome probabilities.
Source: Morgan Stanley Research
• The 2-year Treasury yield continues to trend lower.
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3. Consumer spending increased less than expected in June but remains resilient.
• This chart shows real consumer spending on goods and services.
Source: @TheTerminal, Bloomberg Finance L.P.
• Here is a look at real disposable income and consumer spending levels.
Source: @TheTerminal, Bloomberg Finance L.P.
• Personal savings as a percentage of disposable income remains well below pre-COVID levels.
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4. Next, let’s take a look at the trends in US federal government spending through 2023 (from CBO).
• Total spending (nominal):
• Total spending as a share of GDP:
• Discretionary spending:
• Mandatory spending:
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Canada
1. Household debt remains high versus other G7 nations.
Source: OECD
2. Speculative accounts continue to increase their bets against the loonie.
3. Canada has a lot of researchers.
Source: TLDR
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The Eurozone
1. French consumer confidence improved in July.
2. Italian consumer sentiment continues to climb, …
… but the overall economic sentiment is drifting lower.
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3. Spain’s retail sales were down on a year-over-year basis in June.
• The unemployment rate hit the lowest level in years.
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4. Euro-area services inflation has been driven by volatile components this year.
Source: Nomura Securities
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Europe
1. Sweden’s GDP unexpectedly declined last quarter, resulting in a technical recession.
• The Swedish krona declined further last week, …
… with EUR/SEK testing resistance at the May peak.
Source: @TheTerminal, Bloomberg Finance L.P.
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2. House prices across the EU have started to rise again.
Source: Eurostat Read full article
3. Here is a look at organic farming in the EU.
Source: Eurostat Read full article
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China
1. China has lost its edge on labor costs vs. other EMs.
Source: Oxford Economics
• This chart shows labor disputes over time.
Source: @financialtimes Read full article
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2. Here is a look at factors attributed to poverty in China.
Source: Big Data China Read full article
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Emerging Markets
1. Economists have been reducing their forecasts for rate cuts in Latin American economies this year.
• Brazil (the central bank is on hold):
• Chile:
• Mexico:
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2. Mexican trade balance unexpectedly swung into deficit in June as exports eased.
3. Economists see a sharp decline in Argentina’s consumer spending this year.
4. Russia’s central bank hiked rates by 200 bps.
5. Speculative accounts are boosting their bets on the South African rand.
6. India’s logistics infrastructure is catching up with China’s, while Mexico has weakened.
Source: Oxford Economics
7. Capital Economics expects EM Asia economies to outperform, while LatAm will likely lag.
Source: Capital Economics
8. Next, we have some performance data from last week.
• Currencies:
• Bond yields:
• Equity ETFs:
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Commodities
1. Grain prices continue to struggle.
• Wheat:
• Soybeans:
• Bloomberg’s grains index:
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2. Speculative accounts are now bearish on cotton and rice.
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3. Rising inventories at Chinese ports and bearish sentiment weighed on iron ore prices.
Source: Numera Analytics (@NumeraAnalytics)
4. Gold funds are seeing robust inflows.
Source: BofA Global Research
5. Here is last week’s performance across key commodities.
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Energy
1. Brent crude continues to trade below its 200-day moving average.
Source: @TheTerminal, Bloomberg Finance L.P.
2. Hedge funds are cutting their bets on gasoline futures.
Source: @markets Read full article
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3. Here is a look at US jet fuel consumption.
Source: @EIAgov
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Equities
1. The rotation from mega-cap stocks to smaller-capitalization shares continues.
However, tech positioning remains elevated.
Source: Deutsche Bank Research
2. It’s been a good month for small caps.
Source: @markets Read full article
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3. Deutsche Bank’s overall positioning index declined last week but remains in bullish territory.
Source: Deutsche Bank Research
Fund flows point to elevated risk appetite.
Source: Deutsche Bank Research
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4. Those call option bets haven’t worked out well.
Source: Deutsche Bank Research
5. Realized correlations have been rebounding. Here is the 3-month correlation among Nasdaq 100 stocks.
6. There are a lot of retail stock portfolios greater than $500k in value.
Source: Torsten Slok, Apollo
7. Next, we have some performance data from last week.
• Sectors:
• Equity factors:
• Macro basket pairs’ relative performance:
• Thematic ETFs:
• Largest tech firms:
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Credit
1. Leveraged loan funds continue to see strong inflows.
Source: BofA Global Research
2. CLO new-deal volume set a record pace this year, although issuance has slowed since May. According to PitchBook, a dearth of M&A and LBO-related leveraged loans has squeezed the supply of net new assets available for CLO managers.
Source: PitchBook
3. Here is last week’s performance across select credit asset classes.
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Global Developments
1. The Yen Carry Trade Return Index declined alongside the Nasdaq 100 and gold, although uptrend support could stabilize these assets over the short term.
Source: Aazan Habib, Paradigm Capital
2. Here is a look at the Gini Coefficient (inequality) in select economies.
Source: Big Data China Read full article
3. Next, we have some performance data from last week.
• Currencies:
• Bond yields:
• Equities:
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Food for Thought
1. Job postings for software developers:
Source: @axios Read full article
2. Low-wage workers in each state:
Source: Visual Capitalist Read full article
3. States with the largest population declines between 2022 and 2023:
Source: Visual Capitalist Read full article
4. Annual estimates of same-sex couple households in the US:
Source: @axios Read full article
5. Expansion of public fast-charging stations:
Source: @climate Read full article
6. Democratic vice presidential nomination probabilities in the betting markets:
Source: @TheTerminal, Bloomberg Finance L.P.
7. Medal distribution in the Summer Olympics (historical data and a 2024 forecast):
Source: The Economist Read full article
• Top medal winners in the Summer Olympics by medals per GDP and per population:
Source: The Economist Read full article
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