The Daily Shot: 07-Aug-24
• The United States
• Canada
• The United Kingdom
• The Eurozone
• Japan
• Asia-Pacific
• China
• Emerging Markets
• Energy
• Equities
• Credit
• Rates
• Global Developments
• Food for Thought
The United States
1. Let’s begin with some household finance trends.
• Transitions into credit delinquencies continue to rise for both credit card and auto debt.
Source: @TheTerminal, Bloomberg Finance L.P.
Source: @axios Read full article
The increases have been particularly sharp among younger Americans.
Source: @TheTerminal, Bloomberg Finance L.P.
• Student debt delinquencies remain low due to government support.
Here are the student debt delinquency transition percentages by age.
Source: Federal Reserve Bank of New York
• Mortgage foreclosures remain low.
Source: Federal Reserve Bank of New York
– Fewer households with weaker credit scores are able to secure mortgage financing.
Source: Federal Reserve Bank of New York
• Consumers anticipate spending less on discretionary items.
Source: The Conference Board
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2. The trade deficit eased in June as exports rose.
The US non-petroleum trade deficit is $100 billion.
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3. Government spending is down on a year-over-year basis.
Source: BofA Global Research
4. According to BofA, the yield curve signals an increased likelihood of a hard landing.
Source: BofA Global Research
• Currently, the Atlanta Fed’s GDPNow model estimate for Q3 growth is holding at 2.9% annualized, showing no signs of a hard landing.
Source: Federal Reserve Bank of Atlanta
Estimates for consumer spending (PCE goods and services) remain robust.
Source: @TheTerminal, Bloomberg Finance L.P.
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Canada
1. Will the S&P/TSX Composite Index hold the uptrend support?
Source: @TheTerminal, Bloomberg Finance L.P.
2. Speculative traders hold extreme bets against the loonie. A crowded trade?
3. The services PMI remains in contraction territory.
Service sector hiring stalled in July.
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4. The trade balance unexpectedly swung into surplus in June.
Source: @economics Read full article
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The United Kingdom
1. Construction activity accelerated in July, exceeding forecasts.
2. Here is a look at prison population vs. capacity.
Source: The Economist Read full article
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The Eurozone
1. Let’s begin with Germany.
• Industrial production improved in June but remained near post-COVID lows.
• Exports declined for the second month in a row, surprising to the downside.
• The construction sector remains in recession.
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2. French stocks hit the lowest level since last November.
3. Who holds Italian government debt?
Source: IMF Read full article
4. Eurozone retail sales volume declined in June.
5. Improving sentiment points to a recovery in euro-area business investment after a sharp contraction late last year.
Source: ECB
• Housing investment remains weak, but there are some signs of stabilization.
Source: ECB
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6. Here is a look at the ECB’s net purchases of government debt by country since July of 2022.
Source: @DanielKral1, @OxfordEconomics
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Japan
1. The BoJ struck a dovish tone amid market volatility.
Source: @economics Read full article
• JGB yields and the yen declined.
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2. Here is a look at the BoJ’s history of interventions in the currency markets.
Source: Capital Economics
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Asia-Pacific
1. Asian stocks’ correlation to the S&P 500 jumped in recent days.
h/t @richwesgoodman
2. New Zealand’s unemployment rate continues to climb.
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China
1. Retail sales volume is improving, particularly among luxury goods and apparel.
Source: China Beige Book
2. China Beige Book’s inflation gauge continues to rise year-over-year. Higher input costs and wage inflation could pressure margins.
Source: China Beige Book
3. Fearing US sanctions, Chinese banks are increasingly reluctant to lend to Russian companies, driving up their borrowing costs.
Source: @x1skv Read full article
4. Here is a look at outbound foreign direct investment.
Source: The Economist Read full article
5. Finally, we have trends in venture capital investments in China by investor origin.
Source: The Economist Read full article
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Emerging Markets
1. Let’s start with some updates on Chile.
• Manufacturing production hit a multi-year low in June.
• Copper output is back below last year’s levels.
• Retail sales surged in June.
• The overall economic activity improved.
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2. Brazil’s exports hit a multi-year high last month.
3. Mexico’s vehicle exports are down on a year-over-year basis.
4. Argentina’s vehicle sales climbed above last year’s levels.
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Energy
1. Crude oil failed to rebound with stocks despite geopolitical tensions.
Source: @TheTerminal, Bloomberg Finance L.P.
2. US gasoline demand remains elevated.
Source: Goldman Sachs; @MikeZaccardi
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Equities
1. Futures are higher this morning, but the rebound has been choppy.
2. The recent selloff has been sharper than the average.
Source: Goldman Sachs; @MikeZaccardi
• The S&P 500 had one of its best starts this year and remains above the median trend even after the selloff.
Source: Goldman Sachs; @MikeZaccardi
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3. Small caps and the S&P 500 Equal Weighted Index failed to break out.
Source: BCA Research
4. The Russell 3,000 Index (broad US market) appears oversold.
Source: Aazan Habib, Paradigm Capital
5. The S&P 500 tends to bottom around the Sahm Rule recession trigger date.
Source: Macrobond
6. How frequent are 5%, 10%, 15%, and 20% market pullbacks?
Source: BofA Global Research; @MikeZaccardi
7. Hedge funds bought the dip on Monday.
Source: @markets Read full article
8. The S&P 500 futures liquidity has deteriorated.
Source: Goldman Sachs; @dailychartbook
9. The average retail portfolio is underwater year-to-date.
Source: JP Morgan Research; @WallStJesus
10. Next, we have some updates on the recent spike in volatility.
• VIX typically spikes around the late stage of the Fed’s hiking cycle …
Source: Deutsche Bank Research
… and ahead of elections.
Source: Citi Private Bank
• Historically, a top-decile VIX reading has led to a near-term bounce in stocks. (2 charts)
Source: @Todd_Sohn
Source: @Todd_Sohn
Here is a look at the S&P 500 returns following a 2+ standard deviation VIX spike.
Source: Alpine Macro
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Credit
1. High-yield debt implied volatility has been lagging behind that of the S&P 500.
2. Here is a look at European leveraged loan and high-yield bond issuance.
Source: @TheTerminal, Bloomberg Finance L.P. Read full article
3. US leveraged loan default rates have been trending lower.
Source: Torsten Slok, Apollo
However, the overall Chapter 11 filings have been rising.
Source: @markets Read full article
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4. Banks are still tightening standards on commercial real estate (CRE) loans, …
Source: @TheTerminal, Bloomberg Finance L.P.
… and demand for credit in this sector remains soft.
Source: @TheTerminal, Bloomberg Finance L.P.
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Rates
1. Open interest in 10-year Treasury futures is near record highs.
Source: @markets Read full article
2. The copper-to-gold ratio points to more downside for Treasury yields.
Source: @TheTerminal, Bloomberg Finance L.P.
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Global Developments
1. Here is a look at recent market moves in standard deviations.
Source: Goldman Sachs; @MikeZaccardi
2. Carry trades financed with yen loans have grown substantially since the GFC.
Source: BIS Read full article
3. Commodity currencies are holding downtrend resistance vs. USD.
Source: BCA Research
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Food for Thought
1. Solar share of global electricity generation:
Source: Ember Read full article
2. Global smartphone market share of top five manufacturers:
Source: Counterpoint Research Read full article
3. Impact of spreadsheet software on job trends in accounting and analysis:
Source: @WSJ Read full article
4. Percentage of US workers earning less than $17 per hour by state:
Source: @axios Read full article
5. Sectors with the highest and lowest share of job postings advertising benefits:
Source: Indeed Hiring Lab
6. Teen births and female dropout rates in the US:
Source: Merrill Lynch
7. States with the highest average lottery spending per person:
Source: Lottery Geeks
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