The Daily Shot: 12-Aug-24
• The United States
• Canada
• Europe
• Japan
• China
• Emerging Markets
• Commodities
• Energy
• Equities
• Credit
• Global Developments
• Food for Thought
The United States
1. Let’s begin with some updates on inflation.
• The non-discretionary component of the PCE inflation index has remained sticky.
Source: Wells Fargo Securities
• Here are the year-over-year CPI changes for “card-centric” categories.
Source: Bank of America Institute
• What should we expect from the July CPI report this week?
– Nomura (a slightly higher core CPI increase vs. June):
Source: Nomura Securities
– Barclays (0.21% monthly increase):
Source: Barclays Research
– Wells Fargo (0.17% increase):
Source: Wells Fargo Securities
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2. Dollar-denominated money market fund assets hit a record high last week.
Source: @wealth Read full article
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3. Next, we have some data on the housing market.
• Homes are taking longer to sell.
Source: Redfin
• Housing affordability is at the lowest levels since the 1980s. (2 charts)
Source: @WSJ Read full article
Source: @WSJ Read full article
• The value of US residential real estate is nearing $50 trillion.
Source: Redfin
• Buyers’ agent commissions have been moving lower.
Source: @axios Read full article
• Just over half of mortgages originated in 1985 had adjustable rates.
Source: @WSJ Read full article
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4. Here is a look at wage growth by income level based on BofA’s customer data.
Source: Bank of America Institute
5. US retailers have been expediting holiday imports, anticipating potential strikes and disruptions.
Source: Reuters Read full article
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Canada
1. Canada’s jobs report surprised to the downside, marking the second consecutive monthly drop in employment.
However, full-time employment registered a robust gain.
• The unemployment rate held steady.
• Labor force participation hit the lowest level since 2021.
• Wage growth remained above 5%, topping expectations.
2. Canada’s temporary foreign worker program has been surging, prompting the government to implement curtailments.
Source: @economics Read full article
3. CAD/USD is holding resistance at the 50-day moving average.
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Europe
1. France’s unemployment rate was lower than expected last quarter.
2. Sweden’s private sector output edged higher in June.
But household consumption has been deteriorating.
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3. Norway’s inflation was a bit softer than expected.
The Norwegian krone outperformed last week.
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4. Here is a look at online platform bookings for short-stay accommodations across Europe.
Source: Eurostat Read full article
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Japan
1. Speculative accounts have massively cut their net-short yen positions as the carry trade unwinds (2 charts).
Source: Reuters Read full article
Source: @markets Read full article
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2. Barclays says the BoJ is probably done for the year.
Source: Barclays Research
Source: @economics Read full article
The market still sees an eight basis points increase by the end of 2024.
Source: @TheTerminal, Bloomberg Finance L.P.
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China
1. Foreign investors have been withdrawing capital from China’s equity markets.
Source: @markets Read full article
2. China is flooding global markets with cheap EVs.
Source: Foreign Affairs Read full article
• Domestically, China’s EV sales have surpassed those of combustion engine cars.
Source: Reuters Read full article
Source: Reuters Read full article
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Emerging Markets
1. Brazil’s inflation climbed in July.
Source: @economics Read full article
• Speculative accounts have been boosting their bets against the real.
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2. Mexico’s manufacturing output climbed in June.
3. Turkey’s industrial production was well below 2023 levels in June.
4. Huge government defense spending helped drive Russia’s wartime growth, but the economy is set to cool down.
Source: @economics Read full article
5. Here is a look at last week’s performance.
• Currencies:
• Bond yields:
• Equity ETFs:
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Commodities
1. The November soybean futures dipped below $10/bushel.
Corn futures also continue to sink.
Bloomberg’s grains index hit the lowest level since 2020.
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2. Copper inventories have risen sharply.
Source: Yahoo Finance Read full article
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3. Speculative cotton futures positions hit a multi-year low.
4. Total commodity positioning has turned negative.
Source: @markets Read full article
5. The Bloomberg Commodity Index is hovering near its long-term average after a series of boom/bust cycles.
Source: Damanick Dantes; Bloomberg
• Commodity prices have trended lower as global inflation and growth surprises have weakened.
Source: Damanick Dantes; Bloomberg
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6. Here is a look at last week’s performance.
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Energy
1. Speculative accounts continue to cut their bets on US gasoline futures.
2. The US rig count climbed last week.
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Equities
1. The GS positioning index eased further last week.
Source: Goldman Sachs; @WallStJesus
• The Deutsche Bank positioning index fell into underweight territory …
Source: Deutsche Bank Research
… and we could see a further pullback in positioning if volatility remains elevated.
Source: Deutsche Bank Research
• Investment managers are still relatively bullish.
Source: NAAIM Read full article
• Asset managers have reduced their Nasdaq 100 futures positions but are still bullish.
Source: Barclays Research; @WallStJesus
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2. Equity fund flows remain positive, …
Source: Deutsche Bank Research
… driven by continued demand for tech funds.
Source: Deutsche Bank Research
• Hedge funds are getting back into tech.
Source: Goldman Sachs
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3. The Russell 3,000 Index (broad US market) is holding support with oversold breadth readings.
Source: Aazan Habib, Paradigm Capital
4. The stock/bond ratio sharply declined amid imminent rate cut expectations. (2 charts)
Source: SentimenTrader
Source: MRB Partners
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5. This chart shows the evolution of correlation among stocks and among sectors.
Source: Goldman Sachs; @MikeZaccardi
6. Next, we have some updates on the volatility markers.
• Implied vol tends to remain elevated for a while after growth scares.
Source: Goldman Sachs; @MikeZaccardi
• Historically, VIX spikes above 50 have been bullish for market returns over the next 12 months.
Source: MarketDesk Research
• Net bullish options volume has declined sharply, …
Source: Deutsche Bank Research
… as put volumes surged, driven primarily by index options.
Source: Deutsche Bank Research
Here is the overall options volume.
Source: Deutsche Bank Research
• Options skew is still elevated.
Source: @markets Read full article
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7. Finally, we have some performance data from last week.
• Sectors:
• Equity factors/styles:
• Macro basket pairs’ relative performance:
• Thematic ETFs:
• Largest US tech firms:
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Credit
1. Last week’s stock market dive also rocked the US leveraged loan segment, marking one of the worst days since the onset of the pandemic.
Source: PitchBook
2. Goldman expects bond spreads to tighten.
Source: Goldman Sachs; @MikeZaccardi
3. Here is last week’s performance.
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Global Developments
Below, we have some performance data from last week.
• Currencies:
• Bond yields:
• Equities:
We also included USD-denominated equity ETFs to reflect international markets’ performance in USD terms.
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Food for Thought
1. Companies relocating to Texas:
Source: @financialtimes Read full article
2. State governments’ debt-to-GDP ratios:
Source: Cato Institute Read full article
3. German defense spending:
Source: @financialtimes Read full article
4. Cheating in the H-1B visa lottery through multiple registrations:
Source: @bbgvisualdata Read full article
• Outsourcing firms dominate the H-1B visa lottery with high application rates compared to major tech companies.
Source: @bbgvisualdata Read full article
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5. Education levels of foreign-born individuals in major OECD immigrant-receiving countries:
Source: Federal Reserve Bank of St. Louis Read full article
6. US oil and gas production under Trump and Biden:
Source: The Economist Read full article
7. Cost overruns of summer Olympic Games compared to total budgets:
Source: @opinion Read full article
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