Democrats boost US consumer sentiment

The Daily Shot: 19-Aug-24
The United States
The United Kingdom
Europe
Japan
China
Emerging Markets
Commodities
Energy
Equities
Credit
Rates
Global Developments
Food for Thought



 

The United States

1. The U. Michigan’s sentiment indicator edged higher …
 

 
… due to improved sentiment among Democrats.
 
Source: @TheTerminal, Bloomberg Finance L.P.  
 
Source: ABC News   Read full article  
 
Here are the contributions to the headline index.
 
Source: @TheTerminal, Bloomberg Finance L.P.  
 
Buying conditions for durables remain soft.
 

 
The expected and current financial situation indices have diverged.
 

 
Inflation expectations were unchanged this month.
 

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2. Housing starts weakened in July, …
 

 
… particularly in the single-family construction sector.
 

 

 
Source: Reuters   Read full article  
 
Building permits were above 2023 levels (2 charts).
 

 

 
Below are the seasonally adjusted trends.
 
Source: @TheTerminal, Bloomberg Finance L.P.  

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3. The Philly Fed’s regional manufacturing index unexpectedly declined this month.
 

 

 
The July hiring spree is over.
 

 
Fewer firms plan to raise prices.
 

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4. Hotel properties have been performing well, …
 
Source: Deutsche Bank Research  
 
… but online search activity points to a pullback in travel.
 
Source: @business   Read full article  

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5. The US dollar has been under pressure amid expectations of Fed rate cuts in the months ahead.
 

 
The market is still pricing 100 bps of rate cuts this year.
 
Source: @TheTerminal, Bloomberg Finance L.P.  


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The United Kingdom

1. Retail sales were back above last year’s levels in July.
 

 
Source: RTT News   Read full article  

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2. Housing asking prices are holding above 2023 levels.
 

 
3. The BoE’s balance sheet remains significantly larger than it was before COVID.
 
Source: BoE   Read full article  
 
4. Unhappily married?
 
Source: @economics   Read full article  


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Europe

1. Euro-area trade surplus topped expectations.
 

 
Source: RTT News   Read full article  

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2. Swiss industrial output surged last quarter.
 

 
3. Here is a look at EU member GDP growth since the start of COVID.
 
Source: @DanielKral1, @OxfordEconomics  
 
4. Finally, we have government budget allocations for R&D by sector and per capita.
 
Source: Eurostat   Read full article  


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Japan

1. Speculative accounts are now net long yen futures (for the first time since 2021).
 

 
2. Will a stronger yen halt the tourism boom?
 
Source: @JeffreyKleintop  
 
3. Machinery orders improved in June.
 

 
4. BofA private clients have been exiting Japanese stocks.
 
Source: BofA Global Research  


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China

1. Utilized foreign direct investment hit a multi-year low in July.
 

 
2. The renminbi could be a good hedge against US economic deterioration.
 
Source: Barclays Research  
 
3. Stop releasing embarrassing data …
 
Source: @markets   Read full article  
 
4. China’s converts market has been under pressure.
 

 
Source: @markets   Read full article  


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Emerging Markets

1. Brazil’s economic activity accelerated in June.
 

 
Source: @economics   Read full article  

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2. Argentina’s government continues to run a surplus.
 

 
3. Malaysia’s and Thailand’s Q2 GDP reports came in slightly above expectations.
 

Source: Nikkei Asia   Read full article  
 

Source: @economics   Read full article  

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4. Romania’s Q2 GDP growth surprised to the downside.
 

 
5. South Africa’s retail sales accelerated in June.
 

 
6. Next, we have some data on last week’s performance.
 
Currencies:
 

 
Bond yields:
 

 
Equity ETFs:
 


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Commodities

1. Let’s begin with some updates on gold, which closed above $2,500 on Friday.
 

 
Gold futures made a fresh all-time high with improving long-term momentum. (2 charts)
 

 

 
Central banks have been buying a lot of gold.
 
Source: BofA Global Research; @dailychartbook  
 
Gold implied vol remains compressed by historical standards.
 
Source: Aazan Habib, Paradigm Capital  

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2. Is the US grains rout nearing its end? (3 charts)

 

 

 
Here is a look at China’s soybean inventories.
 
Source: @markets   Read full article  

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3. How did commodity markets perform last week?
 


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Energy

1. Brent crude continues to trade below $80/bbl.
 
Source: @TheTerminal, Bloomberg Finance L.P.  
 
2. US natural gas inventories unexpectedly declined during the week of August 5th.
 
Weekly changes:
 

 
Inventory levels:
 


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Equities

1. Stocks had a good week.
 

 
2. Next, let’s take a look at some sentiment indicators.
 
Deutsche Bank’s positioning index (a bounce):
 
Source: Deutsche Bank Research  
 
Goldman’s positioning indicator (lower):
 
Source: Goldman Sachs; @MikeZaccardi  
 
Speculative US equity futures positioning (still elevated):
 
Source: JP Morgan Research; @WallStJesus  

——————–

 
3. How does the stock market perform after the Jackson Hole meetings?
 
Source: @markets   Read full article  
 
4. How sensitive are different sectors to movements in long-term Treasury prices?
 
Source: BofA Global Research; @topdowncharts, @Callum_Thomas  
 
5. Net EPS revisions have been less negative than the median historical trend.
 
Source: Goldman Sachs; @MikeZaccardi  
 
6. The S&P 500 tech sector experienced a rapid rise in short-term breadth.
 
Source: SentimenTrader  
 
7. The S&P has averaged a 2% intraday range over the past two weeks – the widest in over a year following a historically long streak of relatively calm conditions.
 
Source: SentimenTrader  
 
8. Open interest in VIX puts has been elevated relative to calls as investors bet on lower volatility.
 
Source: @markets   Read full article  
 
9. The single-stock put-call ratio declined sharply last week.
 

 
10. Finally, we have some performance data from last week.
 
Sectors:
 

 
Equity factors:
 

 
Macro basket pairs’ relative performance:
 

 
Thematic ETFs:
 

 
Largest US tech firms:
 


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Credit

1. Last week saw strong gains in high-yield bonds.
 

 
2. BDC portfolio yields (primarily middle-market loans) are substantially higher than those of corporate high-yield bonds.
 
Source: @TheTerminal, Bloomberg Finance L.P.; h/t @theleadleft  
 
3. Commercial real estate debt CLOs’ portfolios are seeing a higher distress rate.
 
Source: @WSJ   Read full article  
 
This chart shows distress levels by sector.
 
Source: @WSJ   Read full article  
 
Office visits have been improving:
 
Source: Placer.ai  
 
Source: Placer.ai  

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4. Cat bonds continue to outperform.
 

 
Source: @climate   Read full article  

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5. Here is a look at last week’s performance across key credit markets.
 


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Rates

1. Fund managers are overweight bonds.
 
Source: BofA Global Research  
 
2. TIPS are declining as a share of funds’ bond assets.
 
Source: Goldman Sachs; @MikeZaccardi  
 
3. Treasury interest rate volatility remains in a downtrend from last year’s high.
 
Source: Aazan Habib, Paradigm Capital  


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Global Developments

1. Here is a look at market movements since the sell-off in risk assets. (2 charts)
 
Source: MRB Partners  
 
Source: MRB Partners  

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2. Geopolitical risks remain elevated.
 
Source: BlackRock Investment Institute  
 
3. Next, we have some performance data from last week.
 
Currencies:
 

 
Bond yields:
 

 
Equities:
 

 
Equity ETFs (equity performance in dollar terms):
 


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Food for Thought

1. Positive COVID tests:
 
Source: AP News   Read full article  
 
2. Alcohol consumption per person:
 
Source: Our World in Data  
 
3. Clean energy technology investments across US districts since 2021:
 
Source: @liamdenning, @EnergyCredit1, @opinion   Read full article  
 
4. Trends in law enforcement officer numbers:
 
Source: The New York Times   Read full article  
 
5. US labor force participation rate among young college graduates:
 
Source: @BW   Read full article  
 
6. Audience reach concentration among the top 1,000 podcasts:
 
Source: @WSJ   Read full article  
 
7. Lunar landings:
 
Source: @WSJ   Read full article  
 

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