The Daily Shot: 27-Aug-24
• The United States
• Canada
• The United Kingdom
• The Eurozone
• Europe
• China
• Emerging Markets
• Cryptocurrency
• Commodities
• Energy
• Equities
• Credit
• Rates
• Food for Thought
The United States
1. US durable goods orders surged in July, driven by strong aircraft orders.
Source: RTT News Read full article
• However, excluding transportation, durable goods orders registered a decline.
• Real capital goods orders continue to trend lower.
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2. The Dallas Fed’s regional manufacturing index showed some improvement this month, with the index of expected shipments hitting the highest level in more than two years.
The Dallas Fed’s manufacturing report included a comment from a food manufacturer about sausage.
As the economy weakens, we are seeing modest growth in our category of dinner sausage. This category tends to grow when the economy weakens, as sausage is a good protein substitute for higher-priced proteins and can “stretch” consumers’ food budgets.
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3. Starter home sales growth has been outpacing the overall housing market lately as inventories improved (albeit magnified by the low base effect).
Source: Redfin
• Starter homes have been getting smaller to improve affordability.
Source: John Burns Research Read full article
• Share prices of home builders are trading at record highs amid expectations of lower mortgage rates.
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4. Here is a look at the US federal budget.
Source: J.P. Morgan Asset Management
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Canada
1. Economists expect the BoC to lower rates by another 50 bps before the end of the year, with an additional 100 bps reduction anticipated next year.
Source: @TheTerminal, Bloomberg Finance L.P.
2. The loonie continues to rally.
3. Economists are boosting their estimates for Canada’s housing starts this year.
4. The TSX Composite Index reclaimed support from its previous breakout attempt, although upside momentum is starting to fade.
• The TSX Capped REIT Index is breaking above downtrend resistance.
Source: Aazan Habib, Paradigm Capital
• The iShares MSCI Canada ETF (EWC) is testing long-term support vs. SPY.
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The United Kingdom
1. On average, UK shop prices are now down year-over-year.
Source: @financialtimes Read full article
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2. Labor shortages persist.
Source: Pantheon Macroeconomics
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The Eurozone
1. Eurozone sentiment indicators have started to fade.
Source: BCA Research
• However, Germany’s Ifo index was a bit firmer than expected this month.
Source: ifo Institute
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2. Market-based longer-term inflation expectations have been moderating.
Source: BCA Research
3. Speculative euro long positions have faded over the past year.
Source: Longview Economics
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Europe
1. Economists expect Riksbank to deliver another 50 bps of rate cuts this year, with an additional 70 bps anticipated in 2025.
Source: @TheTerminal, Bloomberg Finance L.P.
2. Economists have been downgrading their estimates for Norway’s business investment in 2024.
3. Here is a look at dentist and medical doctor graduates per 100k inhabitants across EU countries.
Source: Eurostat Read full article
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China
1. China’s industrial profits are currently running above the 2015-2023 period average.
2. Here is a look at China’s GDP growth projections by quarter.
3. The yuan has become a popular currency for the funding leg of carry trades.
Source: @markets Read full article
4. Stocks remain under pressure, with the selloff in tech shares accelerating. The ChiNext index hit the lowest level in over five years.
• Foreign investors continue to exit China’s stock market.
Source: Macrobond
Here are the year-to-date cumulative flows into the KraneShares CSI China Internet ETF (KWEB).
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Emerging Markets
1. Speculative BRL short positions appear stretched as BRL/USD tests support at the bottom-end of its trading range.
Source: Longview Economics
2. Economists have been boosting their estimates for Chile’s CPI in 2024.
3. Here is a look at India’s trade deficit with China.
Source: @financialtimes Read full article
• USD/INR has been testing resistance at 84.
Source: @TheTerminal, Bloomberg Finance L.P.
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4. Turkey’s manufacturing confidence continues to slide.
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Cryptocurrency
1. Bitcoin hit resistance at $65k.
2. Crypto funds saw the largest inflows in five weeks.
Source: CoinShares Read full article
• Long-bitcoin funds accounted for most inflows last week, while Ethereum-focused funds saw outflows (mostly via the incumbent Grayscale Ethereum Trust – new products saw inflows).
Source: CoinShares Read full article
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Commodities
1. Gold ETFs’ holdings have started to recover.
Source: @TheTerminal, Bloomberg Finance L.P.
2. Arabica coffee futures continue to climb.
3. Sugar futures are rebounding.
Source: Reuters Read full article
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Energy
1. Brent crude prices surged amid uncertainty in the Middle East and oil field shutdowns in Libya.
Source: @TheTerminal, Bloomberg Finance L.P.
Source: Reuters Read full article
However, analysts are not bullish on crude oil for the months ahead.
Source: @business Read full article
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2. US natural gas futures dipped below $2/mmbtu.
• Negative natural gas prices persist in the Permian Basin as producers anticipate relief from the expected September startup of the Matterhorn Express Pipeline, which will add much-needed takeaway capacity.
Source: @TheTerminal, Bloomberg Finance L.P. Further reading
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Equities
1. The Dow reached a record high on Monday, marking its 23rd record high of the year.
2. Speculative shares have been outperforming in recent days. Here is Goldman’s basket of unprofitable tech companies.
3. Companies outside the Magnificent 7 are expected to contribute more to S&P 500 earnings per share over the next few quarters.
Source: BofA Global Research; @carlquintanilla
4. For now, share buyback activity remains robust.
Source: Goldman Sachs; @dailychartbook
5. Here is a look at S&P 500 industry exposure to China.
Source: PGM Global
6. Hedge funds have been selling stocks, …
Source: Goldman Sachs
… especially tech shares.
Source: Goldman Sachs
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7. Shares of companies exposed to commercial real estate have been rebounding.
8. Small caps are likely to benefit more than large caps from Fed rate cuts, as they will see an immediate reduction in interest expenses.
Source: Truist Advisory Services
9. Corporate sales growth has slowed, but margins continue to trend higher.
Source: PGM Global
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Credit
1. Leveraged loan funds are experiencing outflows as the Fed prepares for rate cuts.
Source: BofA Global Research; @dailychartbook
2. Family offices are losing interest in private credit.
Source: @markets Read full article
3. A significant amount of commercial real estate debt will be due for rollover.
Source: BofA Global Research
4. The boon in US banks’ net interest income (NII) from the Fed’s aggressive tightening cycle is starting to fade.
Source: Alpine Macro
• However, rate cuts (banks borrowing at lower rates relative to their lending rate) could boost net interest margins (NIM).
Source: Alpine Macro
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5. Twitter is officially the worst buyout for banks.
Source: @WSJ Read full article
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Rates
1. The market expects the Fed to halt rate cuts at around 3%, …
… reaching this level in about two years.
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2. The recent rate hike cycle, while not the longest, was notably steep.
Source: @WSJ Read full article
• The current period between the last rate hike and the first cut (assuming September) has been quite long.
Source: @WSJ Read full article
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3. Speculative accounts continue to increase their bets against Treasury futures, often as part of cash-futures arbitrage strategies (2 charts).
Source: Deutsche Bank Research
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Food for Thought
1. Dating apps active users:
Source: The Economist Read full article
2. Meta’s Q2 performance:
Source: @genuine_impact
3. US department-store sales:
Source: @WSJ Read full article
4. Changes in drug overdose fatalities:
Source: Semafor
5. Global wildfire area burned:
Source: Our World in Data
6. Where geologic conditions are favorable for geothermal power generation:
Source: The Washington Post Read full article
7. Objects launched into space:
Source: Alpine Macro
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