The Daily Shot: 28-Aug-24
• The United States
• The United Kingdom
• Europe
• Asia-Pacific
• China
• Emerging Markets
• Commodities
• Equities
• Credit
• Food for Thought
The United States
1. The Conference Board’s consumer confidence index showed improvement this month, topping estimates.
Source: @economics Read full article
• The labor differential indicator continues to trend lower as households become less confident in the job market.
• The current financial situation measure continues to deteriorate, but the outlook is improving.
Source: The Conference Board
• Here is the spread between the Conference Board’s expectations and current conditions indicators. The rebound in this spread from the lows often coincides with recessions.
Source: @TheTerminal, Bloomberg Finance L.P.
• Inflation expectations continue to normalize.
• The index of intentions to buy a home has dropped to a multi-year low.
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2. Home prices continued to climb in June, now up for 16 months in a row.
3. The Richmond Fed’s regional manufacturing index fell to its lowest level since the COVID shock as demand weakened further this month.
The report’s underlying trends are consistent with a manufacturing recession.
– Employment:
– CapEx plans:
• Price pressures continue to ease.
4. The Richmond Fed’s regional services index was also soft, but companies’ outlook is improving.
• Here is the aggregate of the regional services indicators.
Source: @LizThomasStrat
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5. Businesses refrained from reporting unauthorized immigrants to the unemployment insurance system, which explains a significant portion of last week’s substantial payroll revision.
Source: Goldman Sachs; @NickTimiraos
6. The US dollar index (DXY) is at its 200-week moving average.
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The United Kingdom
1. The CBI report continued to show falling retail sales this month.
Source: Reuters Read full article
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2. The pound has been rallying as gilt yields move higher.
Source: @financialtimes Read full article
The market still expects over 40 bps of rate cuts before the year-end.
Source: @TheTerminal, Bloomberg Finance L.P.
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3. Individual and corporate bankruptcies have surged.
Source: Variant Perception
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Europe
1. Let’s begin with some updates on Germany.
• Germany’s private domestic demand deteriorated last quarter (below estimates).
Source: Pantheon Macroeconomics
– The GDP level is almost unchanged since 2019.
– Is Germany on the brink of a recession?
Source: Nomura Securities
• Germany’s consumer confidence unexpectedly declined this month.
Source: @WSJ Read full article
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2. Here is a look at the EU road freight transport by operation type and top country-to-country flows.
Source: Eurostat Read full article
3. This chart shows the EU’s trade balance by product.
Source: Eurostat Read full article
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Asia-Pacific
1. The yen continues to strengthen, with the USD/JPY uptrend support now acting as resistance.
2. South Korea’s department store sales are down sharply relative to 2023.
3. Australia’s monthly CPI measure resumed its decline.
Source: The Guardian Read full article
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China
1. Mainland stocks have decoupled from those listed in Hong Kong.
Source: @TheTerminal, Bloomberg Finance L.P.
• Equity financing is around a decade low.
Source: Gavekal Research
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2. Chinese exporters and multinationals have been amassing US dollars, but lower rates in the US could reverse this trend.
Further reading
3. Japan’s investment in China has been slowing.
Source: @business Read full article
4. Hong Kong’s exports hit the highest level since 2021.
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Emerging Markets
1. Mexican exports reached a new high for the month of July, …
… almost wiping out the nation’s trade deficit.
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2. Factory closures and an influx of low-cost Chinese imports have upended the Thai economy. Here is the evolution of the consensus growth estimate for this year.
However, Thai exports reached a new high last month.
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3. ZAR/USD is breaking above downtrend resistance.
Source: Damanick Dantes; Bloomberg
Recent ZAR strength could help stabilize inflation, although some central bank members have leaned dovish.
Source: @economics Read full article
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4. The decline in the EM M1 money supply growth could weigh on earnings.
Source: BCA Research
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Commodities
1. Gold hit an all-time high on Tuesday.
The options market sees a 24% probability of gold breaching $2,600 within a month.
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2. Coffee prices have reached their highest level since 2016.
Source: barchart.com Read full article
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3. The active NYB sugar futures contract is testing its downtrend resistance.
Source: @TheTerminal, Bloomberg Finance L.P.
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Equities
1. The short end of the volatility curve is elevated ahead of NVIDIA’s earnings and the PCE inflation report.
2. NVIDIA’s earnings often have a significant impact on broader indices, as the stock represents 6.4% of the S&P 500 and 12.9% of the Nasdaq 100 by market capitalization.
Source: @markets Read full article
Here is the market response to NVIDIA’s earnings and the corresponding moves in the S&P 500.
Source: BofA Global Research; @Marlin_Capital
• NVIDIA’s 1-month implied volatility is now almost six times that of the S&P 500.
• What’s the probability of a 10% move in NVIDIA’s stock? Below are the options market’s implied distributions.
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3. Dividend growers have been outperforming the S&P 500 equal weight index.
4. S&P 500 earnings growth has broadened outside of tech.
Source: MRB Partners
5. BCA’s model indicates that US stocks are significantly overvalued.
Source: BCA Research
6. The disinversion of the Treasury yield curve could support defensive stocks relative to the S&P 500.
Source: Numera Analytics (@NumeraAnalytics)
7. Risk control strategies are set to increase their exposure to stocks following the recent pullback in volatility.
Source: @TheTerminal, Bloomberg Finance L.P.; h/t Simon White, Bloomberg Markets Live Blog
8. Short VIX ETFs have attracted significant capital.
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Credit
1. Leveraged finance issuance is expected to accelerate after Labor Day.
Source: @markets Read full article
2. Historically, fallen angels have outperformed the broad high-yield index after the first Fed rate cut. These periods typically preceded widening credit spreads, which boosted the appeal of higher-quality exposures.
Source: VanEck Read full article
3. Munis have become cheaper relative to Treasuries in recent months.
Source: @markets Read full article
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Food for Thought
1. Disputing credit card charges:
Source: LendingTree Read full article
2. Regional variations in expected Alzheimer’s and related dementia cases:
Source: @axios Read full article
3. Share of Indeed job postings with at least one medical and insurance benefit:
Source: Indeed Hiring Lab Read full article
4. Energy use per person:
Source: Our World in Data
5. Fighter jet responses to foreign military aircraft approaching Japan:
Source: @bpolitics Read full article
6. Spending on plant-based foods:
Source: Statista
7. Prize money awarded at the US Open:
Source: Statista
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