The Daily Shot: 09-Sep-24
• The United States
• Canada
• The Eurozone
• Japan
• China
• Emerging Markets
• Commodities
• Energy
• Equities
• Credit
• Global Develop[ments
• Food for Thought
The United States
1. Payrolls rebounded in August but fell short of expectations.
– August marked the 44th consecutive month of job gains.
However, jobs data registered its fourth consecutive downward revision.
– The diffusion index climbed.
Here are the payroll changes by sector.
– The Household Survey outperformed the Establishment Survey for the first time in months.
– Job gains have been running below breakeven levels.
Source: Goldman Sachs; @MikeZaccardi
• The unemployment rate edged lower.
– The Sahm Rule continues to signal recession.
– By the way, the start of a recession is heavily aligned with the first month when payrolls turn negative.
Source: Deutsche Bank Research
– Underemployment (U-6) is nearing 8%.
• The prime-agelabor force participation rate declined but held near multi-year highs.
Source: @TheTerminal, Bloomberg Finance L.P.
– The labor force participation rate among women reached a record high.
Source: @TheTerminal, Bloomberg Finance L.P.
• Wage growth was higher than expected.
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2. The payrolls report left unresolved the debate over whether the Fed will implement a 50 bps or 25 bps rate cut this month. The market-based probability of a 50 bps increase is below 40%.
Source: @economics Read full article
However, the market is pricing 114 bps of rate reductions before the end of the year.
Source: @TheTerminal, Bloomberg Finance L.P.
• Equities tumbled.
• Bond yields were lower.
– The Treasury curve steepened.
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3. Market-based inflation expectations are down sharply due to weaker oil prices.
4. Small business funding costs remain elevated.
Source: BofA Global Research
5. Mortgage rates continue to ease.
Source: Mortgage News Daily
6. Here is a look at US goods imports by country.
Source: J.P. Morgan Asset Management
7. TSA passenger volumes have risen above pre-pandemic levels.
Source: Bank of America Institute
• More Americans are planning to travel abroad within the next six months.
Source: Bank of America Institute
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Canada
1. August saw an increase in Canada’s employment, driven by part-time jobs, while full-time employment declined.
• The unemployment rate increased.
Source: @WSJ Read full article
• Labor force participation edged higher.
• Wage growth slowed but was above estimates.
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2. The Ivey PMI dipped into contraction territory last month.
Source: Reuters Read full article
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The Eurozone
1. Germany’s industrial production fell sharply in July, heightening concerns about a potential recession (3 chart).
Source: @WSJ Read full article
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2. French manufacturing output also declined (lowest since 2021)
3. Germany’s trade surplus was well below forecasts in July as imports jumped.
Source: @TheTerminal, Bloomberg Finance L.P.
Source: @WSJ Read full article
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4. The euro-area Q2 GDP was revised lower, …
Source: @WSJ Read full article
… amid deteriorating private domestic demand.
• Consumer spending:
• Business investment:
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Japan
1. The Economy Watchers Survey Expectations index unexpectedly climbed above 50 last month.
2. Speculative accounts further boosted their bets on the yen.
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China
1. Consumer inflation edged higher last month, …
… boosted by food prices.
However, China’s core inflation continues to trend downward, with disinflationary pressures persisting.
Source: South China Morning Post Read full article
Here are the trends in goods vs. services CPI.
Source: @TheTerminal, Bloomberg Finance L.P.
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2. The PPI remains in deflation territory.
3. China’s FX reserves continue to increase.
4. Stocks remain under pressure.
5. IG corporate bond spreads have been widening.
Source: Douglas Huang, @TheTerminal, Bloomberg Finance L.P.
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Emerging Markets
1. Mexico’s vehicle exports were back above 2023 levels last month.
2. Chile’s CPI has been grinding higher.
3. Colombia’s inflation continues to moderate.
4. Next, we have some performance data from last week.
• Currencies:
• Bond yields:
• Equity ETFs:
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Commodities
1. The selloff in China’s steel futures has been relentless.
2. Here’s the performance data from last week across commodity markets.
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Energy
1. Brent crude hit the lowest level since 2021.
Source: @markets Read full article
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2. Crude oil futures positioning is near multi-year lows.
Source: @Ole_S_Hansen
3. US fracking activity continues to ease.
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Equities
1. Last week proved to be a challenging one for stocks.
• Equities were under pressure globally.
Source: @DavidInglesTV
• Semiconductor shares saw the biggest weekly decline since 2020.
• The Magnificent 7 stocks dropped nearly 4% on Friday.
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2. The S&P 600 (small caps) dipped below its 50-day moving average.
3. Goldman’s positioning indicator continues to move lower.
Source: Goldman Sachs; @MikeZaccardi
• US equity flows were negative last week.
Source: Reuters Read full article
• Tech positioning has been declining amid weaker earnings growth expectations, according to Deutsche Bank.
Source: Deutsche Bank Research
By the way, the gap between tech and non-tech ETF flows has been widening over the past year.
Source: @Todd_Sohn
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4. Developed-market equities have sustained long-term uptrends with a rapid turnaround in breadth.
Source: SentimenTrader
5. Market concentrations remain elevated.
Source: Goldman Sachs; @MikeZaccardi
6. US earnings growth has diverged from economic and sales surprises.
Source: PGM Global
• The gap between S&P 500 earnings and free cash flow has risen to the highest level since the financial crisis.
Source: PGM Global
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7. Here is a look at unprofitable companies’ proportions by company size.
Source: J.P. Morgan Asset Management
8. International companies prefer to be listed in the US rather than Europe.
Source: Torsten Slok, Apollo
9. 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. Here is a look at CRE debt delinquencies at US banks:
Source: S&P Global Market Intelligence
• How many banks exceed the 2006 CRE loan concentration guidance?
Source: S&P Global Market Intelligence
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2. Next, we have some performance data from last week.
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Global Develop[ments
1. Here is an overview of central banks’ current policy rates alongside year-end market expectations.
Source: Truist Advisory Services
2. High-beta currencies significantly underperformed DM low-yielders and Asia EM currencies.
Source: Barclays Research
3. Finally, we have some performance data from last week.
• Currencies:
• Bond yields:
• Equity indices:
• Equity ETFs (performance in dollar terms):
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Food for Thought
1. US passports in circulation:
Source: @chartrdaily
2. Net worth by marital status:
Source: @WSJ Read full article
3. US migration trends:
Source: Redfin; h/t @MikeZaccardi
4. Population projections for China and India:
Source: Our World in Data
5. Kindergartners with vaccine exemptions:
Source: @axios Read full article
6. Significant gap between organ demand and transplants in the US:
Source: Alpine Macro
7. Start of early in-person voting:
Source: @axios Read full article
8. Fiction book sales:
Source: @chartrdaily
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