The Daily Shot: 18-Sep-24
• The United States
• Canada
• The Eurozone
• Japan
• China
• India
• Commodities
• Energy
• Equities
• Alternatives
• Rates
• Global Developments
• Food for Thought
The United States
1. August retail sales exceeded expectations, …
Source: ABC News Read full article
… boosted by a robust increase in online sales, indicating that US consumers continue to spend.
• Here are the changes by sector.
• Real retail sales moved higher last month.
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2. Industrial production also surprised to the upside.
Source: @economics Read full article
Vehicle production rebounded.
• This chart shows the manufacturing production level as well as capacity utilization.
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3. Manufacturing inventories increased again.
4. The Atlanta Fed’s GDPNow growth estimate for Q3 climbed to 3% (annualized), driven by stronger retail sales (which bolstered the goods consumption component) and increased inventory growth (above).
Source: Federal Reserve Bank of Atlanta
Source: @TheTerminal, Bloomberg Finance L.P.
• The betting market estimates Q3 GDP growth at 2.6%.
Source: Kalshi
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5. The NHIB homebuilder sentiment index increased this month as mortgage rates move lower.
Source: Reuters Read full article
Homebuilder shares have been outperforming.
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6. The unemployment rate is currently at the lower end of its range typically seen before the first Fed rate cut.
Source: Simon White, Bloomberg Markets Live Blog
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Canada
1. Canada’s headline CPI fell to 2% year-over-year in August.
Source: Reuters Read full article
• Core inflation measures were also lower.
• Housing inflation measures diverged, with homeowners seeing slower price increases than renters.
Source: @TheTerminal, Bloomberg Finance L.P.
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2. A 50 bps BoC rate cut next month looks increasingly likely.
3. Last month’s housing starts surprised to the downside.
Source: Reuters Read full article
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The Eurozone
1. Germany’s ZEW expectations index tumbled this month, coming in well below forecasts (2nd panel).
Source: @economics Read full article
The ZEW index also declined at the Eurozone level.
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2. Here is a look at Germany’s voting intention polls over time.
Source: The Economist Read full article
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Japan
1. Both imports and exports declined last month.
Source: @TheTerminal, Bloomberg Finance L.P.
Source: @WSJ Read full article
The trade deficit narrowed.
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2. Service sector activity continues to climb.
3. Machinery orders were above 2023 levels in July.
4. Here is a look at Japan’s M&A activity.
Source: The Economist Read full article
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China
1. Corporate sector deleveraging could take a while.
Source: Barclays Research
2. Loan demand remains soft.
Source: Alpine Macro
3. EV adoption in China shows stark regional disparities.
Source: @climate Read full article
4. Here is a look at working-age population projections.
Source: BCA Research
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India
1. Gains in wholesale prices were lower than expected last month.
2. India’s gold imports surged in August.
• Export growth slowed.
• As a result, the trade deficit widened sharply.
Source: Reuters Read full article
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3. The rupee has been rebounding from all-time lows.
4. India experienced rapid growth of unicorns (startups valued > $1bn), although valuations have leveled off.
Source: PitchBook
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Commodities
1. Coffee prices continue to hit multi-year highs.
2. Sugar futures jumped on Tuesday.
Source: barchart.com Read full article
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3. Here is a look at China’s steel production and exports.
Source: @business Read full article
4. China continues to dominate rare earths production, though other countries have been increasing their output as well.
Source: @markets Read full article
Growing production has put downward pressure on rare-earth commodities and the mining firms specializing in rare earths.
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Energy
1. Capital Economics expects oil demand to peak around 2030.
Source: Capital Economics
2. Goldman estimates that US crude oil production will reach a record high this month.
Source: Goldman Sachs; @MikeZaccardi
3. The US is set to significantly expand natural gas power capacity in 2024.
Source: @climate Read full article
4. When the Matterhorn Express Pipeline comes online in the next few weeks, Permian natural gas will flow to the US Gulf of Mexico, likely boosting Permian gas prices (which have been negative at times). With easier access to sell their associated gas, frackers are expected to increase crude oil production.
Source: Matterhorn Express Pipeline
Source: @JavierBlas, @opinion Read full article
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Equities
1. Risk appetite among global fund managers declined this month.
Source: BofA Global Research
2. Momentum is starting to weaken within the S&P 500. (2 charts)
Source: Longview Economics
Source: Longview Economics
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3. How has the stock market historically performed following the disinversion of the Treasury curve (2s10s)?
Source: Goldman Sachs; @MikeZaccardi
4. An increasing share of fund managers prefer companies to return cash to investors rather than focusing on balance sheet improvements or capex spending.
Source: BofA Global Research
5. Earnings expectations for small caps continue to diverge from those of the S&P 500.
Source: @TheTerminal, Bloomberg Finance L.P.
• US small-caps could benefit from lower short-term rates.
Source: Truist Advisory Services
• Small caps trade at an extreme valuation discount relative to the S&P 500.
Source: Truist Advisory Services
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6. Value ETFs are seeing robust inflows.
Source: @markets Read full article
7. Here’s an overview of global equity markets’ valuations relative to their 20-year history.
Source: Goldman Sachs; @WallStJesus
8. How large is the current elections premium in the VIX curve compared to previous presidential elections (2 charts)?
Source: Nomura Securities; @WallStJesus
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Alternatives
1. Investors have been pulling capital from multi-manager hedge funds.
Source: @financialtimes Read full article
2. Private credit fundraising is slowing …
Source: @markets Read full article
… and is increasingly dominated by mega-funds.
Source: @markets Read full article
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3. Global GPs are having a better year capital raising for real assets, secondaries, and PE deals, while other segments such as real estate remain a grind.
Source: PitchBook
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Rates
1. Open interest in fed funds futures surged as traders increased bets on Fed rate cuts.
Source: @markets Read full article
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2. Here is a look at the Treasury curve disinversion episodes since 1950.
Source: Goldman Sachs; @MikeZaccardi
• Following past disinversions of the 2s10s Treasury curve, 10-year yields have tended to rise gradually, on average, when the economy has avoided a recession.
Source: Goldman Sachs; @MikeZaccardi
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Global Developments
1. Price and earnings remain weak for developed market equities relative to the US, but the price ratio appears oversold with improving momentum (2 charts).
Source: Truist Advisory Services
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2. State Street’s Market Regime Indicator remains at elevated levels.
Source: State Street Global Advisors
3. Fund managers are increasingly viewing global monetary policy as too restrictive.
Source: BofA Global Research
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Food for Thought
1. Active users on the largest dating apps:
Source: @financialtimes Read full article
2. Boeing’s revenue:
Source: @chartrdaily
3. Trends in audio programming listening preferences:
Source: @CivicScience Read full article
4. Sources of dissatisfaction among OECD countries:
Source: @financialtimes Read full article
5. Healthcare worker shortages:
Source: @axios Read full article
6. Projections for electricity’s share of total energy consumption:
Source: BofA Global Research; @MikeZaccardi
7. Best and worst countries for women:
Source: Statista
8. Betting market probabilities for the 2025 Super Bowl champion:
Source: Polymarket
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