The Daily Shot: 23-Sep-24
• The United States
• The United Kingdom
• The Eurozone
• Japan
• China
• India
• Emerging Markets
• Commodities
• Energy
• Equities
• Credit
• Rates
• Global Developments
• Food for Thought
The United States
1. US financial conditions have eased sharply in recent weeks, with much of the September easing attributed to lower rates.
For reference, here’s the longer-dated chart of our financial conditions index.
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2. Companies have turned cautious ahead of the elections.
Source: @axios Read full article
3. The recent moderation in core PCE inflation has been driven by the supply side, while the demand component remains resilient.
Source: Deutsche Bank Research
4. Next, we have some updates on the labor market.
• Labor data releases have been surprising to the downside.
• Here is Goldman’s forecast for US job growth.
Source: Goldman Sachs; @MikeZaccardi
• Did the negative revision in jobs data lead the Fed to implement a 50 bps rate cut?
Source: Nomura Securities
– Even after the downward revisions, payrolls are still in line with the pre-pandemic three-year average.
Source: Truist Advisory Services
• Here is the Atlanta Fed’s labor market spider chart.
Source: Federal Reserve Bank of Atlanta
• The Sahm Rule modification based on the prime-age nonemployment rate does not signal a recession.
Source: Oxford Economics
• IT unemployment is climbing as more companies incorporate AI tools.
Source: @WSJ Read full article
• Rising retirement rates are creating a challenge for labor force growth.
Source: Gavekal Research
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The United Kingdom
1. Retail sales strengthened further last month, topping expectations.
Source: @economics Read full article
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2. Government borrowing was higher than expected in August, …
Source: BBC Read full article
… with the debt-to-GDP ratio hitting 100% for the first time since the early 1960s.
Source: @economics Read full article
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The Eurozone
1. The September flash PMI reports surprised to the downside, with French aggregate business activity slipping into contraction territory.
Germany’s composite PMI was also below forecasts. We will have more on the PMI release tomorrow.
• The euro declined in response to the weak PMI print.
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2. French business confidence held up this month.
• Retail sales improved in July.
• Economists have sharply downgraded French consumer spending growth this year.
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3. Eurozone consumer confidence improved this month.
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Japan
1. Foreign funds sold a record amount of Japanese shares last week.
Source: @markets Read full article
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2. Corporate earnings growth has accelerated in recent years.
Source: @JeffreyKleintop
3. Condo sales hit a multi-year low.
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China
1. The PBoC unexpectedly cut the 7-day repo rate.
Source: @economics Read full article
Source: @economics Read full article
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2. The 10-year government bond yield is nearing 2% for the first time.
3. The RMB has been strengthening.
4. The revised youth unemployment rate is surging. Will this index be “revised” again?
Source: Reuters Read full article
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5. How have Beijing’s subsidies affected trade?
Source: IMF
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India
1. India’s equity indices are reaching record highs, …
… significantly outperforming their emerging market peers.
• Foreign inflows have been robust.
Source: @markets Read full article
• Domestic recurring investment plans targeting the stock market have taken off.
Source: @business Read full article
• Indian stocks’ weight in international indices has been rising.
Source: Kuvera
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2. Here is a look at India’s largest family business groups.
Source: The Economist Read full article
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Emerging Markets
1. Brazi’s bond yields jumped after the central bank’s rate hike.
2. Economists have been downgrading their estimates for South Africa’s inflation this year.
3. Egypt’s trade deficit widened sharply in July.
4. Russian banks have encountered significantly higher yuan funding costs (due to US threats of sanctioning Chinese banks) despite stable domestic yuan funding rates.
Source: MUFG Securities
5. Next, we have some performance data from last week.
• Currencies:
• Bond yields:
• Equity ETFs:
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Commodities
1. Iron ore remains under pressure.
2. Gold hit its 33rd record high this year (2 charts).
• The options market is pricing in a 10% probability of gold finishing the year above $3k.
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3. Sugar has been staging a remarkable rally.
Source: @markets Read full article
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4. Here is last week’s performance.
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Energy
1. Brent crude is testing resistance at $75/bbl amid geopolitical tensions.
Source: BBC Read full article
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2. Cushing, OK (WTI settlement hub) crude oil inventories have declined sharply.
Source: Financial Post Read full article
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3. Hedge funds are very bearish on diesel futures.
Source: @markets Read full article
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4. US natural gas futures have been rebounding, …
… amid falling gas rig count.
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Equities
1. Equity funds saw robust inflows last week.
Source: BofA Global Research
2. So far, the S&P 500 is positive this month, although seasonality suggests weakness ahead. (2 charts)
Source: @Optuma
Source: @Optuma
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3. Risk appetite has waned despite the S&P 500’s rise.
Source: SentimenTrader
4. A substantial drop in mortgage rates is typically a tailwind for stocks.
Source: SentimenTrader
5. BofA’s private clients have been dumping low-vol funds.
Source: BofA Global Research
6. This chart shows labor costs by sector.
Source: Goldman Sachs; @MikeZaccardi
7. US small and mid-caps are holding support relative to large-caps.
Source: Aazan Habib, Paradigm Capital
8. The market is scaling back earnings growth expectations for AI stocks.
Source: BofA Global Research; @dailychartbook
9. Next, let’s take a look at last week’s performance data.
• Sectors:
• Equity factors:
• Macro basket pairs’ relative performance:
• Thematic ETFs:
• Largest US tech firms:
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Credit
1. The US syndicated loan market has become less risky.
Source: PitchBook
2. This chart shows the sources of growth in the US fixed-income market.
Source: Deutsche Bank Research
3. Here is last week’s performance.
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Rates
1. Treasury market implied volatility eased sharply after the Fed’s rate cut.
2. The rapid drop in Treasury yields over the summer suggests that bonds have already priced in the first rate cut alongside economic concerns.
Source: MarketDesk Research
• Historically, long-duration Treasuries typically underperform short/intermediate-term Treasuries during the 12 months after the yield curve disinverts. However, the timing can vary widely.
Source: MarketDesk Research
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3. Primary dealers hold a lot of Treasury debt.
Source: Deutsche Bank Research
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Global Developments
1. The G20 leading index continues to rise, suggesting that global economic activity may improve in the coming months.
2. Here is last week’s performance data.
• Currencies:
• Yields:
• Equity indices:
• Equity ETFs:
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Food for Thought
1. Projected US revenue changes if the 2017 Tax Cuts and Jobs Act expires at the end of 2025:
Source: @WSJ Read full article
2. Occupational distribution of recent immigrants vs. US-born workers:
Source: @WSJ Read full article
3. Shifts in US dairy consumption:
Source: @BW Read full article
4. Countries with the highest obesity rates:
Source: Visual Capitalist Read full article
5. Wealthier customers tend to be more loyal.
Source: Placer.ai
6. The most “Instagrammable” US universities:
Source: QR Code Generator
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