The Daily Shot: 26-Sep-24
• The United States
• Europe
• Asia-Pacific
• China
• India
• Emerging Markets
• Commodities
• Energy
• Equities
• Rates
• Food for Thought
The United States
1. Let’s begin with the housing market.
• The 30-year mortgage rate has fallen for eight consecutive weeks.
• Last week, mortgage applications exceeded the previous year’s level for the first time in more than three years (2 charts).
– Here is the rate lock count.
Source: AEI Housing Center
• Refi activity is surging.
Source: @markets Read full article
• Home price appreciation is slowing. As mortgage rates decrease, more homeowners are able to move, adding more inventory to the market (pent-up supply) …
Source: AEI Housing Center
… and slowing home price appreciation. Lower rates may actually dampen home prices, at least initially, until the pent-up supply is absorbed.
Source: AEI Housing Center
– This scatterplot illustrates the relationship between home price appreciation and inventories.
Source: AEI Housing Center
– Here is a look at inventories by price tier.
Source: AEI Housing Center
• New home sales are running well above last year’s levels.
Below are the seasonally adjusted contributions to new home sales.
– By region:
Source: AEI Housing Center
– By stage of constructions (completed homes increasingly dominate):
Source: AEI Housing Center
Here is a look at new home inventories.
– Number of units (multi-year high):
– Months of supply:
• Prices of new homes are running below last year’s levels.
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2. Lower-skill workers are experiencing a more rapid slowdown in wage growth, according to the Atlanta Fed’s tracker.
Source: @TheTerminal, Bloomberg Finance L.P.
• Job hopping is no longer financially rewarding.
Source: @TheTerminal, Bloomberg Finance L.P.
Here is the difference between the wage growth of “switchers” and “stayers.”
• On the other hand, BofA’s internal data suggest that wage growth is rebounding.
Source: Bank of America Institute
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3. US truck tonnage has been showing some improvement.
4. Companies have been preparing for a potential strike at East and Gulf Coast ports, …
Source: Capital Economics
… a concern now reflected in the widening differentials between East and West Coast shipping costs.
Source: @JeffreyKleintop
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Europe
1. French consumer confidence is rebounding, topping expectations.
2. Sweden’s central bank eased policy again, …
Source: @economics Read full article
… lowering its projected rate path.
Source: Nordea Markets
• Here is the history of Riksbank’s forecasts.
Source: @DanielKral1, @OxfordEconomics
• The yield curve has been steepening.
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3. The Czech central bank also cut rates.
Source: Euronews.com Read full article
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4. Swiss economic sentiment has been deteriorating.
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Asia-Pacific
1. Taiwan’s industrial production surprised to the upside.
2. Australia’s job vacancies continue to fall but remain well above pre-COVID levels.
Source: Reuters Read full article
3. Aussie-yen is approaching resistance at its 200-day moving average.
Source: @TheTerminal, Bloomberg Finance L.P.
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China
1. China’s stocks continue to surge.
Source: @TheTerminal, Bloomberg Finance L.P.
• The Shanghai Shenzhen CSI 300 Index is having its best week in nearly a decade, …
Source: @DavidInglesTV
… but the index faces downtrend resistance.
Source: @TheTerminal, Bloomberg Finance L.P.
• Hedge funds’ purchases of Chinese shares surged.
Source: Goldman Sachs; @markets Read full article
• Earnings expectations are improving.
Source: BofA Global Research; @dailychartbook
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2. Here’s an overview of sector contributions to the manufacturing trade surplus.
Source: IMF
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India
1. India’s stock market reached its 45th record high of the year.
• Indian share valuations appear frothy.
Source: @TheTerminal, Bloomberg Finance L.P.
• What is the options market’s implied probability of another 10% gain by mid-November?
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2. Bond yields continue to fall.
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Emerging Markets
1. Brazil’s latest inflation reading was a bit below forecasts.
• The current account deficit is the widest in years.
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2. Next, we have some updates on Argentina.
• Economic activity jumped in July.
Source: @economics Read full article
• US dollar deposits are surging, supported by government policy.
Source: Reuters Read full article
• Here is a look at Milei’s approval ratings.
Source: @economics Read full article
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3. Zimbabwe faces another currency crisis.
Source: @economics Read full article
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Commodities
1. Gold appears overbought.
• Will private investors follow central banks’ lead in increasing their gold holdings?
Source: Alpine Macro
• Gold mining stocks are improving relative to copper mining stocks.
Source: Aazan Habib, Paradigm Capital
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2. Iron ore futures continue to rebound, boosted by China’s latest monetary stimulus.
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Energy
1. Brent crude held resistance at $75/bbl, falling sharply on news from Libya and Saudi Arabia.
Source: @TheTerminal, Bloomberg Finance L.P.
Source: @bpolitics Read full article
Source: @financialtimes Read full article
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2. US inventories of crude oil and refined products declined more than expected last week.
– Here are the inventory levels.
– This chart shows crude inventories measured in days of supply.
• Gasoline demand improved.
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3. Crude oil prices continue to drive US market-based inflation expectations.
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Equities
1. Micron shares surged after the close on robust AI-related demand.
Source: MarketWatch Read full article
• Stock futures are flying.
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2. The Nasdaq 100/S&P 500 price ratio returned to the bottom of its long-term uptrend channel.
Source: Deutsche Bank Research
3. The bull market has not been accompanied by a surge in leverage, partly because market participants prefer using options to gain leverage.
Source: TS Lombard
4. In recent months, there has been an underlying rotation to defensive sectors relative to cyclical sectors (2 charts).
Source: BCA Research
Source: TS Lombard
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5. Options activity outside of regular trading hours has been rising.
Source: @GunjanJS
6. Strong returns among the top US companies by market-cap generally fade over time relative to the S&P 500 index.
Source: Goldman Sachs
7. Small-cap fundamentals are yet to recover.
Source: BofA Global Research; @MikeZaccardi
8. The US boasts top market-cap companies that are still fairly young versus Europe.
Source: Deutsche Bank Research
9. Equity ETFs increasingly dominate the ETF market.
Source: Goldman Sachs; @MikeZaccardi
10. Dimensional and Aventis (mostly systematic equity approaches) have accounted for a bulk of cumulative inflows into active ETFs since 2020.
Source: Morningstar Read full article
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Rates
1. The Treasury curve continues to steepen (2 charts).
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2. Market expectations of the Fed funds rate have been volatile. (2 charts)
Source: Alpine Macro
Source: Alpine Macro
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3. Fed policy typically works with 12-16 month lags before a rate change occurs.
Source: Alpine Macro
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Food for Thought
1. Generational differences in job satisfaction and willingness to be unemployed vs. unhappy at work:
Source: ADP Research
2. Limited presence of Chinese tech firms among the global top 100 by revenue:
Source: Statista
3. Q-Tel’s portfolio, the non-profit investment arm of the CIA (2 charts):
Source: @chartrdaily
Source: @chartrdaily
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4. How far does $100 go in each state?
Source: Visual Capitalist Read full article
5. New US sanctions by year:
Source: @bpolitics Read full article
6. Homelessness rates in advanced economies:
Source: Our World in Data
• The US homeless population is increasing.
Source: @WSJ Read full article
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7. Share of Americans who read or listened to books in 2023:
Source: Statista
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