The Daily Shot: 02-Oct-24
• The United States
• Canada
• The Eurozone
• Europe
• Asia-Pacific
• China
• Emerging Markets
• Commodities
• Energy
• Equities
• Credit
• Rates
• Global Developments
• Food for Thought
The United States
1. Job openings increased again in August, topping expectations.
Source: @TheTerminal, Bloomberg Finance L.P.
Source: @economics Read full article
• Here are the changes by sector.
– Job vacancies in construction surged.
– Business services as well as hotels and restaurants also contributed to gains in job openings.
– Here is a look at government vacancies.
Source: @TheTerminal, Bloomberg Finance L.P.
• Job openings per unemployed person increased but remained below pre-pandemic levels.
• Here is the Beveridge curve.
• Share prices of recruiting firms point to higher job openings ahead.
Source: @TheTerminal, Bloomberg Finance L.P.
• Quits (voluntary resignations) continued to decline, indicating that workers are becoming more uncertain about the job market.
• Layoffs remained below pre-COVID levels.
Source: @TheTerminal, Bloomberg Finance L.P.
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2. The ISM Manufacturing PMI held in contraction territory in September.
Source: @TheTerminal, Bloomberg Finance L.P.
• International demand deteriorated.
• Factories have been reporting staff reductions.
• Costs are declining again.
• The orders vs. inventories index spread rebounded, indicating firmer factory activity in the near future.
Source: @TheTerminal, Bloomberg Finance L.P.
– Similarly, the stock market’s cyclicals versus defensives ratio signals stronger manufacturing growth ahead.
Source: @TheTerminal, Bloomberg Finance L.P.
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3. Construction spending unexpectedly declined in August, marking the third consecutive month of decreases.
• Both residential and nonresidential private construction spending edged lower.
Source: @TheTerminal, Bloomberg Finance L.P.
– Here are the components of private residential construction spending.
Source: Wells Fargo Securities
• This chart shows manufacturing and warehouse construction spending.
Source: Wells Fargo Securities
• State and local government construction spending growth has been slowing.
Source: Oxford Economics
• Architecture billings continue to contract (diffusion index < 50).
Source: Wells Fargo Securities
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4. The Atlanta Fed’s GDPNow Q3 growth estimate was revised lower (2.5% annualized), …
Source: Federal Reserve Bank of Atlanta
… in part due to soft construction spending.
Source: @TheTerminal, Bloomberg Finance L.P.
• Goldman’s GDP tracker points to 3.2% growth in Q3.
Source: Goldman Sachs; @MikeZaccardi
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5. The Citi Economic Surprise Index continues to rebound.
6. US automobile sales improved in September.
Source: MarketWatch Read full article
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7. The East Coast dockworker strike is on.
Source: LA Times Read full article
• How much cargo goes through these ports? (2 charts)
Source: Semafor
Source: Goldman Sachs; @MikeZaccardi
• Here are some of the companies exposed to these ports.
Source: @axios Read full article
• Companies have been building inventories in preparation for the strike.
Source: @AnnaEconomist Read full article
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Canada
1. Manufacturing activity returned to growth in September.
2. Consumer confidence continues to climb.
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The Eurozone
1. The euro-area headline inflation dipped below 2% in September. Core inflation also eased.
• Services inflation is still high.
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2. French bond spreads remain elevated due to ongoing concerns about the nation’s fiscal situation.
Source: @bpolitics Read full article
• Here is a look at French fiscal balance forecasts.
Source: @DanielKral1, @OxfordEconomics
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3. Italy’s manufacturing PMI moved deeper into contraction in September.
• Spain’s manufacturing sector is bucking the trend.
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4. EUR/USD is testing resistance, although long-term momentum has improved.
5. The bond market is starting to price a greater dovish pivot from the ECB vs. the Fed.
Source: MRB Partners
6. Relative economic growth expectations could support wider US-German government bond spreads.
Source: MRB Partners
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Europe
1. Swiss manufacturing activity has almost stabilized.
• The Swiss leading indicator surprised to the upside.
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2. The Czech factory slump persists.
Source: S&P Global PMI
3. Here are the trends in EU inland waterway freight transport and goods distribution.
Source: Eurostat Read full article
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Asia-Pacific
1. South Korea’s CPI report surprised to the downside, …
… suggesting that rate cuts are coming.
Source: @economics Read full article
• South Korea’s manufacturing PMI suddenly dipped into contraction territory in September.
Source: Reuters Read full article
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2. New Zealand’s business confidence hit the highest level in a decade.
3. Australian residential building approvals remain soft.
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China
1. Hong Kong-listed shares continue to surge.
2. China’s 2024 GDP growth is expected to miss Beijing’s target.
Source: @economics Read full article
3. Here is a look at China’s tax revenue as a share of GDP.
Source: Rhodium Group Read full article
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Emerging Markets
1. Let’s begin with some manufacturing PMI reports.
• Brazil (a rebound in September):
• Russia (a contraction?):
Source: S&P Global PMI
• Turkey (ongoing slump):
Source: S&P Global PMI
• South Africa (back in growth territory):
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2. Next, we have some updates on Chile.
• Economic activity (unexpected contraction):
Source: @economics Read full article
• Commercial activity outlook:
• Evolution of the 2024 CPI estimates:
• Retail sales (stronger than expected):
• Industrial production (stronger than expected):
• Copper output (well above 2023 levels):
• Unemployment (slightly below 2023 levels):
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3. Thailand’s business investment is rolling over.
4. Here is a look at EM currencies’ rate differentials vs. implied volatility.
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Commodities
1. US grains continue to rebound.
• Corn:
• Wheat:
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2. The October-November LME aluminum spread continues to widen.
Source: @markets Read full article
Source: @markets Read full article
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Energy
1. Brent crude has risen above $75/bbl amid escalating tensions in the Middle East.
Source: @bpolitics Read full article
• WTI oil experienced an oversold bounce as geopolitical tensions escalated, although price has been confined to a choppy range between $62-$85/bbl.
• Call option volume on the largest crude oil ETF surged this week.
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2. The American Petroleum Institute estimates a reduction in US crude oil inventories last week.
3. US gasoline prices at the pump still have room to move lower.
Source: @TheTerminal, Bloomberg Finance L.P.
4. Here is a look at the US nuclear power output.
Source: @chartrdaily
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Equities
1. Current S&P 500 valuations point to low single-digit annualized returns over the next five years.
Source: J.P. Morgan Asset Management
2. Nondealer positioning in US equity futures has been surging.
Source: Goldman Sachs; @dailychartbook
3. Here is a look at share buyback announcements by sector.
Source: Deutsche Bank Research
4. US high-quality, low-beta, and large-cap stocks typically outperform small-caps one year after the first rate cut with or without a recession.
Source: BlackRock Investment Institute Read full article
• Healthcare and Consumer Staples have historically emerged as top performers one year after the first rate cut. Although cyclicals, particularly financials, start to improve two-to-three years out, according to BlackRock.
Source: BlackRock Investment Institute Read full article
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5. Despite slowing inflation, stocks that benefit from rising prices have been outperforming recently.
6. Rising global liquidity is a tailwind for stocks.
Source: Simon White, Bloomberg Markets Live Blog
7. Growth in active ETFs’ assets has been remarkable.
Source: J.P. Morgan Asset Management
8. Here’s an overview of forward earnings yields compared to implied volatility, highlighting expected performance versus perceived risk.
• Sectors:
• Equity factors:
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9. The equal-weighted MSCI ACWI index broke above a two-year long range with improving breadth.
Source: Aazan Habib, Paradigm Capital
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Credit
1. BDCs have been issuing a lot of debt.
Source: @markets Read full article
2. September was a big month for debt issuance globally.
Source: @markets Read full article
3. US commercial property prices have stabilized.
Source: @wealth Read full article
4. Here’s an overview of credit asset yields compared to implied volatility, illustrating expected performance versus perceived risk.
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Rates
1. Repo market volatility has increased, raising the possibility that the Fed may consider further slowing QT to prevent a 2019-style disruption to money market functioning. While repo rates typically rise at quarter-end, this increase was particularly pronounced.
• GC overnight repo vs. fed funds rate:
• MBS repo vs. fed funds rate:
• 3-month SOFR vs. 3-month OIS:
2. Repo activity has exploded over the past couple of years.
Source: @markets Read full article
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Global Developments
1. Global equities (especially recent strength in China) and precious metals have outperformed a selection of major assets this year while oil lagged.
Source: Deutsche Bank Research
2. Global profitability is improving.
Source: MRB Partners
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Food for Thought
1. Cash as a percentage of financial assets by age in the US:
Source: @bespokeinvest
2. How the US rail system compares to global peers:
Source: CFR Read full article
3. Whooping cough incidence by state:
Source: @business Read full article
4. Heat-related illness in sports by temperature and event type:
Source: The Economist Read full article
5. States ranked by average daily walking trips per 100 people:
Source: Statista
6. Counties relying on government assistance by net political affiliation:
Source: @WSJ Read full article
7. Longest-living US presidents:
8. 10 symbolic Rosh Hashanah foods:
Source: The Spruce Eats Read full article
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