The Daily Shot: 17-Oct-24
• The United States
• Canada
• The United Kingdom
• Europe
• Asia-Pacific
• China
• Emerging Markets
• Energy
• Equities
• Credit
• Rates
• Global Developments
• Food for Thought
The United States
1. Mortgage applications declined last week as rates climbed.
Here is the rate lock count.
Source: AEI Housing Center
• Refi applications tumbled.
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2. The University of Michigan index of buying conditions for houses appears to have bottomed.
• The reported value of consumers’ primary residence hit a new high.
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3. The NY Fed’s regional non-manufacturing report revealed fewer firms raised wages this month, but more are planning to do so.
4. Here is the Oxford Economics US consumer health monitor.
Source: Oxford Economics
• Historically, with a long lag, consumer leverage increases as first-time workers move into their careers.
Source: TS Lombard
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5. Import prices climbed last month, but the gains are expected to be limited as the US dollar rallies.
6. Here is a look at potential election market impacts according to Deutsche Bank.
Source: Deutsche Bank Research
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Canada
1. Housing starts were below expectations last month.
2. Canada’s housing sales-to-new listings ratio has been trending lower.
Source: Oxford Economics
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The United Kingdom
1. As we highlighted yesterday, the UK CPI report surprised to the downside.
• Core CPI:
• Services CPI:
By the way, rent inflation remains elevated.
• Retail price index:
• The PPI:
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2. A BoE rate cut next month is now fully baked in.
The expected rate trajectory has been repriced sharply lower.
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3. The UK’s official home price appreciation index exceeded expectations in August.
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Europe
1. French government spending stands out compared to its EU peers.
Source: The Economist Read full article
2. The decline in China’s luxury retail sales could point to a decrease in Swiss watch exports.
Source: PGM Global
3. Poland’s budget deficit has surged this year following increased government spending on defense and efforts to address last month’s historic flooding crisis.
Further reading
Poland’s inflation is rebounding.
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4. Here is a look at sources of food waste in the EU.
Source: Eurostat Read full article
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Asia-Pacific
1. Japan’s trade deficit last month came in much narrower than expected.
2. Next, we have some updates on Australia.
• The September employment report exceeded forecasts, …
… as the nation’s labor market continues to show remarkable strength.
– The unemployment rate declined.
– The labor force participation rate reached a new high.
• The Aussie dollar and bond yields climbed in response to the jobs report.
The probability of an RBA rate cut next month is now near zero.
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China
1. The Shanghai Shenzhen CSI 300 Index entered correction today, …
… with the Hang Seng Index also in correction territory.
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2. Bond yields are falling again.
3. Here is a look at China’s system-wide leverage.
Source: Wells Fargo Securities
4. Iron ore futures are tumbling as the market is disappointed in China’s housing stimulus.
Source: @markets Read full article
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Emerging Markets
1. India’s trade deficit narrowed sharply last month.
• Foreign investors have been pulling out of India’s equity market, partially rotating back into China.
Source: @markets Read full article
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2. Thailand’s central bank delivered its first rate cut of the cycle.
Source: Bangkok Post Read full article
• The Philippine central bank also cut rates.
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3. Vietnam’s currency is rapidly reversing recent gains.
4. South Africa’s retail sales surprised to the upside.
5. Argentina’s government continues to run a surplus.
6. EM energy stocks remain in a long-term price downtrend vs. the EM index, and relative valuations are less compelling.
Source: Alpine Macro
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Energy
1. Brent crude remains below $75/bbl.
• Realized volatility has been rising.
• Historically, the WTI Crude Oil price recoveries have aligned with troughs in US leading economic indicators (LEIs), especially after recessions. However, the latest bounce in oil prices has stalled as momentum behind LEIs waned.
Source: Damanick Dantes; Bloomberg
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2. The American Petroleum Institute estimates a drop in US crude oil stockpiles last week.
3. Non-OPEC oil producers are projected to significantly boost output next year.
Source: @markets Read full article
4. US natural gas futures remain under pressure.
5. Global utilities have only signed 45 Mlbs of long-term contracts for uranium this year, which is well below the yearly replacement rate contracting of 150 Mlbs.
Source: Alpine Macro
• The Global X Uranium ETF (URA) continues to build long-term price momentum after a tough start.
– The VanEck Uranium and Nuclear ETF surged 7% on Wednesday.
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Equities
1. Bank stocks continue to surge.
• Shares of regional banks have been supporting the rally in small-cap indices (2 charts).
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2. S&P 500 at 6,270 by year-end?
Source: @markets Read full article
The options market sees a 10% probability of such an outcome.
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3. The US dollar’s strong gains could start to weigh on the stock market rally.
Source: @markets Read full article
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4. Here is a look at equity valuations across US and international markets.
Source: Goldman Sachs; @MikeZaccardi
5. The US price outperformance compared to the rest of the world can largely be attributed to its earnings outperformance.
Source: Goldman Sachs; @MikeZaccardi
6. Fund managers perceive an election sweep in November as a negative factor for stocks.
Source: BofA Global Research
7. The Nasdaq 100 futures open interest declined sharply this week.
Source: @technology Read full article
8. VIX remains above its 200-day moving average ahead of the elections.
9. What if China’s stimulus exceeds expectations? According to some estimates, the stimulus package could be well above 5 trillion yuan. How might key equity sectors be affected over the next 60-90 days? We used one of OpenAI’s latest models, incorporating historical data and recent news, to generate this upside scenario.
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Credit
1. Chapter 11 filings continue to climb.
Source: @economics Read full article
2. Dealers are short investment-grade bonds.
Source: BofA Global Research; III Capital Management
3. Covenant quality remains poor.
Source: @wealth Read full article
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Rates
1. The 10-year Treasury yield is testing initial resistance along with the US Citi Economic Surprise Index.
Source: Damanick Dantes; Bloomberg
2. Fund managers see a US election sweep in November as a negative for bonds.
Source: BofA Global Research
3. Inflation-linked Treasuries continue to experience outflows.
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Global Developments
1.. Fund managers have grown more optimistic about global growth this month, …
Source: BofA Global Research
… increasingly anticipating a soft landing
Source: BofA Global Research
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2. Here is a look at relative currency valuations, as assessed by Deutsche Bank.
Source: Deutsche Bank Research
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Food for Thought
1. Florida’s power outages and electricity demand:
Source: BloombergNEF Read full article
2. Impact of immigration policy scenarios on US GDP and inflation:
Source: @business Read full article
3. US 2024 presidential election betting market probabilities:
Source: @TheTerminal, Bloomberg Finance L.P.
4. Share of online job postings for AI jobs:
Source: Federal Reserve Bank of Atlanta
5. Data centers’ share of total power consumption:
Source: Torsten Slok, Apollo
6. Job mobility declines with age across OECD countries.
Source: OECD Read full article
7. Cumulative number of exoplanets discovered:
Source: Our World in Data Read full article
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