The Daily Shot: 18-Oct-24
• The United States
• Canada
• The Eurozone
• Europe
• Japan
• China
• Emerging Markets
• Cryptocurrency
• Commodities
• Energy
• Equities
• Credit
• Global Developments
• Food for Thought
The United States
1. Despite weak consumer sentiment, US household spending remains robust, with last month’s retail sales exceeding expectations.
Source: MarketWatch Read full article
• The increase in spending was broad-based, with most sectors posting gains, …
… pushing the retail sales diffusion index to its highest level in two years.
• Real retail sales also continued to climb in September.
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2. The retail sales upside surprise lifted the Atlanta Fed’s GDPNow Q3 growth estimate to 3.4% annualized.
Source: Federal Reserve Bank of Atlanta
Here are the contributions.
Source: @TheTerminal, Bloomberg Finance L.P.
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3. Treasury yields jumped after the retail sales surprise, …
… and the yield curve steepened.
• The market has moved away from pricing in jubo Fed rate cuts, ….
… pricing in only 45 bps of additional rate cuts this year.
Source: @TheTerminal, Bloomberg Finance L.P.
• The US dollar continues to rally.
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4. Manufacturing output fell in September, …
… largely due to the Boeing strike.
• Meanwhile, mining output was pulled down by hurricanes Francine and Helene, weighing on overall industrial production.
Source: @economics Read full article
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5. The Philly Fed’s regional manufacturing index rebounded this month, driven by stronger demand.
This suggests a potential recovery in factory activity at the national level.
Source: @TheTerminal, Bloomberg Finance L.P.
• Factories in the Philly Fed district are not engaging in much hiring at the moment, but they plan to increase hiring in the coming months.
– More manufacturers plan to boost workers’ hours.
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6. Initial jobless claims eased last week but remained elevated, largely due to the impact of the hurricanes (2 charts).
Source: @RenMacLLC
Source: @economics Read full article
Here is the seasonally adjusted index.
Source: @TheTerminal, Bloomberg Finance L.P.
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Canada
1. Foreigners sold C$12 billion worth of Canadian equities in August.
2. There has been a wide dispersion between the gold price and TSX micro-caps this year.
Source: Aazan Habib, Paradigm Capital
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The Eurozone
1. As expected, the ECB cut rates again.
Source: @economics Read full article
• Lagarde expressed optimism about the ECB’s efforts to curb inflation.
Christine Lagarde: – The incoming information on inflation shows that the disinflationary process is well on track. The inflation outlook is also affected by recent downside surprises in indicators of economic activity. Meanwhile, financing conditions remain restrictive.
Source: @economics Read full article
• The ECB’s policy is increasingly diverging from that of the Fed.
Source: @WSJ Read full article
Here are a couple of reasons.
– Inflation divergence:
Source: @TheTerminal, Bloomberg Finance L.P.
– Growth divergence:
Source: @TheTerminal, Bloomberg Finance L.P.
• The ECB is now watching the PMIs closely as the indicators remain in contraction territory.
Source: Pantheon Macroeconomics
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2. The market has begun to price in a jumbo ECB rate cut for both December and March.
Source: Reuters Read full article
• The ECB rate trajectory has been repriced sharply lower.
• The euro has been weakening.
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Europe
1. Shares of European automakers continue to struggle.
2. Swiss watch exports dipped below 2022 levels amid soft demand from China.
Source: @markets Read full article
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Japan
1. The headline CPI eased last month, …
… but core inflation ticked higher.
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2. The market has raised its expectations for a BoJ rate hike later this year.
Source: @TheTerminal, Bloomberg Finance L.P.
3. USD/JPY climbed above 150 as the yen continues to weaken.
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China
1. China’s GDP growth declined on a year-over-year basis.
Source: Reuters Read full article
The economy got a boost from China’s services sector.
Source: ING
• Beijing was quick to disclose more information on stimulus after the GDP print.
Source: @economics Read full article
• Stocks jumped.
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2. Home prices declined again last month, …
Source: @TheTerminal, Bloomberg Finance L.P.
… pushing steel prices lower.
• Real estate investment remains depressed.
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3. Last month’s industrial production and retail sales surprised to the upside. We will have more on the topic on Monday.
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Emerging Markets
1. Chile’s central bank delivered another rate cut.
2. Turkey’s central bank is holding the benchmark rate at 50%.
3. A recovery in global trade could benefit EM currencies.
Source: MRB Partners
4. EM-focused equity funds registered outflows.
Source: BofA Global Research
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Cryptocurrency
1. It has been a good week for cryptos with Bitcoin Cash (BCH) and Litecoin (LTC) outperforming top peers.
Source: FinViz
2. BTC/USD is attempting to break above its short-term downtrend.
3. The Crypto Fear & Greed Index entered “greed” territory.
Source: Alternative.me
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Commodities
Gold hit another record high and is now up 40% from a year ago.
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Energy
1. US crude oil and refined products inventories report was bullish, with stockpiles declining across the board.
Source: @WSJ Read full article
• Gasoline demand eased.
• Jet fuel inventories have normalized.
Source: @markgongloff, @opinion Read full article
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2. US crude oil production hit a record high.
3. This table outlines potential US election winners/losers across the energy industry.
Source: MRB Partners
4. BofA’s private clients have been exiting energy funds.
Source: BofA Global Research
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Equities
1. Foreigners bought almost $65 billion of US equities in August.
2. Tech funds are seeing some outflows, …
Source: BofA Global Research
… but the overall equity ETF inflows have been robust.
Source: JP Morgan Research; @WallStJesus
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3. Earnings expectations for large and small caps continue to diverge.
Source: @TheTerminal, Bloomberg Finance L.P.
4. Here’s a look at US equity ownership over time, …
Source: Goldman Sachs; @MikeZaccardi
… with households playing an increasingly dominant role.
Source: Goldman Sachs; @MikeZaccardi
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5. Realized and implied volatility measures have diverged ahead of the elections.
Source: @TheTerminal, Bloomberg Finance L.P.
6. How might various sectors be impacted by a contested US election? Below is an AI-generated scenario analysis.
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Credit
1. Foreigners purchased almost $42 billion of US corporate bonds in August.
2. Corporate IG bond fund inflows remain robust.
Source: BofA Global Research
• Leveraged loan funds are also seeing inflows.
Source: BofA Global Research
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Global Developments
1. Easing monetary conditions should support global growth.
Source: Simon White, Bloomberg Markets Live Blog
2. The dispersion among ex-US equity valuations remains elevated.
Source: BlackRock Investment Institute
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Food for Thought
1. The impact of Hurricane Milton visible in card spending data:
Source: BofA Global Research; @MikeZaccardi
2. US online search advertising revenue share:
Source: @WSJ Read full article
3. Map of Lebanon highlighting Hezbollah areas:
Source: The Economist Read full article
4. Obesity rates among US adults by sex and education level:
Source: CDC
5. US federal budget deficit or surplus as a percentage of GDP by presidential term:
6. Trump/Harris media appearances (2 charts):
Source: @WSJ Read full article
Source: @WSJ Read full article
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7. US voter turnout by state in the 2020 presidential election:
8. Most stolen vehicle models in the US from 2021 to 2023:
Source: @axios Read full article
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Have a great weekend!
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