The Daily Shot: 28-Oct-24
• The United States
• Canada
• The United Kingdom
• The Eurozone
• Japan
• China
• Emerging Markets
• Commodities
• Energy
• Equities
• Credit
• Rates
• Global Developments
• Food for Thought
The United States
1. Treasury yields continue to rise, with this morning’s bond selloff driven by what appears to be a “calibrated” Israeli response to Iran’s attack earlier this month.
• The combination of rising bond yields and a stronger dollar has been tightening US financial conditions.
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2. Economists anticipate an additional 50 bps of Fed rate cuts this year, followed by approximately 120 bps of reductions next year.
Source: @TheTerminal, Bloomberg Finance L.P.
• Market expectations for Fed rate cuts have been significantly scaled back, …
Source: @TheTerminal, Bloomberg Finance L.P.
… with a total of 140 bps of reductions anticipated before the end of the easing cycle.
Source: @TheTerminal, Bloomberg Finance L.P.
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3. US durable goods orders declined in September, …
… dragged lower by Boeing’s challenges.
• Excluding transportation, durable goods orders exceeded expectations, with capital goods orders showing robust gains.
– After a prolonged decline, real capital goods orders appear to have stabilized.
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4. The U. Michigan’s final October consumer sentiment report came in stronger than earlier estimates.
Source: @economics Read full article
• Inflation expectations were revised lower.
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5. The Citi US Economic Surprise Index continues to rise.
6. The Atlanta Fed’s GDPNow Q3 growth estimate remains above 3% (annualized), …
Source: Federal Reserve Bank of Atlanta
Source: @TheTerminal, Bloomberg Finance L.P.
… surpassing economists’ forecasts. Growth is expected to slow in the current and the following quarter.
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Canada
1. Canada’s retail sales climbed for the third consecutive month, according to the September estimate.
Source: @WSJ Read full article
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2. The loonie’s 2-week implied volatility has surged in anticipation of the US elections.
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The United Kingdom
1. Pantheon Macroeconomics expects the government budget deficit to widen.
Source: Pantheon Macroeconomics
2. Here is a look at commercial property value growth forecasts.
Source: Reuters Read full article
3. Correction: The September manufacturing PMI did not slip into contraction territory this month, as our earlier chart indicated. However, growth has stalled, and demand (second panel) is contracting.
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The Eurozone
1. Germany’s Ifo index of business climate showed improvement this month, topping expectations.
Here are the trends by sector.
Source: ifo Institute
Source: Reuters Read full article
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2. French consumer confidence edged lower.
3. EUR/USD is testing short-term support as the dollar approaches resistance.
Source: Aazan Habib, Paradigm Capital
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Japan
Japan’s ruling party has lost its majority in the Lower House.
Source: NBC News Read full article
Source: @AsiaElects
• The yen retreated further.
• Longer-dated JGB yields have been climbing.
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China
1. Industrial profits softened further in September.
2. Utilized foreign direct investment strengthened last month but remains well below 2023 levels.
3. Equity margin trading surged following Beijing’s announcement of multiple stimulus measures.
4. China has increasingly relied on domestically manufactured industrial robots.
Source: Gavekal Research
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Emerging Markets
1. Economists have been downgrading Mexico’s GDP growth forecasts.
2. Economists are revising down their forecasts for Argentina’s 2025 CPI, yet the median projection remains above 50%.
3. Russia’s central bank hiked its benchmark rate to the highest level in recent history.
Source: AP News Read full article
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4. Turkey’s manufacturing confidence is rebounding.
5. EM equity funds are seeing some ouflows.
Source: BofA Global Research
6. Next, we have some performance data from last week.
• Currencies:
• Bond yields:
• Equity ETFs:
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Commodities
1. Palladium jumped another 3% on Friday.
2. Gold is experiencing a winning streak above its 200-day moving average, which is typically a bullish development within its long-term uptrend.
Source: SentimenTrader
3. Fund managers have nearly covered their bets against US corn futures.
Source: @SusanNOBULL, @Barchart Read full article
4. HRW wheat futures sold off last week.
5. Here is a look at last week’s performance.
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Energy
1. Brent crude tumbled following what appears to be a “calibrated” Israeli response to Iran’s recent attack.
Source: The New York Times Read full article
• The Israeli shekel surged.
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2. Wind installations have lagged significantly behind added solar capacity.
Source: @climate Read full article
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Equities
1. A basket of tariff-sensitive stocks within the S&P 500 started to underperform as the probability of a Trump victory rose.
Source: Deutsche Bank Research
• How do stocks perform going into close presidential elections?
Source: Deutsche Bank Research
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2. Goldman’s sentiment indicator remains in bullish territory but is not stretched.
Source: Goldman Sachs; @MikeZaccardi
3. The correlation between the average stock (equal weight index) and the S&P 500 has declined substantially this year. Stock pickers could benefit from this dislocation.
h/t @RBAdvisors
4. The Magnificent 7 earnings growth has slowed.
Source: @markets Read full article
5. Tech funds saw some outflows in recent days
Source: Deutsche Bank Research
6. Volatility premium (implied vs. realized) tends to rise ahead of the US presidential elections.
Source: Deutsche Bank Research
7. The US dollar continues to rally.
How might US equity sectors be impacted if this trend persists over the next 60 to 90 days? Below is an AI-based scenario analysis.
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8. Next, we have some performance data from last week.
• Sectors:
– Banks (US regional banks are underperforming again):
– Healthcare:
• Factors:
– Buyback basket:
• Macro basket pairs’ relative performance:
• Thematic ETFs:
• Largest US tech firms:
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Credit
1. US BDC portfolios have shown increasing spread compression, with the share of richly priced loans (700bps or more) dwindling.
Source: PitchBook
2. US LBO loan volume is rising.
Source: PitchBook
3. Here is last week’s performance.
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Rates
1. The resilient economy accounted for roughly half of the recent rise in Treasury yields, which caused markets to pare back large rate cut expectations. The other half is possibly due to election pricing.
Source: Russell Investments Read full article
2. Goldman sees Treasury yields declining sharply before the end of the year.
Source: Goldman Sachs; @MikeZaccardi
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Global Developments
1. Speculative accounts are now net long the US dollar in the futures market.
Source: @markets Read full article
• The dollar has just started to build a risk premium, possibly reflecting rising trade risk.
Source: Deutsche Bank Research
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2. Global M&A activity is experiencing an upturn.
Source: PitchBook
3. Next, we have some performance data from last week.
• Currencies:
• Bond yields:
• Equity indices:
• USD-denominated equity ETFs:
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Food for Thought
1. Online casino revenue in New Jersey is closing in on land-based casinos:
Source: @technology Read full article
2. Girl Scouts USA FY23 operating revenues and expenses:
Source: @chartrdaily
3. Homes per 1,000 inhabitants in selected countries:
Source: The Economist Read full article
4. Projected median age of major global populations through 2100:
Source: The Economist Read full article
5. Medicaid enrollment:
Source: Alpine Macro
6. Pressures experienced by US teens across different areas:
Source: @chartrdaily
7. Payroll cost per win for MLB teams in the 2024 season:
h/t Wells Fargo Securities
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