The Daily Shot: 08-Nov-24
• The United States
• The United Kingdom
• The Eurozone
• Europe
• Asia-Pacific
• China
• Emerging Markets
• Cryptocurrency
• Commodities
• Equities
• Alternatives
• Food for Thought
The United States
1. As expected, the Fed cut its benchmark rate by 25 bps on Thursday.
• The FOMC statement expressed less confidence that inflation is slowing, …
Source: FOMC
… nudging Bloomberg’s sentiment indicator slightly in a hawkish direction.
Source: @TheTerminal, Bloomberg Finance L.P.
• Rising wage growth could slow the Fed’s pace of rate cuts going forward.
Source: Scotiabank Economics
• The market still expects a rate cut in December, but the situation is less certain beyond that.
Here is Goldman’s forecast.
Source: Goldman Sachs; @MikeZaccardi
– The market-implied fed funds rate trajectory shifted higher over the past few days.
• Will the Fed pause rate cuts next year?
Source: Nomura Securities
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2. Unit labor costs climbed more than expected last quarter.
Source: @economics Read full article
However, businesses experienced slower inflation in Q3.
• The increase in labor productivity was a bit below forecasts.
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3. Initial jobless claims remained low last week.
• Continuing claims are running slightly above last year’s levels.
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4. Consumer credit growth in September came in below estimates.
• Credit card debt levels eased slightly (the blue line shows real credit card debt).
– Credit card debt has been trending lower relative to disposable personal income.
• Despite media hype about household financial stress, consumer debt relative to disposable personal income has been declining, dropping well below pre-COVID levels.
– Here is the total consumer debt relative to US GDP.
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5. USD-denominated money market fund assets have risen above $6.5 trillion.
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The United Kingdom
1. The BoE cut rates as expected.
Source: @economics Read full article
• The market expects the next rate cut to be in February.
• The market-implied overnight rate trajectory shifted slightly higher over the past few days.
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2. The DMP inflation expectations eased in October.
3. Short-term gilt yields remain elevated relative to Bunds,
4. UK hiring and temporary employment activity have been contracting.
Source: S&P Global PMI
5. Growth in UK construction activity eased last month.
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The Eurozone
1. Let’s begin with Germany,
• Industrial production declined in September.
Source: ING Read full article
• The construction sector remains in recession.
• Business investment has been weakening.
Source: @economics Read full article
• The trade surplus surprised to the downside.
Source: @WSJ Read full article
• The spread between EUR rate swaps and Bund yields turned negative for the first time amid concerns that Germany may need to increase spending to stimulate economic growth.
Source: @markets Read full article
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2. Dutch manufacturing output also fell in September.
3. Spain’s industrial production improved.
4. French bond spreads remain elevated.
5. Euro-area retail sales are rebounding, with the September print surprising to the upside.
6. EUR/USD realized volatility surged this week.
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Europe
1. Riksbank cut rates by 50 bps for the first time in a decade.
Source: @economics Read full article
• Sweden’s inflation edged higher in October.
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2. The Czech central bank also cut rates.
• Czech industrial p[production eased in September.
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3. European M&A activity is increasing.
Source: ING
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Asia-Pacific
1. Japanese funds sold record amounts of foreign bonds last week.
2. South Korea’s stock market has massively underperformed Taiwan’s this year.
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China
1. FX reserves dropped last month.
2. Household consumption and housing sales remain below trend.
Source: Gavekal Research
3. Property construction is expected to continue to fall despite recent stimulus efforts.
Source: IMF; {h/t} SOM Macro Strategies
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Emerging Markets
1. Mexico’s inflation is slowing rapidly.
• Bond yields have been moving lower this week.
• The peso initially dropped following Trump’s victory in the US but has since rebounded. USD/MXN is now testing support at the 50-day moving average.
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2. Chile’s exports hit a new high for October.
Copper exports remain in record territory.
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3. Argentina’s factory output is rebounding.
4. South Africa’s electricity output remains well above last year’s levels.
5. EM debt funds are seeing outflows (2 charts).
Source: BofA Global Research
Source: BofA Global Research
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Cryptocurrency
1. It has been a good week for cryptos, with Ether (ETH) outperforming top peers.
Source: FinViz
2. Bitcoin is nearing $80k.
3. Bitcoin implied volatility dropped after the US election.
4. Bitcoin sharply outperformed gold.
Source: @markets Read full article
5. Bitcoin ETF trading volumes surged this week.
Source: @markets Read full article
6. The correlation between bitcoin and stocks jumped.
7. Crypto funds are seeing some outflows.
Source: BofA Global Research
8. ETH/USD held long-term support.
9. The ETH/BTC price ratio rose toward its 50-day moving average.
10. The Crypto Fear & Greed Index reached “extreme greed” territory earlier this week.
Source: Alternative.me
11. There was a sharp spike in short liquidations as BTC/USD rallied above $70K.
Source: Coinglass
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Commodities
1. Aluminum prices jumped on Thursday.
2. Here is a look at China’s imports of soybeans from the US and Brazil.
Source: @bpolitics Read full article
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Equities
1. The S&P 500 Equal Weighted Index hit its 27th record high of the year on Thursday.
2. VIX continues to tumble.
3. The S&P 500 valuation (forward P/E ratio) is nearing its 2020 highs.
Source: @TheTerminal, Bloomberg Finance L.P.
4. Goldman is upbeat on the S&P 500 earnings growth.
Source: Goldman Sachs; @MikeZaccardi
5. Retail buying activity increased modestly this week.
Source: Vanda Research
• This chart compares this year’s retail flows to recent elections.
Source: Vanda Research
• Retail investors boosted purchases of small caps.
Source: Vanda Research
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6. The share of Russell 2,000 companies with negative earnings continues to rise.
Source: Torsten Slok, Apollo
7. Small caps are seeing inflows.
Source: BofA Global Research
• Financials fund flows surged this week.
Source: BofA Global Research
• Tech funds are seeing outflows.
Source: BofA Global Research
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8. High levels of ownership by passive funds do not guarantee outperformance.
Source: Goldman Sachs; @MikeZaccardi
• Here is a look at passive ownership by sector.
Source: Goldman Sachs; @MikeZaccardi
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9. How might a reduction in the corporate tax rate from 20% to 15% impact different sectors? Here’s an AI-assisted scenario analysis. Note that some of these effects may already be priced in.
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Alternatives
1. The median age of US startups participating in funding rounds has increased in recent years.
Source: Carta
2. Buyout funds’ management fees have been falling.
Source: @financialtimes Read full article
• Here are the management fees by fund size.
Source: @financialtimes Read full article
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3. Equity strategy hedge funds showed the largest one-year median return, while macro showed the lowest median return.
Source: Bloomberg Indices
4. There has been an increase in macro hedge fund launches this year.
Source: Bloomberg Indices
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Food for Thought
1. Preferred holiday gifts:
Source: @CivicScience Read full article
2. Influence of social media influencers on purchase decisions by generation:
Source: The Economist Read full article
3. The inflation disconnect (economists see price changes; Main Street sees prices):
Source: BofA Global Research
4. Total housing units in the United States:
5. Google search activity for “22nd Amendment”:
6. Types of tasks for which US workers are using generative AI:
Source: St. Louis Fed Read full article
7. Most frequently chosen snack types among Gen Z:
Source: @CivicScience Read full article
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Have a great weekend!
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