Posted on by The Daily Shot Editor: Lev Borodovsky

Delinquent US credit card debt highest in over a decade

The Daily Shot: 14-Nov-24
• The United States
• Canada
• The United Kingdom
• The Eurozone
• Asia-Pacific
• China
• Emerging Markets
• Cryptocurrency
• Commodities
• Energy
• Equities
• Alternatives
• Rates
• Global Developments
• Food for Thought

 

The United States

1. The CPI report was roughly in line with expectations, indicating that inflation remains sticky.
 
– Healine CPI (month-over-month):
 

 
– Core CPI:
 

 
Source: Reuters   Read full article  
 
• The core goods CPI edged higher, …
 

 
… boosted by a sharp increase in used vehicle prices (see second panel).
 

 
Excluding used vehicles, however, the core goods CPI contracted.
 
Source: @RenMacLLC  
 
• The core services CPI remained elevated, …
 

 
… as housing inflation strengthened.
 

 
– Medical care services prices increased again.
 

 
– The transportation services CPI components were mixed, with vehicle repair costs and airline fares posting strong gains for three consecutive months, while car insurance costs unexpectedly declined.
 

 
– Apparel prices declined sharply.
 

 
– Here is the supercore CPI.
 

 
– This chart illustrates the changes in CPI components for October.
 
Source: @KevRGordon  
 
• The breadth of inflation increases ticked higher but remains below average levels.
 
Source: @ShaneOliverAMP  
 
We will have more data on US inflation trends tomorrow.

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2. Short-term Treasury yields declined as the market breathed a sigh of relief that the CPI report wasn’t more alarming.
 

 
– Market expectations for a December Fed rate cut have risen, with the probability approaching 90%.
 

 
– However, longer-term yields rose, with the 10-year yield approaching 4.5%.
 

 
The Treasury curve steepened (2 charts).
 

 

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3. The US dollar continues to surge.
 

 
4. US real wages keep improving.
 

 
5. The percentage of US credit card debt that is delinquent reached its highest level in over a decade last quarter.
 

 
6. Mortgage applications for home purchases are hovering at last year’s depressed levels.
 

 
Here is the rate lock count.
 
Source: AEI Housing Center  
 
Refi activity seems to be stabilizing.
 

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Canada

1. TSX Index breadth is starting to weaken.
 
Source: Aazan Habib, Paradigm Capital  
 
2. A rapid slowdown in population growth could cool rent inflation.
 
Source: Capital Economics  

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The United Kingdom

1. The latest RICS report points to further improvements in the housing market.
 

 
Source: Reuters   Read full article  

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2. GBP/USD remains under pressure.
 

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The Eurozone

1. The euro continues to retreat vs. the dollar.
 

 
2. In US dollar terms, euro-area equities are getting hammered relative to US peers.
 

 
• Shares of automakers and suppliers continue to sink.
 

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3. Here is a look at rising sick leave in Germany post-pandemic and a comparison of work hours lost due to sickness.
 
Source: @financialtimes   Read full article  

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Asia-Pacific

1. The yen continues to retreat, with USD/JPY breaching 156.
 

 
JGB yields keep climbing.
 

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2. New Zealand’s house sales are running well above last year’s levels.
 

 
• The Kiwi dollar is down sharply vs. the US dollar.
 

 
• Bond yields are rising.
 

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3. Next, we have some updates on Australia.
 
• The labor market showed signs of cooling.
 

 
Source: Reuters   Read full article  
 
– The unemployment rate was almost unchanged.
 

 
– Labor force participation inched lower.
 

 
• Australia’s inflation expectations continue to ease.
 

 
• The Aussie dollar is selling off relative to the USD.
 

 
Bond yields are rising.
 

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China

1. Corporate bond issuance has slowed materially, but total bank credit has held up much better.
 
Source: PGM Global  
 
2. The US share of China’s exports has been trending lower.
 
Source: Capital Economics  

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Emerging Markets

1. India’s Nifty equity index is testing support at the 200-day moving average.
 

 
• Wholesale inflation increased last month.
 

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2. Turkey’s home sales are at a multi-year high for this time of the year.
 

 
3. Brazil’s services output continues to surge.
 

 
4. Philippine stocks are deep in correction territory.
 
Source: @DavidInglesTV  
 
5. The Mexican Peso is one of the most overvalued currencies in EM.
 
Source: Alpine Macro  

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Cryptocurrency

1. Bitcoin is trading above $90k.
 

 
2. Bitcoin and gold have diverged after the US election.
 
Source: Gavekal Research  
 
The correlation between gold and bitcoin has moved deep into negative territory.
 

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3. Dogecoin is up almost 150% month-to-date.
 

 
• Here is a look at the month-to-date crypto returns.
 

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4. The iShares Bitcoin Trust ETF daily fund inflows continue to surge.
 
Source: @EricBalchunas  

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Commodities

1. Iron ore futures are weakening amid concerns about softer demand from China.
 

 
2. Copper has been under pressure as the US dollar surges.
 

 
3. Coffee futures are trading near multi-year highs.
 

 
4. Chicago milk futures keep tumbling (Class III milk is mostly used to make cheese).
 

 
5. US lumber continues to rally amid preemptive purchasing ahead of expected US tariffs.
 

 
6. This scatterplot illustrates the correlations of commodity markets with the S&P 500 and the US dollar.
 

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Energy

1. Shale oil well productivity has been surprisingly strong (2 charts).
 
Source: @markets   Read full article  
 
Source: @business   Read full article  
 
This infographic highlights key changes that have led to improved productivity among shale drillers.
 
Source: @business   Read full article  

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2. European natural gas futures keep moving higher.
 

 
3. Here is a look at the annual solar PV deployment in the EU and US from 2005 to 2023.
 
Source: BRUEGEL   Read full article  

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Equities

1. The S&P 500 risk premium (forward earnings yield minus the 10-year Treasury yield) has turned negative for the first time since 2002, indicating frothy valuations in the US stock market.
 

 
2. VIX is nearing 14.
 

 
3. ETF flows hit a record high of $1.4 trillion this year.
 
Source: @financialtimes   Read full article  
 
• Flows into active ETFs have accelerated in recent years, while active mutual funds experienced negative flows. (2 charts)
 
Source: J.P. Morgan Asset Management  
 
Source: J.P. Morgan Asset Management  
 
• Equity funds still take in more than half of flows, but much less than the 85% share in 2019.
 
Source: J.P. Morgan Asset Management  

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4. Investors now expect small caps to outperform.
 
Source: BofA Global Research  
 
5. There has been a substantial drop in the number of publicly listed US firms over the past 30 years.
 
Source: Torsten Slok, Apollo  
 
6. Next, let’s take a look at how different segments of the equity market are correlated to Treasuries and the S&P 500.
 
• Sectors:
 

 
• Factors/styles:
 

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Alternatives

1. The chart below shows the current allocation of institutional investors across major alternative asset strategies.
 
Source: Goldman Sachs  
 
2. This chart provides an overview of the dominance of financial sponsors in US private equity exits within buy-and-build platforms.
 
Source: Goldman Sachs  

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Rates

1. The 10-year Treasury yield has already deviated from its typical post-Fed cut path. A major factor this year has been resilient economic growth and overly aggressive rate-cut expectations.
 
Source: MRB Partners  
 
2. Treasury yield sensitivity to economic surprises has been elevated.
 
Source: BlackRock Investment Institute  

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Global Developments

1. Rising policy uncertainty has occurred alongside an increase in fixed-income volatility.
 
Source: MRB Partners  
 
2. Which countries are likely to be most impacted by US tariffs?
 
Source: Deutsche Bank Research  
 
• This chart shows the estimated impact of proposed Trump tariffs on exports of goods to the US by 2028.
 
Source: @MaevaDebarge, Bloomberg Economics   Read full article  

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Food for Thought

1. Top financial stress factors for US military families:
 
Source: Wells Fargo Securities  
 
2. Preferred sources for weather emergency updates:
 
Source: @CivicScience   Read full article  
 
3. Top destinations for college graduates:
 
Source: The Economist   Read full article  
 
4. Top 10 prescription drugs in the US:
 
Source: Visual Capitalist   Read full article  
 
5. Proposed US small modular nuclear reactor (SMR) capacity by developer and customer type:
 
Source: @financialtimes   Read full article  
 
6. Shift in Trump’s vote share among diverse urban areas and high-cost counties since 2020:
 
Source: The Washington Post   Read full article  
 
7. The Earth’s fifteen tectonic plates:
 
Source: It’s a natural universe   Read full article  
 

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