Posted on by The Daily Shot Editor: Lev Borodovsky

Swiss franc, Treasuries gain on Putin’s new nuclear doctrine

The Daily Shot: 19-Nov-24
• Global Developments
• The United States
• Canada
• The United Kingdom
• The Eurozone
• Japan
• China
• Emerging Markets
• Cryptocurrency
• Commodities
• Energy
• Equities
• Credit
• Rates
• Food for Thought

 

Global Developments

1. After Biden authorized Ukraine to use US missiles on Russian territory, Putin signed a new doctrine allowing Russia to respond with nuclear weapons without requiring a direct nuclear attack.
 
Source: ABC News   Read full article  
 
• The Swiss franc, typically a haven currency, strengthened following the announcement from Russia.
 

 
Treasury yields declined.
 

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2. Europe and Japan’s share of global GDP has substantially declined over the past 20 years, while China has increased.
 
Source: Deutsche Bank Research  
 
3. Here is a look at enterprise survival and birth rates across selected economies.
 
Source: Codera Analytics  

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The United States

1. Homebuilder sentiment improved further this month, with single-family unit sales expectations reaching their highest level since 2022.
 

 
Source: @economics   Read full article  

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2. US import prices unexpectedly rose last month, but the strength of the dollar in November is expected to reverse this trend.
 

 
Source: MarketWatch   Read full article  

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3. Business applications registered a robust increase last month.
 

 
4. The US federal debt-to-GDP ratio has increased sharply and is projected to keep climbing.
 
Source: Deutsche Bank Research  
 
5. Next, we have some data on the potential trade war.
 
• How might a trade war affect US and global GDP growth next year?
 
Source: @JeffreyKleintop   Read full article  
 
• Companies are increasingly discussing tariffs on earnings calls.
 
Source: @M_McDonough  
 
• Below is a forecast for tariff increases from Bloomberg Economics.
 
Source: @AnnaEconomist, @economics   Read full article  
 
• As observed during the 2018–2019 period, consumer goods affected by tariffs experienced significant price increases.
 
Source: Goldman Sachs; @SamRo  
 
Here are two scenarios illustrating how tariffs could affect inflation.
 
Source: Goldman Sachs; @MikeZaccardi  

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Canada

1. Housing starts increased again last month.
 

 
2. Foreigners bought about CAD 15 billion of Canadian equities in September.
 

 
3. Oxford Economics projects a shallower path for BoC rates compared to market expectations.
 
Source: Oxford Economics  

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The United Kingdom

1. Economists raised their projections for UK GDP growth next year, boosted by increased government spending.
 

 
2. UK productivity softened last quarter.
 

 
3. The rise in US economic momentum versus the UK suggests lower gilt yields ahead, which could also impact GBP/USD negatively.
 
Source: BCA Research  

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The Eurozone

1. Economists continue to reduce their 2025 growth estimates for Germany and France, downgrading industrial production forecasts for both economies.
 
Germany:

 
France:
 

 
• Projections for business investment growth at the Eurozone level continue to sink.
 

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2. Economists are further reducing their 2025 year-end projections for the ECB rate, now anticipating 125 bps of cuts between now and the end of 2025.
 
Source: @TheTerminal, Bloomberg Finance L.P.  
 
3. The euro-area trade surplus was higher than expected in September.
 

 
4. It’s been a challenging year for European shares relative to the US.
 
Source: @financialtimes   Read full article  

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Japan

1. Machinery orders surprised to the downside.
 

 
Source: The Japan Times   Read full article  

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2. When will the BoJ raise rates? Here is a forecast from Oxford Economics.
 
Source: Oxford Economics  
 
3. Japan’s arms imports from the US have risen lately.
 
Source: Barclays Research  

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China

1. FXI ETF (China large caps) outflows reached almost $1 billion last week.
 

 
2. Barclays forecasts a weaker CNY amid moderating GDP growth.
 
Source: Barclays Research  

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Emerging Markets

1. Chile’s GDP growth strengthened last quarter (on a year-over-year basis).
 

 
2. Colombia’s growth was a bit disappointing.
 

 
Source: @economics   Read full article  

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3. The Turkish lira’s declines accelerated in recent days as the currency continues to hit record lows vs. the dollar.
 

 
Source: @markets   Read full article  
 
• The Turkish government may need to introduce higher-denomination notes following years of persistently high inflation.
 
Source: @markets   Read full article  

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4. This scatterplot illustrates that countries with the largest goods surpluses with the US experienced the biggest currency declines since the US elections.
 
Source: Alpine Macro  

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Cryptocurrency

1. The Crypto Fear & Greed Index moved deeper into “extreme greed” territory.
 
Source: Alternative.me  
 
2. Crypto funds continued to see inflows last week.
 
Source: CoinShares   Read full article  
 
Source: Deutsche Bank Research  
 
However, investors added to short-Bitcoin funds and exited multi-asset products last week.
 
Source: CoinShares   Read full article  

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3. Bitcoin’s market cap as a percentage of the total crypto market cap (dominance ratio) is testing long-term resistance. Could we see a reversal into altcoins?
 

 
4. 37% of top altcoins have outperformed bitcoin over the past 90 days. (2 charts)
 
Source: Blockchain Center  
 
Source: Blockchain Center  

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Commodities

1. Let’s begin with some updates on gold.
 
• For now, gold is tracking its post-2016-election trend.
 

 
• Gold ETF outflows accelerated in recent days.
 

 
• Central banks’ gold purchases increased after Russia’s central bank assets were frozen in 2022.
 
Source: Goldman Sachs; @WallStJesus  
 
• Gold at $3,150 by the end of next year? The options market assigns a 19% probability of such an outcome (based on options maturing at the end of November 2025).
 
Source: Fortune   Read full article  
 

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2. European olive oil prices tumbled in recent days.
 

 
3. Next, we have some positioning data for select US agricultural commodities based on speculative futures positions.
 
• Corn:
 

 
• Soybean oil:
 

 
• Rough rice:
 

 
• CME lean hogs:
 

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Energy

1. US retail gasoline prices continue to drift lower.
 

 
2. Oil markets are expected to be well supplied next year.
 
Source: @JavierBlas, @IEA  
 
3. China’s solar module industry is grappling with overproduction and an intense price war.
 
Source: @climate   Read full article  

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Equities

1. All eyes are on Nvidia’s earnings report this week. Here is the S&P 500 short-term volatility curve.
 

 
2. Aggregate equity futures positioning remains elevated.
 
Source: Deutsche Bank Research  
 
• Here is Deutsche Bank’s measure of US small-cap positioning.
 
Source: Deutsche Bank Research  

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3. Foreigners bought $121 billion worth of US equities in September.
 

 
4. The S&P 500 at 6,700 by the end of next year? The options market assigns about a 24% probability to such an outcome.
 
Source: CNBC   Read full article  
 

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5. Next, we have some sector updates.
 
• The S&P 500 financials index hit its 27th record high of the year.
 

 
– We could see further gains based on the post-2016-election performance.
 

 
• This chart shows current sector drawdowns from the highs.
 

 
• Biotech stocks have been struggling this month.
 

 
• The US healthcare sector is expected to outperform over the long run as the nation’s population ages.
 
Source: Oxford Economics  

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6. The biggest 10 US stocks now account for 21% of total global market capitalization.
 
Source: Goldman Sachs; @MikeZaccardi  
 
7. Improving liquidity could be a tailwind for global stocks.
 
Source: BofA Global Research  
 
8. Leveraged ETFs increasingly exacerbate equity market moves.
 
Source: BofA Global Research; @neilksethi  

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Credit

1. Foreigners purchased $43 billion of US corporate bonds in September.
 

 
2. Here is a look at fund flows by asset class.
 
Source: Deutsche Bank Research  
 
3. Generally, US corporations have avoided taking on higher borrowing costs.
 
Source: Barclays Research  
 
4. US loan growth in the banking system has been relatively weak since the Fed started tightening policy.
 
Source: MarketDesk Research  

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Rates

1. Bond funds are seeing outflows.
 
Source: Barclays Research; @dailychartbook  
 
2. Goldman expects Treasuries to deliver positive returns next year.
 
Source: Goldman Sachs; @MikeZaccardi  
 
3. Japan and China have been selling Treasuries.
 
Source: @markets   Read full article  

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Food for Thought

1. Semiconductor revenues:
 
Source: BofA Global Research; @dailychartbook  
 
2. The distribution by type of the most visited websites in the world:
 
Source: Wikipedia   Read full article  
 
3. Voting preferences based on top issues among voters for Trump and Harris:
 
Source: @financialtimes   Read full article  
 
4. Remittances from selected LatAm countries as a share of GDP:
 
Source: Fitch Ratings  
 
5. Public perception vs. reality of immigrant population sizes across countries:
 
Source: Our World in Data  
 
6. Greatest hits album sales:
 
Source: @chartrdaily  
 

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