The Daily Shot: 20-Nov-24
• The United States
• Canada
• The United Kingdom
• Europe
• Japan
• China
• Cryptocurrency
• Commodities
• Energy
• Equities
• Alternatives
• Credit
• Global Developments
• Food for Thought
The United States
1. Let’s begin with the housing market.
• US housing starts fell back below last year’s levels in October, …
… impacted by hurricanes in the southern region.
Source: Oxford Economics
– However, building permits for single-family units improved, exceeding 2023 levels.
On the other hand, multifamily building permits remained soft.
This seasonally adjusted chart illustrates the divergence between single-family and multifamily permits.
Source: @TheTerminal, Bloomberg Finance L.P.
• Multifamily units under construction have dropped 19% from last year, marking the steepest decline since 2011 (2nd panel).
• The spread between total building permits and housing completions remains negative.
Source: @TheTerminal, Bloomberg Finance L.P.
• Housing starts remain low relative to the nation’s population.
Source: @opinion Read full article
• Home price appreciation held up well last month, according to Redfin.
Source: Redfin
• The percentage of sales to first-time home buyers has fallen to a record low.
Source: @WSJ Read full article
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2. US consumer credit has tightened, according to the latest NY Fed survey, with rejection rates on credit applications rising.
Source: @wealth Read full article
3. The unemployment rate among recent college grads has risen well above the total unemployment rate.
Source: Federal Reserve Bank of New York
4. Consumer-facing companies are increasingly focused on affordability.
Source: Goldman Sachs
5. Profits as a share of gross value added is near its cyclical peak.
Source: J. Safra Sarasin
6. Big tech CapEx growth is expected to decelerate.
Source: Goldman Sachs; @MikeZaccardi
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Canada
1. The October CPI report surprised to the upside.
• Here is the core CPI.
• Rent inflation slowed.
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2. The market scaled back BoC rate cut expectations following the CPI report, with the likelihood of a jumbo cut next month decreasing.
Here is the market pricing for the year-end CORRA.
Source: @TheTerminal, Bloomberg Finance L.P.
• Bond yields and the loonie gained.
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3. In USD terms, Canadian shares have outperformed their US counterparts in recent days.
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The United Kingdom
1. The October CPI report topped expectations.
• Here is the core CPI.
• Services CPI remains elevated, …
… as rent inflation hits a multi-year high.
• Retail price inflation also registered an increase.
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2. A BoE rate cut next month is now off the table.
The market-implied overnight rate trajectory shifted higher this week.
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3. Expansionary fiscal policy could boost GDP growth and inflation, which could encourage the BoE to cut rates only gradually. (2 charts)
Source: J. Safra Sarasin
Source: J. Safra Sarasin
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Europe
1. ECB officials have adopted a less dovish tone this month, …
… amid expectations of stronger wage growth (and a weaker euro).
Source: Nomura Securities
However, services inflation is trending lower.
Source: Commerzbank Research
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2. Spain’s housing sales climbed to their highest levels since 2008.
3. European stocks remain under pressure.
4. Here is a look at the EU’s goods trade with the US (2 charts).
Source: @DanielKral1, @OxfordEconomics
Source: @DanielKral1, @OxfordEconomics
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Japan
Last month’s exports were stronger than expected.
Source: CNBC Read full article
The trade deficit widened.
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China
1. China could face difficulties devaluing its currency against the dollar to offset potential US tariffs. BCA Research estimates that the RMB would have to depreciate by at least 20% to compensate for a 60% tariff, which could send USD/CNY to levels above 8.5, sparking capital outflows and potential market panic domestically.
Source: BCA Research
• Beijing has been closely managing the renminbi’s performance relative to other Asian currencies.
Source: Gavekal Research
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2. Business sentiment has weakened.
Source: Alpine Macro
3. China’s share of global export manufacturing has risen over the past 20 years.
Source: BCA Research
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Cryptocurrency
1. Bitcoin reached another record high.
2. Ether hit its lowest level relative to bitcoin since 2021.
3. Here is a look at crypto performance since the US election day.
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Commodities
1. The copper/gold price ratio is approaching support.
• The gap between copper price and inflation expectations has been closing.
Source: Longview Economics
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2. Cocoa prices reached the highest level since 1990.
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Energy
1. API’s report points to a US inventory build last week.
Source: @markets Read full article
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2. Crude oil implied volatility continues to trend lower.
3. China’s oil imports increased this month.
Source: Gavekal Research
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Equities
1. The post-election jump in Deutsche Bank’s positioning indicator has been extreme.
Source: Deutsche Bank Research
• This chart shows buy-side positioning in small caps.
Source: RBC; @WallStJesus
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2. Here is a look at cumulative regional fund flows.
Source: Deutsche Bank Research
• Equity ETF inflows have surged.
Source: @Todd_Sohn
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3. Corporate insiders have been dumping shares.
Source: @financialtimes Read full article
Source: @markets Read full article
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4. Momentum stocks continue to outperform.
5. US stocks have benefited from a gradual rate-cut cycle, likely due to the absence of recession-driven emergency cuts.
Source: BofA Global Research
6. Equity mutual funds’ cash levels are at record lows.
Source: Goldman Sachs; @MikeZaccardi
7. S&P 500 earnings estimates for 2025 have dropped significantly since August.
Source: @markets Read full article
8. Goldman expects M&A activity to rise next year.
Source: Goldman Sachs; @MikeZaccardi
9. Traders have been bidding up out-of-the-money call options on the VIX as a hedge against tail risks.
Source: @TheTerminal, h/t Chris Murphy, Susquehanna International Group
• The 2016 post-election performance suggests additional downside potential for the VIX.
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Alternatives
1. Private equity dry powder declined this year.
Source: BofA Global Research; @dailychartbook
2. PE exits have been depressed.
Source: BofA Global Research; @dailychartbook
• Exit values appear to have troughed.
Source: PitchBook
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3. There has been record activity in secondary markets, as growing discounts on private company shares reflect a rush for liquidity amid sluggish exits.
Source: @wealth Read full article
4. The median time between US startup primary rounds has lengthened considerably over the past two years.
Source: Carta
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Credit
1. Deutsche Bank anticipates a robust year for structured credit issuance in 2025.
Source: Deutsche Bank Research
2. CLOs have outperformed since the Fed’s first rate cut in September (while long-term Treasury yields have increased).
Source: VanEck Read full article
3. Demand for business loans declined last quarter.
Source: @TheTerminal, Bloomberg Finance L.P.
• Lenders tightened loan standards for small firms while halting tightening for large firms.
Source: @TheTerminal, Bloomberg Finance L.P.
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Global Developments
1. The US dollar rally has stalled, with the DXY index testing support at the June peak.
2. There is a strong correlation between total working-age population growth and GDP.
Source: Deutsche Bank Research
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Food for Thought
1. Remote work postings on Indeed:
Source: Indeed Hiring Lab
2. Market share trends among leading cloud providers:
Source: The Economist Read full article
3. Global distribution shift in advanced logic chip production by 2032:
Source: @technology Read full article
4. Teenage pregnancy rates:
Source: Our World in Data
5. Trump’s 2020 vs. 2024 two-party vote share among female voters:
Source: The Economist Read full article
6. US production of tree nut:
Source: @chartrdaily
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