The Daily Shot: 27-Nov-24
• The United States
• The United Kingdom
• The Eurozone
• Asia-Pacific
• China
• Emerging Markets
• Cryptocurrency
• Commodities
• Equities
• Alternatives
• Rates
• Food for Thought
As a reminder, The Daily Shot will not be published this Thursday and Friday (Nov. 28th and 29th).
The United States
1. The FOMC minutes indicated that the Fed is in no hurry to cut rates, emphasizing a “gradual” approach to policy normalization.
“… it would likely be appropriate to move gradually toward a more neutral stance of policy over time.
This chart illustrates the frequency of “gradual” and similar terms mentioned in FOMC minutes.
Some FOMC participants continue to express doubts about the accuracy of neutral rate estimates, creating uncertainty around the current monetary policy’s level of restrictiveness.
Many participants observed that uncertainties concerning the level of the neutral rate of interest complicated the assessment of the degree of restrictiveness of monetary policy and, in their view, made it appropriate to reduce policy restraint gradually.
Here is the frequency of the word “restrictive” or similar terms across FOMC minutes.
• There was less discussion of inflation/prices.
• The number of credit-related comments increased.
——————–
2. The Conference Board’s Consumer Sentiment Index showed further improvement this month, …
… with households’ outlook on the job market strengthening (2 charts).
• Inflation expectations dipped to pre-COVID levels.
——————–
3. The Richmond Fed’s manufacturing index confirmed what we’ve been seeing in other regional Fed reports: soft current activity but improving outlook.
• Factories in the region are reporting growing inventories and weakening capital expenditure plans.
4. An improvement in regional manufacturing activity points to a turnaround in the ISM manufacturing index.
Source: MRB Partners
5. Service sector regional Fed surveys also report an improving outlook.
• Richmond Fed:
• Philly Fed:
——————–
6. Next, we have some updates on the housing market.
• Home price appreciation measures were mixed in September.
– Case-Shiller (slower gains):
– FHFA (acceleration):
Home prices continue to outpace wages.
• New home sales tumbled last month, …
… partially due to the impact of hurricanes in the southern region.
Source: @TheTerminal, Bloomberg Finance L.P.
Source: @economics Read full article
– Here is the breakdown by stage of construction.
Source: @TheTerminal, Bloomberg Finance L.P.
The inventory of completed homes for sale continues to rise.
Source: BofA Global Research; @dailychartbook
Back to Index
The United Kingdom
The CBI report showed weakness in UK retail sales this month.
Source: RTT News Read full article
Back to Index
The Eurozone
1. Bund yields have been moving lower.
2. French bond spreads to Germany and sovereign CDS spreads have widened sharply due to budgetary concerns.
Source: Le Monde Read full article
French stocks are selling off.
Source: @TheTerminal, Bloomberg Finance L.P.
——————–
3. Will Germany ease its strict fiscal rules to support key investment initiatives?
Source: @bpolitics Read full article
Back to Index
Asia-Pacific
1. The yen has been strengthening.
2. South Korea’s manufacturing outlook has soured.
3. The RBNZ cut rates by 50 bps, …
Source: Reuters Read full article
… but the market had anticipated a more aggressive move. Consequently, the Kiwi dollar and bond yields surged.
——————–
4. Australia’s monthly CPI index was softer than expected, …
… but core inflation increased. The RBA is in no hurry to cut rates.
• Australia’s Q3 construction activity topped expectations.
Back to Index
China
1. China’s industrial profits improved last month, but year-to-date profits remain below last year’s levels.
Source: Reuters Read full article
——————–
2. China-focused equity ETFs are seeing substantial outflows.
Source: @markets Read full article
3. China’s steel exports are surging.
Source: @WSJ Read full article
Back to Index
Emerging Markets
1. Mexico’s equities fell on Tuesday following Trump’s threat of a 25% tariff.
2. Brazil’s mid-November CPI growth topped estimates.
Source: Reuters Read full article
——————–
3. Turkey’s inflation expectations have been easing.
Source: @SelvaBaziki; @TheTerminal Read full article
Back to Index
Cryptocurrency
1. So far, XRP has significantly outperformed top crypto peers this month.
Source: FinViz
Source: Decrypt Read full article
——————–
2. BTC long-term holders’ realized the profit/loss ratio is at an extreme.
Source: @glassnode
3. Traders who have held BTC over the past six-12 months (shorter-term) have sold to realize profits, according to blockchain data. (2 charts)
Source: @glassnode
Source: @glassnode
Back to Index
Commodities
1. Cocoa futures continue to surge.
2. Chicago lean hog futures are rising ahead of the holidays.
Back to Index
Equities
1. The S&P 500 reached its 52nd record high of the year.
2. The forward P/E ratio climbed to 22.5x, indicating elevated valuations.
Source: @TheTerminal, Bloomberg Finance L.P.
3. Deutsche Bank projects S&P 500 earnings per share to breach the upper end of the long-term uptrend channel next year.
Source: Deutsche Bank Research
4. US households have not been this bullish on the stock market in recent decades.
5. S&P 500 breadth continues to expand.
Source: Aazan Habib, Paradigm Capital
6. Monthly equity fund inflows have been exceptionally robust this year, …
Source: Deutsche Bank Research
… driven by demand for US stocks.
Source: Deutsche Bank Research
——————–
7. Investors are pouring into leveraged equity ETFs. This is not going to feel good on the way down.
Source: Nomura Securities; @WallStJesus
——————–
8. The equal-weight semiconductor ETF (ESOX) made a new price low relative to the S&P 500.
h/t @StocktonKatie
9. Fund managers have reduced their exposure to Magnificent 7 shares recently.
Source: Goldman Sachs; @AyeshaTariq
10. Will we see non-tech firms increase their CapEx spending?
Source: Deutsche Bank Research
Back to Index
Alternatives
1. High interest rates have reduced private equity leverage ratios.
Source: VRC
2. US IPO and M&A activity is recovering.
Source: PitchBook
3. The PE investment-to-exits ratio has risen sharply this year.
Source: VRC
4. Here is a look at PE deal volume by type.
Source: VRC
5. The first half of this year saw record secondary deal volume, with nearly half of those being GP-led secondaries.
Source: Schroders Read full article
6. This chart shows valuation multiples for public, private, and middle-market firms.
Source: VRC
7. Median valuations of VC-backed companies in Europe improved in Q3.
Source: PitchBook
8. Most venture deals are signed in December, with discussions most likely beginning in the prior few months.
Source: Carta
9. US venture capital down-rounds remain elevated.
Source: PitchBook
Back to Index
Rates
1. The Fed is considering reducing its overnight reverse repurchase (RRP) facility rate to align with the lower bound of the fed funds rate target range, aiming to push down money market rates.
FOMC Minutes: – The staff also noted that lowering the ON RRP offering rate 5 basis points would align the ON RRP offering rate with the bottom of the target range for the federal funds rate and would probably put some downward pressure on other money market rates.
Source: @TheTerminal, Bloomberg Finance L.P.
2. Options traders have been placing bearish bets on Treasuries.
Source: @markets Read full article
3. Treasury auction sizes have increased on average by 29% across the yield curve this year.
Source: Torsten Slok, Apollo
• Treasury issuance is rising as a share of GDP.
Source: Torsten Slok, Apollo
——————–
Food for Thought
1. Mid-priced food and beverage products struggle as both budget and premium options gain popularity.
Source: @business Read full article
2. The half-life of US businesses by industry (the time it took for 50% of the businesses in each sector that were founded in 2013 to cease operations or exit the market):
3. US women lead in college degree completion:
Source: Pew Research Center Read full article
4. Frequency of annual doctor visits across countries:
Source: Visual Capitalist Read full article
5. US foreign-born vs. native-born workforce distribution across selected occupations:
Source: Alpine Macro
6. Democrats’ support among the wealthiest vs. poorest Americans:
Source: @financialtimes Read full article
7. The most valuable Lego sets:
Source: Visual Capitalist Read full article
——————–
The next Daily Shot will be published on Monday, December 2nd.
To our US subscribers, Happy Thanksgiving!
Back to Index