December 2, 2024 by The Daily Shot Editor: Lev Borodovsky

Consumer spending slowed in October

The Daily Shot: 02-Dec-24
• The United States
• Canada
• The United Kingdom
• The Eurozone
• Japan
• Asia-Pacific
• China
• Emerging Markets
• Commodities
• Energy
• Equities
• Credit
• Rates
• Global Developments
• Food for Thought

The United States

1. Consumer spending growth slowed in October, …

… dragging the Atlanta Fed’s GDPNow Q4 growth estimate lower.

Source: Federal Reserve Bank of Atlanta

– Spending on non-durable goods declined.

Source: @TheTerminal, Bloomberg Finance L.P.

• Real incomes improved.

– Trends in real income and spending:

Source: @TheTerminal, Bloomberg Finance L.P.

– Real income ex government payments:

• Slower spending combined with rising incomes led to an increase in savings.

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2. The PCE inflation report showed faster price gains in October.

• Core PCE inflation:

• Services PCE inflation:

• Supercore PCE:

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3. US financial conditions eased last week as the dollar and Treasury yields retreated.

4. Durable goods orders saw minimal growth in October, surprising to the downside, while capital goods orders unexpectedly fell.

Source: MarketWatch Read full article

Real capital goods orders continue to decline, signaling weak business investment.

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5. The US trade deficit in goods narrowed in October …

… as imports fell more sharply than exports, …

Source: @TheTerminal, Bloomberg Finance L.P.

… with imports weakening across major sectors.

Source: @TheTerminal, Bloomberg Finance L.P.

Canada

1. Canada’s GDP growth slowed last quarter.

Source: @WSJ Read full article

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2. The CFIB Small Business Confidence Index rose sharply in November.

• CFIB by sector (data on the natural resources sector was not available):

• By province:

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3. Here is a look at Canada’s exports to the US.

Source: @bpolitics Read full article

The United Kingdom

1. Consumer credit growth was lower than expected …

… but mortgage approvals accelerated.

Source: RTT News Read full article

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2. EUR/GBP hit the lowest level since early 2022.

The Eurozone

1. Euro-area inflation ticked up in November.

• The market does not anticipate the November inflation uptick to hinder ECB rate cuts.

Source: @economics Read full article

• Here is a look at CPI trends by country.

– Germany (lower than expected):

– France:

– Italy (an upside surprise):

– Spain:

– The Netherlands:

• Inflation expectations climbed in October.

——————–

2. The French sovereign CDS spread remains elevated amid budget uncertainty.

Source: @bpolitics Read full article

The euro retreated.

• French consumer confidence declined sharply.

• Consumer spending on goods contracted in October.

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3. German retail sales strengthened in October.

• The nation’s consumer sentiment dropped.

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4. Italian consumer confidence eased last month.

Here is the overall economic sentiment, which includes business confidence.

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5. Economic sentiment at the Eurozone level was flat.

Japan

1. Tokyo inflation accelerated in November.

Source: @economics Read full article

• The yen has been strengthening.

• JGB yields continue to move higher.

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2. Industrial production and retail sales expanded less than expected in October.

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3. The unemployment rate edged higher.

Asia-Pacific

1. Let’s begin with South Korea.

• The central bank unexpectedly cut rates last week.

Source: CNBC Read full article

• Exports were softer than expected in November.

Source: Reuters Read full article

• Industrial production was roughly unchanged in October.

• South Korea’s manufacturing PMI moved back into growth territory.

Source: S&P Global PMI

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2. Taiwan’s factory activity grew at a slightly faster pace in November.

Source: S&P Global PMI

3. Australia’s retail sales increased more than expected in October.

China

1. PMI indicators point to faster factory activity growth in November.

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2. Stocks are higher on stimulus hopes.

Source: @markets Read full article

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3. Economic momentum is rising.

Source: MRB Partners

Emerging Markets

1. Let’s begin with Asian manufacturing PMI trends:

• Thailand (slow growth):

Source: S&P Global PMI

• The Philippines (acceleration):

Source: S&P Global PMI

• Malaysia (soft):

Source: S&P Global PMI

• Indonesia (contraction easing):

Source: S&P Global PMI

• Vietnam (modest growth):

Source: S&P Global PMI

• ASEAN:

Source: S&P Global PMI

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2. Indian Q3 GDP growth was below estimates.

Source: Reuters Read full article

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3. According to government data (taken with a grain of salt), Russia’s unemployment rate is at a record low.

Source: @bpolitics Read full article

The tight labor market, fueled by defense spending and other war-related factors, is driving inflation higher.

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4. Next, we have some performance data for November.

• Currencies:

• Bond yields:

• Equity ETFs:

Commodities

1. US wheat prices remain under pressure.

2. Here is a look at last month’s performance.

Energy

1. Fracking activity in the US has been slowing.

• Frac spread:

• Rig count:

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2. US crude oil inventories are back inside the 5-year range.

Equities

1. The S&P 500 remains on track for its best year since 1998.

2. The S&P 500 Equal Weighted Index (representing the average S&P 500 stock) is approaching overbought levels, …

… with valuations now exceeding pre-COVID highs.

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3. US stocks appear overbought, but non-US stocks are not.

Source: MRB Partners

• Here is the MarketDesk technical composite for the S&P 500.

Source: MarketDesk Research

• The stock/bond ratio has reached the upper boundary of its uptrend channel.

Source: @i3_invest

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4. Long-duration stocks have been outperforming.

5. Companies with significant international sales are underperforming.

6. Asset manager positioning is at an extreme.

Source: MarketDesk Research

7. Next, let’s take a look at quarter-to-date performance attribution.

• S&P 500:

• S&P 600 (note that the Q3 and Q4 gains were driven almost entirely by multiple expansion):

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8. Finally, we have last month’s performance data.

• Sectors:

• Factors:

• Macro basket pairs:

• Thematic ETFs:

• US tech firms:

Credit

1. Historically, failing banks experienced a boom in total assets up to three years before they contract. The recent boom/bust pattern has been more pronounced than the pre-1935 sample.

Source: Federal Reserve Bank of New York Read full article

2. Leveraged loan fund flows rose in November.

Source: PitchBook

• The share of leveraged loans that are bid at par or higher grew to 62%. Spikes in ‘par-or-better’ typically precede a rise in repricing activity.

Source: PitchBook

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3. Below is the November performance data.

Rates

Here is a look at Treasury yield attribution.

• November:

• YTD:

Global Developments

1. Global policy easing is anticipated to continue at a brisk pace next year:

Source: BofA Global Research

2. The global 65+ age population is expected to rise from 800 million to 1.6 billion by 2050.

Source: Torsten Slok, Apollo

3. Next, we have some performance data for November.

• Currencies:

• Bond yields:

• Equity indices:

• USD-denominated ETFs:

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Food for Thought

1. Comcast struggles with declining video customer base amid cord-cutting trend.

Source: @chartrdaily

2. US bank branches:

Source: @WSJ Read full article

3. States vs. G7 countries by GDP per capita:

Source: Visual Capitalist Read full article

4. Driving-related and homicide death rates in selected US counties:

Source: @foxjust, @opinion Read full article

5. International students in OECD countries:

Source: @financialtimes Read full article

6. Median salaries by US government agency:

Source: @WSJ Read full article

7. Comparative lifespans across the animal kingdom:

Source: Data Is Beautiful

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