Small businesses have not done much hiring this year

The Daily Shot: 05-Dec-24
• The United States
• Canada
• The United Kingdom
• The Eurozone
• Asia-Pacific
• China
• Emerging Markets
• Cryptocurrency
• Energy
• Equities
• Credit
• Rates
• Global Developments
• Food for Thought

The United States

1. The November ADP employment report was roughly in line with expectations.

• Key sectors posted payroll gains, except for manufacturing, …

… which experienced its largest decline in over a year.

– Leisure and Hospitality registered a relatively small gain, …

… consistent with weakness reported by Homebase.

Source: Estelle Ou and Anna Wong, Bloomberg Economics Read full article

– Healthcare hiring held up.

– Construction job gains remain robust.

• Small businesses have not done much hiring this year.

• The ADP diffusion index remains robust, indicating broad-based hiring.

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2. The ADP wage growth tracker highlights stronger wage growth, especially among job switchers.

Source: @TheTerminal, Bloomberg Finance L.P.

• Small business wage growth strengthened.

Source: @economics Read full article

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3. The ISM Services PMI dropped sharply, indicating significantly slower activity growth last month. The reading came in well below forecasts.

Hiring slowed.

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4. The Fed’s Beige Book report points to a modest improvement in business activity.

Source: Oxford Economics

• Concerns about tariffs and international trade have surged.

• The Beige Book report also signaled some concern about limits on immigration.

• There was increased discussion about commercial real estate, …

… and less focus on interest rates.

Source: MarketWatch Read full article

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5. Next, we have some updates on the housing market.

• Mortgage applications were slightly higher than those recorded during Thanksgiving week in 2023.

– Here is the rate lock count.

Source: AEI Housing Center

– Refi activity was weak.

• The AEI Housing Center sees home price appreciation at 4.4% in October (YoY), strengthening somewhat in November and December.

Source: AEI Housing Center

Here are the home price appreciation trends by price tier.

Source: AEI Housing Center Read full article

• Housing completions have been running below household formation since the financial crisis.

Source: Morgan Stanley Research

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6. Online holiday sales were stronger than last year on Thanksgiving and Black Friday. Cyber Monday sales were weaker.

Source: Goldman Sachs

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Canada

1. Canada’s services PMI is back in growth territory.

2. The nation’s labor productivity continues to deteriorate.

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The United Kingdom

1. The UK services PMI was revised higher, indicating modest growth last month.

2. FTSE 100 breadth is improving after reaching an oversold extreme last month.

Source: Damanick Dantes; Bloomberg

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The Eurozone

1. French Prime Minister Barnier was ousted on Wednesday, expanding the nation’s political crisis.

Source: BBC Read full article

French stocks have not seen this level of underperformance since 2010.

Source: @TheTerminal, Bloomberg Finance L.P.

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2. Germany’s factory orders declined slightly in October.

3. The euro-area services PMI was revised higher but remained in contraction territory.

• Spain’s services growth eased last month.

• Italy’s services PMI unexpectedly dipped into contraction territory.

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4. Economic conditions have diverged across the euro area.

Source: MRB Partners

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Asia-Pacific

1. The South Korean won stabilized today following this week’s sharp decline.

Stocks continue to drop.

• South Korea’s GDP posted slight growth last quarter.

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2. Taiwan’s core inflation was a bit below forecasts.

3. Australia’s trade surplus topped expectations.

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China

1. China’s deflationary pressures are expected to persist, according to Morgan Stanley.

Source: Morgan Stanley Research

2. Chinese companies are gaining market share in automation components.

Source: Gavekal Research

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Emerging Markets

1. Let’s begin with Mexico.

• Factory activity has stabilized.

• The unemployment rate surprised to the downside.

• Domestic vehicle sales accelerated.

• CapEx was down on a year-over-year basis.

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2. LatAm had a negative contribution to EM local debt returns this year.

Source: Deutsche Bank Research

3. Saudi Arabia’s business activity is accelerating.

Source: S&P Global PMI

4. Below is an overview of middle-income household growth in Asia, broken down by country.

Source: The Economist Read full article

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Cryptocurrency

Bitcoin surpassed the $100k milestone.

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Energy

1. US crude oil inventories declined sharply last week, but refined product stockpiles increased.

Here are the inventory levels.

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2. The global crude oil market will be well supplied next year.

Source: BofA Global Research

3. Canada’s crude oil prices could face a sharp decline if the US imposes tariffs on Canadian imports.

Source: Goldman Sachs; @AyeshaTariq

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Equities

1. The largest tech ETF broke above resistance on Wednesday amid rotation back into the sector.

2. Tech is the only major sector with valuations exceeding those of the S&P 500.

Source: Deutsche Bank Research

3. US fund inflows are hitting extreme levels.

Source: Goldman Sachs; @Marlin_Capital

4. S&P 500 performance breadth improved in the second half, as the S&P 500 outpaced the S&P 100.

Source: BMO; @GunjanJS

5. The more volatile bonds are versus stocks, the more likely stocks are to outperform bonds over the next 12 months.

Source: Denise Chisholm; Fidelity Investments

6. US household allocation to stocks is at an all-time high.

Source: MarketDesk Research

7. M&A activity relative to the S&P 500 market cap has been weak.

Source: Deutsche Bank Research

8. US small-cap active mutual funds dominate passive ETFs in terms of AUM.

Source: @Todd_Sohn

9. Banks’ private clients are harvesting tax losses this month, potentially adding downward pressure on this year’s underperforming stocks.

Source: BofA Global Research; @AyeshaTariq

10. The scatterplots below illustrate forward earnings yields versus implied volatility, comparing expected performance with perceived risk.

• Sectors:

• Factors/styles:

• International markets:

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Credit

1. Securitized issuance rebounded this year and is expected to continue higher.

Source: Deutsche Bank Research

2. This year’s CLO manager count is reflective of elevated deal activity.

Source: Deutsche Bank Research

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Rates

1. Here is the attribution of the 10-year Treasury yield over time.

2. JP Morgan’s clients are increasingly upbeat on Treasuries.

Source: @markets Read full article

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Global Developments

1. Here are Morgan Stanley’s trade policy assumptions for US-Mexico and US-China relations. (2 charts)

Source: Morgan Stanley Research

Source: Morgan Stanley Research

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2. This chart depicts goods trade as a percentage of GDP in the world’s largest economies.

Source: @financialtimes Read full article

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Food for Thought

1. Top industries posting AI-related job openings:

Source: The Burning Glass Institute Read full article

2. Mobile network speeds by country:

Source: The Economist Read full article

3. Gender representation at US veterinary schools:

Source: American Association of Veterinary Medical Colleges

4. Religious composition of India’s adult population:

Source: Pew Research Center Read full article

5. US federal entitlement spending is increasingly crowding out non-defense discretionary spending.

Source: J.P. Morgan Asset Management

6. Teen vaping rates by state:

Source: The Freedom Center

7. Comprehensive Greek mythology family tree of primordial deities and Olympian gods:

Source: Korwin Briggs

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