The Daily Shot: 18-Dec-24
• The United States
• Canada
• The United Kingdom
• The Eurozone
• Japan
• China
• Emerging Markets
• Commodities
• Equities
• Credit
• Rates
• Global Developments
• Food for Thought
The United States
1. Last month’s retail sales exceeded expectations, driven by strong vehicle and online sales (3 charts).
Source: @economics Read full article
• Food services sales declined.
• Here is a look at monthly gains in core retail sales.
• The blue graph below shows the inflation-adjusted retail sales level.
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2. After two months of declines, manufacturing output increased less than expected in November.
Capacity utilization edged higher.
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3. The NAHB builder sentiment index was roughly unchanged in December.
While homebuilders are upbeat on sales next year, …
… buyer interest remains soft.
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4. The Atlanta Fed’s GDPNow Q4 growth estimate has been moving lower but remains above 3% (annualized).
Source: Federal Reserve Bank of Atlanta
Here are the contributions.
Source: @TheTerminal, Bloomberg Finance L.P.
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5. The market anticipates a Fed rate cut today, potentially followed by a pause.
Economists project an additional 75 bps of rate cuts next year (in addition to 25 bps today).
Source: @TheTerminal, Bloomberg Finance L.P.
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Canada
1. The headline CPI dipped below 2% in November.
• Core inflation measures were mixed.
• Rent inflation remains elevated.
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2. The Canadian dollar dropped below 70 US cents for the first time since March 2020, …
… as the rate differential continues to widen.
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The United Kingdom
1. UK wage growth accelerated in the three months ending in October, …
… sending gilt yields higher.
• Unemployment claims remain elevated, …
… while payrolls saw a sharp decline in November. However, this figure is subject to significant revisions.
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2. Here is Morgan Stanley’s forecast for the BoE rate over the next couple of years.
Source: Morgan Stanley Research
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The Eurozone
1. Germany’s ZEW expectations of economic growth (2nd panel) improved this month.
However, the Ifo business expectations index (2nd panel) saw a sharp decline.
Here is Ifo by sector.
Source: ifo Institute
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2. The French bond spread over Germany remains elevated due to political and budgetary uncertainty.
Source: @business Read full article
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3. The euro-area trade surplus narrowed sharply in October.
4. The euro’s share of SWIFT payments has decreased over the past few years.
Source: Gavekal Research
5. Morgan Stanley sees the ECB’s terminal rate at 1% (reached in early 2026).
Source: Morgan Stanley Research
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Japan
1. Exports have been steady over the past year.
2. Will the BoJ raise its policy rate to 0.75% next year? Here is a forecast from Morgan Stanley.
Source: Morgan Stanley Research
3. Below is a projection for Japan’s power mix by 2040.
Source: @bpolitics Read full article
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China
1. Market rates have been declining across maturities. Here is the 1-year swap.
This is the swap curve shift over the past seven days.
The PBoC is trying to push back on falling yields. Will it work this time?
Source: @markets Read full article
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2. Industrial production has been tracking the pre-COVID trend, while retail sales have been falling further behind.
Source: @markets Read full article
3. Broad price declines continue.
Source: @economics Read full article
4. The slump in Hong Kong’s property market is taking its toll.
Source: SCMP Read full article
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Emerging Markets
1. The Brazilian real bounced from the lows as the central bank intervened.
Source: @economics Read full article
Brazil’s sovereign CDS spread has widened the most among EM peers.
Source: @markets Read full article
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2. Argentina reported another budget surplus.
• Employment optimism in Argentina is low compared to other OECD countries.
Source: Gallup Read full article
• Support for President Milei varies between the rich and poor, according to a Gallup survey.
Source: Gallup Read full article
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3. Chile’s central bank delivered another rate cut.
4. The Indian rupee continues to weaken, with USD/INR nearing 85.
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Commodities
1. Funds have been boosting their bets on corn futures.
Source: Deutsche Bank Research
2. Have lumber futures finally bottomed?
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Equities
1. It’s been a while since the Dow registered nine consecutive daily losses.
2. Speculative stocks continue to outperform.
• Meme stocks:
• Unprofitable tech:
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3. The S&P 500 Shiller CAPE ratio has reached its highest level since the dot-com bubble, highlighting lofty valuations.
Source: GuruFocus.com
4. Fund managers continue to view long positions in Magnificent 7 stocks as the most crowded trade.
Source: BofA Global Research
Here is Deutsche Bank’s tech positioning indicator.
Source: Deutsche Bank Research
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5. Is the Nasdaq 100 hitting resistance?
• Here is the Nasdaq 100 performance relative to international stocks.
Source: @johnauthers, @opinion Read full article
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6. Next, we have some sector updates.
• Sector fund flows indicate increasing demand for financials, …
Source: Deutsche Bank Research
… with fund managers holding their highest overweight position in decades (2 charts).
Source: BofA Global Research
Source: BofA Global Research
• The semiconductor sector premium has narrowed since the June peak.
Source: @TheTerminal, Bloomberg Finance L.P.
The recent valuation moves within the sector have been uneven.
Source: @markets Read full article
• The S&P 500 materials sector experienced declining breadth for most of the year and does not appear oversold.
– The S&P 500 materials (XLB) and metals/mining sector (XLB) ETFs experienced new breakdowns in long-term relative strength. (2 charts)
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Credit
1. There was a slight increase in the share of active bond managers beating their benchmark this year vs. last year.
Source: State Street Global Advisors Read full article
2. HY market complacency has been rising.
Source: @WSJ Read full article
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Rates
1. What do investors see the Treasury curve doing over the next six months? This chart is from a survey by Alpine Macro.
Source: Alpine Macro
2. Repo volumes have been surging, fueled in part by extensive cash-futures basis arbitrage activity in Treasuries.
Source: Simon White, Bloomberg Markets Live Blog
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Global Developments
1. Tariff uncertainty is rising, albeit still below the 2019 peak.
Source: BlackRock Investment Institute
2. The wide gap between US and non-US economic growth is starting to narrow, which could weigh on the dollar. (2 charts)
Source: MRB Partners
Source: MRB Partners
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3. Here is a look at the top 2500 global companies by R&D spend.
Source: @financialtimes Read full article
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Food for Thought
1 Total movie releases by firm:
Source: Wall Street Horizon Read full article
2. Literacy and numeracy proficiency among OECD adults:
Source: The Economist Read full article
3. Changes in active military personnel for the US and selected European countries:
Source: @financialtimes Read full article
4. City neighborhoods and urban counties with shifts toward Trump by racial and ethnic group:
Source: The New York Times Read full article
5. Four main types of AI and their subcategories:
Source: @genuine_impact
6. 2024 search trends:
Source: r/dataisbeautiful
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