The Daily Shot: 20-Dec-24
• The United States
• Canada
• The United Kingdom
• The Eurozone
• Europe
• Japan
• China
• India
• Emerging Markets
• Cryptocurrency
• Commodities
• Energy
• Equities
• Credit
• Rates
• Global Developments
• Food for Thought
The United States
1. Third-quarter GDP growth was revised upward, …
… supported by stronger business investment and a smaller impact from the trade deficit.
• Business investment contribution:
• Net rade:
Consumer spending was very strong last quarter.
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2. The Philly Fed’s regional manufacturing index dropped sharply in December, …
Source: Reuters Read full article
… signaling downside risks for manufacturing at the national level.
Source: @TheTerminal, Bloomberg Finance L.P.
• Demand softened.
• Price indices suggest some margin pressures.
Source: @TheTerminal, Bloomberg Finance L.P.
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3. The Conference Board’s leading index registered its first increase in 33 months.
Source: @TheTerminal, Bloomberg Finance L.P.
4. Initial and continuing jobless claims declined but remained slightly above 2023 levels.
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5. Existing home sales were once again 5% higher than last year’s levels, topping forecasts.
Increasing inventories bolstered home sales in November.
The median price continued to rise.
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6. The 10-year Treasury yield is at the highest level since May.
7. Here is a look at US exports to China by sector.
Source: Gavekal Research
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Canada
1. The CFIB small business expectations eased this month.
• Monthly changes by sector:
• Levels by sector and province:
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2. It’s been a tough month for Canadian stocks, which now appear oversold.
• The relative strength of Canadian financial stocks has not been matched with improving earnings.
Source: MRB Partners
– Canada’s earnings momentum remains weak relative to the rest of the world.
Source: MRB Partners
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The United Kingdom
1. The BoE kept rates unchanged, though the MPC vote was divided.
Source: Reuters Read full article
• A rate cut is still expected in February.
Source: @TheTerminal, Bloomberg Finance L.P.
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2. The pound was lower.
3. Home price appreciation continues to climb.
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The Eurozone
1. French business confidence deteriorated further this month amid political uncertainty.
2. Germany’s consumer sentiment improved slightly this month.
• Germany continues to see net private capital outflows.
Source: @economics Read full article
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Europe
1. Riksbank delivered a hawkish rate cut, …
… raising inflation projections for next year.
Source: Nordea Markets
Nordea Markets: – … today’s message from the Riksbank was more hawkish than expected. The bank is less concerned about the economy and the labour market, but sees more risks for the inflation outlook. Our instant view is that the Riksbank will cut rates in January but pause in March (in line with our forecast). As our inflation forecast is lower than the bank’s, we see an additional rate cut in May. Thus, we stick to our forecast of a policy rate at 2.00% in May.
• The market expects about 30 bps of rate reductions by March.
Source: @TheTerminal, Bloomberg Finance L.P.
• Bond yields and the krona jumped.
Stocks underperformed.
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2. Norway’s central bank held rates steady but raised the projected rate path.
Source: Nordea Markets
The krone sold off.
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3. EU’s new car registrations were slightly below last year’s levels.
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Japan
1. BoJ’s Ueda hinted at a delay in rate hikes, …
Source: @economics Read full article
… sending the yen sharply lower.
But Tokyo put the market on notice.
Source: @economics Read full article
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2. Inflation rose last month.
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China
1. Wage growth has stalled.
Source: @markets Read full article
2. Beijing plans to run a higher budget deficit to fund stimulus measures.
Source: @markets Read full article
3. US dollar deposits in Hong Kong have been rising rapidly.
Source: Gavekal Research
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India
1. Economists reduced their projections for India’s FY 2025 GDP growth …
… while raising their inflation estimates.
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2. Growth in India’s crude oil consumption is expected to surpass that of China.
Source: @EIAgov Read full article
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Emerging Markets
1. Banxico followed the Fed with a rate reduction this week.
Source: Reuters Read full article
– Bond yields climbed.
• Mexico’s retail sales continue to run below last year’s levels.
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2. Argentina’s consumer confidence improved again this month.
• The unemployment rate declined last quarter.
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3. The Philippine central bank implemented its third rate cut of the current cycle.
4. Hungarian business confidence continues to deteriorate.
5. EM governments are allocating an increasing share of revenues to interest payments.
Source: @markets Read full article
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Cryptocurrency
1. It has been a tough week for cryptos, with Bitcoin Cash (BCH) and Litecoin (LTC) underperforming top peers.
Source: FinViz
2. Ether hit resistance again near its previous peak.
3. There was a spike in long BTC liquidations as the crypto dipped below $100K.
Source: Coinglass
4. The Crypto Fear & Greed Index is declining from “extreme greed” territory.
Source: Alternative.me
5. Bitcoin’s market value relative to its realized value (MVRV) is not yet overbought.
Source: @glassnode
6. Here is a look at Bitcoin holdings by country.
Source: Bitwise
7. The market cap of stablecoins reached a new high.
Source: Bitwise
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Commodities
1. Nickel prices dropped to the lowest level since 2020.
2. Copper futures weakened after the Fed’s hawkish shift sent the dollar higher.
3. Silver registered a sharp decline.
4. An upturn in global manufacturing could support commodity prices.
Source: MRB Partners
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Energy
1. US natural gas prices are surging, …
… driven by colder weather in the Midwest …
Source: Weather Underground
… and increased storage withdrawals.
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2. Coal deliveries to US power plants continue to trend lower.
Source: IEEFA
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Equities
1. Stock futures are down this morning amid concerns over the government shutdown.
Source: Fox News Read full article
Source: Kalshi
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2. NYSE stocks are the most oversold since October 2023 based on short-term breadth signals.
Source: Aazan Habib, Paradigm Capital
3. The Fed’s hawkish stance has weighed on momentum stocks.
4. The S&P 500 Value Index reached its 200-day moving average and is deeply oversold, …
… following a record 14 consecutive daily declines.
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5. Small-cap positioning has been elevated …
Source: Deutsche Bank Research
… as investors anticipate outperformance.
Source: BofA Global Research
• Alpine Macro expects small-cap earnings growth to outperform large-caps next year.
Source: Alpine Macro
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6. US equities continue to trade at a significant premium versus the rest of the world.
Source: AllianceBernstein Read full article
7. Implied correlations climbed this week.
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Credit
1. High-yield funds are experiencing outflows as Treasury yields rise.
Source: BofA Global Research
Conversely, leveraged loans continue to attract fresh capital as investors seek to limit rate risk, given that loans are floating-rate instruments.
Source: BofA Global Research
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2. Hybrid bonds, which combine characteristics of debt and equity by offering fixed interest payments while being subordinated in a company’s capital structure, have seen a significant rise in issuance. The chart shows US dollar-denominated hybrid bond issuance by non-financial companies increasing from $6.5 billion in 2023 to a record $35.6 billion in 2024. This surge is primarily driven by Moody’s February 2024 policy update, which made hybrid bonds more appealing to US companies by allowing a larger portion to be classified as equity.
Source: @markets Read full article
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Rates
1. The 2s10s spread has steepened alongside a positive term premium.
Source: Damanick Dantes; Bloomberg
2. The 2-year Treasury yield could face resistance at 4.5%.
Source: Aazan Habib, Paradigm Capital
3. The recent decline in US economic surprises could point to limited upside in the 10-year Treasury yield.
Source: Damanick Dantes; Bloomberg
4. Foreign purchases of coupon Treasuries remain elevated
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Global Developments
1. Government bonds outside of South Africa and India experienced negative real returns over the past five years and significantly underperformed their 100-year real returns. This is largely because of the recent rise in inflation and yields.
Source: Deutsche Bank Research
• Equities have held up despite the majority of markets underperforming their 100-year real return over the past five years (also due to recent inflation).
Source: Deutsche Bank Research
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2. Global central banks are well into their easing cycle amid strong equity performance.
Source: Simon White, Bloomberg Markets Live Blog
3. Investors see a global trade war as the most bearish scenario next year.
Source: BofA Global Research
• A survey by Alpine Macro shows resurging inflation as the greatest downside risk next year.
Source: Alpine Macro
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Food for Thought
1. Estimated holiday spending:
Source: Gallup Read full article
2. US economic and military aid to select countries:
Source: semafor Read full article
3. US overdose deaths since 2015:
Source: @WSJ Read full article
4. Years lived with disease by country compared to the global average:
Source: @business Read full article
5. Elon Musk’s posting activity and topics on Twitter over the past decade:
Source: The Economist Read full article
6. AI adoption rates among US firms:
Source: Goldman Sachs; @MikeZaccardi
7. Large language models’ guesses for the average human skin color compared to the actual average:
Source: r/dataisbeautiful
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Have a great weekend!
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