The Daily Shot: 06-Jan-25
• The United States
• The United Kingdom
• The Eurozone
• China
• Emerging Markets
• Cryptocurrency
• Commodities
• Energy
• Equities
• Credit
• Global Developments
• Food for Thought
The United States
1. According to the ISM PMI report, the US manufacturing downturn eased in December as demand strengthened (2nd panel).
Source: MarketWatch Read full article
• Export orders stabilized.
• US factories continue to cut jobs.
• This chart shows the contributions to the headline PMI index.
Source: @TheTerminal, Bloomberg Finance L.P.
• Leading indicators point to further improvement in US factory activity.
– ISM orders less inventories:
Source: @TheTerminal, Bloomberg Finance L.P.
– GS cyclicals vs. defensives:
Source: @TheTerminal, Bloomberg Finance L.P.
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2. December vehicle sales exceeded estimates, fueled by stronger demand for hybrids, but gains are not expected to last into 2025.
Source: @markets Read full article
• 2024 sales changes by vehicle type:
Source: @WSJ Read full article
• 2024 sales changes by manufacturer:
Source: @WSJ Read full article
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3. How would tariffs on Canada and Mexico affect trade and GDP growth? The charts below show the outcomes of Oxford Economics’ scenario analysis.
Source: Oxford Economics
Source: Oxford Economics
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4. The long-bond yield continues to rise, …
… with the Treasury curve steepening.
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The United Kingdom
Consumer credit growth slowed in November.
• Mortgage approvals unexpectedly declined, …
… as mortgage rates remain elevated.
Source: Pantheon Macroeconomics
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The Eurozone
1. Germany’s unemployment rate held steady last month.
2. Hedge funds are increasingly bearish on the euro.
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China
1. The renminbi weakened beyond 7.3 to the dollar, …
… as Beijing increasingly signals its intent to curb the currency’s decline.
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2. The S&P Global Services PMI indicates faster growth in China’s services sector last month, though the outlook has been softening.
3. The recent acceleration in retail sales has been driven by consumer goods.
Source: Capital Economics
4. Money supply is starting to improve.
Source: TS Lombard
The PBoC will include residential demand deposits into M1 money supply calculations starting in early-February, covering data for January 2025.
Source: China Daily Read full article
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5. Local governments are struggling with revenue shortages as land sales stall.
Source: @economics Read full article
• Local government debt continues to climb.
Source: @WSJ Read full article
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6. Bank lending rates remain high in real terms.
Source: Capital Economics
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Emerging Markets
1. Mexico’s loan growth remains robust.
• Remittances were above 2023 levels in November.
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2. The Chilean peso keeps sinking vs. the dollar.
3. Argentina’s USD-denominated bonds continue to see a rebound, …
… as Milei secures bank financing.
Source: @economics Read full article
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4. Next, we have some updates on Vietnam.
• Exports (above 2023 levels):
– Trade balance (smaller surplus):
• Inflation:
• GDP growth (stronger than expected):
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5. This scatterplot displays EM currencies’ rate differential with the US vs. their implied volatility.
6. Next, we have some performance data from last week.
• Currencies:
• Bond yields:
• Equity ETFs:
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Cryptocurrency
1. The iShares Bitcoin Trust ETF (IBIT) is experiencing outflows, …
… reflecting broader outflows across the crypto market.
Source: Deutsche Bank Research
2. IBIT has one of the most active ETF options markets.
Source: @markets Read full article
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Commodities
1. Wheat futures faced pressure on Friday due to slower US exports.
2. Cattle futures continue to rally.
Source: @markets Read full article
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3. Commodities are starting to improve relative to global equities …
Source: Aazan Habib, Paradigm Capital
… and holding support relative to global bonds.
Source: Aazan Habib, Paradigm Capital
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4. Here is a look at last week’s performance across commodity markets.
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Energy
1. CTAs have been reducing their exposure to oil.
Source: Deutsche Bank Research
2. Energy stocks typically rise during rate cutting cycles.
Source: MarketDesk Research
• The S&P 500 energy sector experienced a sharp breadth reversal from oversold levels.
Source: SentimenTrader
• The SPDR Energy Sector ETF (XLE) is testing support relative to the S&P 500.
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Equities
1. Crowded longs are outperforming again.
2. This scatterplot shows forward P/E ratios for equity styles compared to 10-year averages.
• Here is a look at global valuations.
Source: J.P. Morgan Asset Management
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3. Dividend growers have been lagging since the start of December.
4. Falling liquidity could be a headwind for stocks.
Source: @TheTerminal, Bloomberg Finance L.P.
5. Which sectors are most concerned about tariffs?
Source: @TheTerminal, Bloomberg Finance L.P.
6. 0DTE contracts accounted for 51% of the S&P 500 index’s options volume in Q4.
Source: @markets Read full article
7. Next, we have some performance data from last week.
• Sectors:
• Factors/styles:
• Macro basket pairs’ relative performance:
– Long-duration vs. short-duration stocks (see above):
• Thematic ETFs:
• Largest US tech firms:
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Credit
1. US corporate BBB/single-A spread hit a multi-year low, indicating higher risk appetite.
2. Current yields vs. implied volatility across credit asset classes illustrate expected performance relative to perceived risk.
3. Here is a look at last week’s performance.
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Global Developments
1. Traders continue to press their US dollar bets.
2. Here is a look at productivity growth rates in advanced economies.
Source: Goldman Sachs; @MikeZaccardi
3. Finally, we have some performance data from last week.
• Currencies:
• Bond yields:
• Equity indices:
• Dollar-denominated equity ETFs:
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Food for Thought
1. Holiday debt trends:
Source: LendingTree Read full article
2. Milk yield per cow:
Source: The Economist Read full article
3. Growing popularity of Obamacare:
Source: @opinion Read full article
4. Top deportation destinations for US removals:
Source: @bpolitics Read full article
5. Job satisfaction in the US:
Source: semafor
6. Isaac Newton’s investments in the South Sea bubble:
Source: Cambria Investment Management
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