The Daily Shot: 17-Jan-25
• The United States
• The United Kingdom
• The Eurozone
• China
• Emerging Markets
• Cryptocurrency
• Commodities
• Energy
• Equities
• Credit
• Rates
• Global Developments
• Food for Thought
The United States
1. December retail sales rose for the fourth consecutive month, though the headline figure came in below expectations, …
… weighed down by building materials.
However, the control group, which excludes building materials, exceeded forecasts.
This chart shows last month’s changes by sector, …
… with the breadth of retail sales improving.
Here is a look at real retail sales (level).
Source: @economics Read full article
——————–
2. The Atlanta Fed’s GDPNow estimate for the Q4 GDP growth got a boost from the robust retail sales report.
Source: Federal Reserve Bank of Atlanta
Here are the contributions.
Source: @TheTerminal, Bloomberg Finance L.P.
——————–
3. The Philly Fed’s regional manufacturing index surged this month.
Source: Reuters Read full article
• This bodes well for factory activity at the national level.
Source: @TheTerminal, Bloomberg Finance L.P.
By the way, Piper Sandler expects monetary easing to support a recovery in manufacturing and services PMIs this year.
Source: Piper Sandler
• Demand continued to strengthen.
• Companies plan to increase hiring, …
… with more firms also expecting to extend workers’ hours.
• The share of manufacturers planning to boost prices is surging.
——————–
4. Initial jobless claims rose well above 2024 levels last week.
Continuing claims were also above last year’s levels two weeks ago.
——————–
5. Builder sentiment edged higher in January, with the NAHB Home Builder Sentiment Index rising to 47, driven by optimism about regulatory improvements despite concerns over rising mortgage rates and material costs
Source: NAHB Read full article
——————–
6. The Fed’s Beige Book highlighted widespread improvement in economic activity …
Source: Oxford Economics
… and sentiment.
• The number of comments related to economic uncertainty eased.
• Surprisingly, there were fewer mentions of interest rates and housing.
• The number of comments related to tariffs and immigration jumped.
Back to Index
The United Kingdom
1. The UK economy barely grew in November.
Source: Reuters Read full article
• Services output edged higher.
• Industrial production was down for the third month in a row.
• Construction improved.
——————–
2. The trade deficit was wider than expected.
3. Retail sales unexpectedly declined in December.
Source: Reuters Read full article
——————–
4. The 2-year gilt yield declined further on soft economic data.
5. The pound fell to its lowest level against the dollar since November 2023 …
… and has weakened sharply against the euro this month.
Back to Index
The Eurozone
1. The euro-area trade surplus widened more than expected in November.
2. The three-month change suggests a softening in the services CPI.
Source: @davidjpowell24, @TheTerminal, Bloomberg Finance L.P. Read full article
3. PMI data points to downside risks for industrial production.
Source: Capital Economics
4. The DAX and STOXX 50 indices reached new highs.
Back to Index
China
1. The Q4 GDP report exceeded expectations, with the economy meeting Beijing’s annual target.
Source: Reuters Read full article
• Industrial production growth topped forecasts.
• The year-over-year increase in retail sales was a bit firmer last month.
——————–
2. Next, we have some updates on the real estate sector.
• New home prices were almost flat last month while existing home price declines slowed further.
Source: @DavidInglesTV
Source: Reuters Read full article
• Property sales and real estate investment remained soft.
• Bonds of Chinese developer Vanke plummeted following reports that the CEO had “disappeared.”
Source: @business Read full article
——————–
3. China’s steel prices have been rebounding.
Back to Index
Emerging Markets
1. Brazil’s economic activity growth slowed in November.
Source: @economics Read full article
——————–
2. Economic sentiment in Argentina has been improving.
Source: @bpolitics Read full article
3. The Mexican peso dropped to its weakest level against the US dollar since early 2022.
4. South Africa’s electricity production remained well above 2023 levels.
5. The Turkish lira devaluation continues.
6. Emerging market debt burdens remain high, with fiscal deficits widening further. (2 charts)
Source: Wells Fargo Securities
Source: Wells Fargo Securities
Back to Index
Cryptocurrency
1. Bitcoin climbed above $100k, gaining momentum on optimism surrounding the incoming US administration’s pro-crypto stance, including plans to designate cryptocurrency as a national priority.
Source: @crypto Read full article
——————–
2. XRP has been surging.
Source: @crypto Read full article
——————–
3. Here is the year-to-date performance for select tokens.
Back to Index
Commodities
1. Copper and aluminum prices have diverged since China eliminated tax rebates on exports. According to the CME Group, this could signal that China is experiencing an increase in domestic demand as it wishes to disincentivize exports.
Source: CME Group Read full article
2. Cobalt and lithium forward curves are in contango.
Source: CME Group Read full article
3. This chart shows the rolling 10-year returns of a broad commodity index.
Source: BofA Global Research
Back to Index
Energy
1. US natural gas futures have been surging …
… as inventories fall back to the five-year average.
Source: NGI Read full article
Source: Investing.com Read full article
• The LNG market is expected to be tight over the next couple of years.
Source: @markets Read full article
——————–
2. US gasoline prices at the pump are headed higher.
Source: @TheTerminal, Bloomberg Finance L.P.
Back to Index
Equities
1. US market breadth is starting to improve again.
Source: Aazan Habib, Paradigm Capital
2. Most sectors registered fund inflows this week.
Source: Barclays Research
3. Given the current S&P 500 valuation, low single-digit annualized returns are expected over the next decade.
Source: Goldman Sachs; @MikeZaccardi
4. Here is a look at sector and equity factor sensitivity to bond yields.
Source: Goldman Sachs; @AyeshaTariq
5. Analysts forecast S&P 500 operating margins to reach nearly 16% in Q4 2024, with further expansion expected as inflation-driven cost pressures continue to ease.
Source: @markets Read full article
6. The iShares US Momentum Factor ETF’s outperformance tends to diminish throughout the rest of Q1 before resuming leadership in Q2.
Source: Aazan Habib, Paradigm Capital
7. Macro hedge funds have been slashing their US equity exposure.
Source: @WallStJesus
8. While the Magnificent Seven’s profit growth is projected to decelerate to 22% from 34% in 2024, the broader S&P 493 is expected to post its third consecutive quarter of earnings growth, with momentum building into 2025.
Source: @markets Read full article
Back to Index
Credit
1. MUFG expects the US corporate debt default cycle to improve this year, …
Source: MUFG Securities
… although there is potential for modest spread widening.
Source: MUFG Securities
2. Demand for leveraged loans remains robust.
Source: BofA Global Research
3. Is there further downside ahead for US commercial real estate?
Source: @chartrdaily
Back to Index
Rates
1. This chart shows the rolling ten-year price returns of longer-dated Treasuries.
Source: BofA Global Research
2. The iShares 20+ Year Treasury Bond ETF (TLT) call option volume surged this week.
Back to Index
Global Developments
1. The sell-off in US, German, and UK sovereign bonds appears stretched.
Source: MRB Partners
• Recently, the sensitivity of UK and German bond yields to US yields has increased.
Source: MRB Partners
——————–
2. This chart compares housing asset values per capita across 16 countries in 2021, broken down into structural value (homes) and land value. France leads with the highest total value at $237k per capita, while Mexico ranks lowest at $83k. In most countries, land value significantly exceeds structural value, with Australia showing the largest disparity ($178k vs $68k for structures).
Source: Tony Blair Institute Read full article
Back to Index
Food for Thought
1. States with minimum wage increases this year:
Source: Truist Advisory Services
2. US multinationals achieve significantly higher returns on investments in tax havens compared to G7 economies, highlighting the role of tax optimization in driving profit patterns.
Source: St. Louis Fed Read full article
3. Bringing manufacturing jobs back to the US is a tall order.
Source: Capital Economics
4. Global migration corridors:
Source: Visual Capitalist Read full article
5. Luxury goods sales:
Source: The Economist Read full article
6. Bird migration pathways:
Source: Audubon
——————–
Have a great weekend!
Back to Index