The Daily Shot: 21-Jan-25
• The United States
• Canada
• The United Kingdom
• The Eurozone
• China
• Emerging Markets
• Cryptocurrency
• Commodities
• Equities
• Rates
• Global Developments
• Food for Thought
The United States
1. US dollar volatility jumped this week due to tariff-related uncertainty.
– The selloff:
Source: CNBC Read full article
– The rebound:
Source: @markets Read full article
• The trade policy uncertainty index has surged in recent months, …
Source: BCA Research
… amplifying overall economic uncertainty.
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2. Treasury yields are declining amid a rebound in global bond markets.
3. Investors are worried about the possibility of the Fed being compelled to raise rates this year.
Source: BofA Global Research
4. The federal budget deficit reached $711 billion in the first fiscal quarter.
Source: MarketWatch Read full article
• Interest expenses are outpacing last year’s levels.
– Net interest costs are expected to rise even with lower interest rates. (2 charts)
Source: MUFG Securities
Source: MUFG Securities
– Interest payments on the national debt now exceed spending on national defense.
• Even optimistic GDP estimates will not offset a rise in government spending.
Source: MUFG Securities
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5. The aging US population is projected to slow household formation.
Source: Barclays Research
6. Labor productivity growth in the US historically accelerated with major technological shifts, peaking at 2.8% during the electricity era and 3.2% during the computer revolution. The emergence of transformational AI is projected to drive productivity growth to 3% by 2030, suggesting a potentially equivalent economic impact to prior revolutionary technologies.
Source: BofA Global Research
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Canada
1. The Canadian dollar whipsawed this week amid tariff-related uncertainty, …
… driving increased volatility.
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2. The BoC business survey revealed a subdued outlook in Q4, …
… though key components showed improvement.
– Sales expectations:
– Employment:
– CapEx:
• Canadian companies are no longer cutting prices.
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3. Bond yields are moving lower amid a rebound in global bond markets.
• The market sees a high probability of a BoC rate cut this month (on the 29th).
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The United Kingdom
1. The unemployment rate has been trending higher.
• UK payroll data, though subject to significant revisions, recorded a second consecutive sharp decline last month.
The claimant count has been relatively steady in recent months.
• Job vacancies were almost unchanged in December.
• Wage growth has been rising in recent months.
However, the vacancies-to-unemployed ratio suggests a slowdown ahead.
Source: Pantheon Macroeconomics
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2. UK large-cap stocks’ discount to European peers has widened.
Source: @TheTerminal, Bloomberg Finance L.P.
3. Residential construction slowed in the past couple of years.
Source: The Economist Read full article
• This chart shows a dramatic rise in how long it takes low- to middle-income households to save for a home deposit in the UK. The time required has increased from about 2-3 years in 1990 to over 22 years by 2022, with particularly steep increases since 2012.
Source: Tony Blair Institute Read full article
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The Eurozone
1. Economists continue to lower Germany’s key economic projections for 2025.
– Industrial production:
– Exports:
– CapEx:
2. Economists are raising their unemployment forecasts for France this year.
3. Eurozone construction output saw a rebound in November.
4. Fund managers have been rotating into Eurozone stocks this month (3 charts).
Source: BofA Global Research
Source: BofA Global Research
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5. EUR/USD is holding resistance at the 50-day moving average.
Source: @TheTerminal, Bloomberg Finance L.P.
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China
1. The renminbi jumped this week after Trump discussed trade with Xi Jinping.
2. Here is a look at China’s renewable electricity capacity growth.
Source: @financialtimes Read full article
3. China’s per-capita GDP growth trails other Asian economies.
Source: Visual Capitalist Read full article
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Emerging Markets
1. The Mexican peso was whipsawed this week amid tariff-related uncertainty.
2. Argentina’s exports rose 33.4% last month compared to December 2023.
The trade surplus topped expectations.
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3. India’s equity market is experiencing significant foreign outflows this month.
4. Planned investments into EM countries have risen sharply in the post-pandemic era.
Source: Capital Economics
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Cryptocurrency
1. Crypto fund inflows surged last week, driven by Bitcoin and Ethereum-focused products. (2 charts)
Source: CoinShares Read full article
Source: CoinShares Read full article
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2. The Crypto Fear & Greed Index returned to “extreme greed” territory.
Source: Alternative.me
3. There was a spike in both long and short BTC liquidations as the crypto traded around the $100K price level.
Source: Coinglass
4. Bitcoin drawdowns can be severe even during strong price uptrends.
Source: Deutsche Bank Research
5. Bitcoin has a positive correlation with risk assets and a negative correlation with safe assets.
Source: Deutsche Bank Research
6. Decentralized AI venture capital activity surged over the past year.
Source: PitchBook
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Commodities
1. Grain futures are rebounding, …
… with corn leading the gains.
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2. Cocoa prices are consolidating.
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Equities
1. Sentiment around 2025 S&P 500 earnings has been weakening, …
Source: Goldman Sachs; @MikeZaccardi
… while earnings revisions for high-quality equities have been improving on a relative basis.
Source: Morgan Stanley Research; SG Cross Asset Research; @WallStJesus
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2. Typically, US stocks face challenges after a presidential inauguration.
Source: Simon White, Bloomberg Markets Live Blog
However, 2016 proved to be an exception.
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3. Measures of equity risk premium remain depressed.
Source: SG Cross Asset Research; @WallStJesus
4. Fund managers’ cash levels have dropped to their lowest point since June 2021, …
Source: BofA Global Research
… with institutional sentiment diverging from that of retail investors.
Source: BofA Global Research
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5. The strength of the US dollar is projected to reduce S&P 500 EPS growth by about 1.5% in Q1 2025, posing challenges for multinationals.
Source: UBS; @WallStJesus
6. How does the S&P 500 typically respond to changes in Treasury yields?
Source: Goldman Sachs; @MikeZaccardi
7. Equity fund inflows since 2020 highlight a dramatic preference for US markets, with $1.2 trillion allocated compared to just $215 billion for the rest of the world. This disparity underscores a significant global shift toward US equities in the 2020s.
Source: BofA Global Research
8. 29% of large-cap mutual funds outperformed their benchmark last year.
Source: Goldman Sachs; @MikeZaccardi
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Rates
1. Fund managers now anticipate higher bond yields ahead, …
Source: BofA Global Research
… reducing their bond allocations to the lowest level since October 2022.
Source: BofA Global Research
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2. Bank reserves are declining and approaching the Fed’s minimum requirement estimate.
Source: PGM Global
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Global Developments
1. Fund managers are very bullish on the US dollar.
Source: BofA Global Research
2. Here is a look at currency sensitivity to yield differentials.
Source: Codera Analytics
3. Defensive ETFs are outperforming early in 2025, reflecting increased demand for inflation hedges and diversification.
Source: @markets Read full article
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Food for Thought
1. Semiconductor companies with the highest market value:
Source: Visual Capitalist Read full article
2. OpenAI targets $100B in annual revenue by 2029.
Source: @chartrdaily
3. Spot the bubble?
Source: Visual Capitalist Read full article
4. US goods trade with key partners:
Source: @WSJ Read full article
5. Most executive orders were signed between the Progressive Era and the Great Depression.
Source: Deutsche Bank Research
6. Structures damaged in California wildfires:
Source: The Economist Read full article
7. Aerial firefighting operations in Los Angeles:
Source: r/DataIsBeautiful
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