The Daily Shot: 23-Jan-25
• The United States
• The United Kingdom
• Europe
• Asia-Pacific
• China
• India
• Emerging Markets
• Commodities
• Energy
• Equities
• Credit
• Rates
• Food for Thought
The United States
1. Let’s begin with the housing market.
• Mortgage applications were roughly in line with 2024 levels last week.
Here is the rate lock count.
Source: AEI Housing Center
Source: NMP Read full article
– Refi activity remains depressed but is holding above last year’s levels.
• Active listings are running well above 2024 levels.
Source: AEI Housing Center
• Despite high mortgage rates, home price appreciation closed 2024 with a 4.6% year-over-year gain, according to AEI.
Source: AEI Housing Center
– The top 50 metro areas all saw year-over-year price increases.
Source: Redfin
– Here is a comparison of year-over-year home price increases between December 2024 and December 2023.
Source: AEI Housing Center
– Redfin’s annual home price appreciation index was up 5.4% in 2024.
Source: Redfin
– Home prices in some metro areas remain well below the 2022 peak.
Source: AEI Housing Center
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2. US truck tonnage fell sharply in the final months of 2024 on a seasonally adjusted basis.
3. The Conference Board’s leading index dipped again in December.
Source: @TheTerminal, Bloomberg Finance L.P.
Source: @WSJ Read full article
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4. Unemployment forecasts are less extreme compared with 12 months ago.
Source: TS Lombard
• Stock investors anticipate a significantly higher job openings rate in the coming months.
Source: Gavekal Research
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5. Morgan Stanley expects one Fed rate cut this year before the central bank pauses.
Source: Morgan Stanley Research
6. The effective tariff rate in the US, which has been historically low in recent decades, could rise sharply under various scenarios of proposed tariff increases.
Source: Goldman Sachs; @MikeZaccardi
7. The US dollar index (DXY) held support at the 50-day moving average.
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The United Kingdom
1. Government borrowing jumped in December as bond yields surged.
Source: Reuters Read full article
Source: BBC Read full article
2. Gilt yields remain elevated relative to Bunds.
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Europe
1. The STOXX 600 hit a record high, …
… as German stocks keep surging.
French shares continue to rebound.
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2. The profit share of non-financial corporations in the euro area has declined notably since its peak in 2022. This trend suggests increasing cost pressures and weakening pricing power amid a slower economic environment.
Source: Eurostat Read full article
3. Poland’s industrial output was almost flat in December.
Wage growth continues to moderate.
Source: @economics Read full article
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4. Here is a look at the largest public debt reduction episodes.
Source: @DanielKral1, @OxfordEconomics
5. Reasons for working after retirement vary across Europe, with enjoyment or financial necessity as key drivers.
Source: Eurostat Read full article
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Asia-Pacific
1. Japan’s trade deficit has nearly vanished for the first time since 2021, …
… with exports outpacing imports in December.
Source: @TheTerminal, Bloomberg Finance L.P.
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2. Next, we have some updates on South Korea.
• The Q4 GDP growth was disappointing.
Source: Reuters Read full article
• Retail sales held up well in December.
• South Korea’s manufacturing sentiment inched higher this month while service firms grew increasingly pessimistic.
• USD/KRW held support at the 50-day moving average.
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China
China’s stocks jumped after Beijing unveiled a plan to push insurance funds into equities, but the rally quickly faded.
Source: Reuters Read full article
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India
1. The NSE Nifty 50 Index found support at 23k.
2. The Indian rupee (INR) has the lowest beta among Asian currencies to the dollar, but Barclays expects this to increase as the RBI allows the currency to move more in line with its peers.
Source: Barclays Research
3. India’s trade deficit with China is growing.
Source: Barclays Research
4. India’s banking liquidity deficit has expanded amid heavy intervention.
Source: Barclays Research
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Emerging Markets
1. Let’s begin with South Africa.
• The CPI report surprised to the downside again.
Source: @economics Read full article
• Bond yields moved lower.
• Retail sales accelerated in November.
• South Africa’s stocks have been outperforming EM peers.
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2. Hungary’s sentiment indicators deteriorated further this month.
3. Thailand’s December exports topped expectations.
4. Argentina’s leading index increased for the 6th month in a row.
5. EM currencies are rebounding.
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Commodities
1. Chicago cattle futures are hitting new highs.
2. Coffee futures continue to surge.
Source: barchart.com Read full article
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Energy
1. US oil and gas production has reached record highs.
Source: Gavekal Research
However, energy prices would need to be much higher for US energy firms to boost production further.
Source: Gavekal Research
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2. Here is a look at US oil imports from Saudi Arabia.
Source: @JavierBlas, @opinion Read full article
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Equities
1. The S&P 500 is testing resistance at the December peak.
2. Semiconductor stocks have been soaring, …
… fueled by heightened enthusiasm for AI.
• Industrials are also outperforming.
Source: Reuters Read full article
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3. Post-IPO stocks have outperformed sharply in recent days, which bodes well for IPO activity this year.
4. Despite the GOP’s aim to reduce government spending, companies with substantial government revenues are outperforming.
5. Consumer staples are at multi-year lows relative to the S&P 500.
6. US equity performance closely aligns with historical patterns observed during non-recessionary Fed rate-cutting cycles.
Source: Goldman Sachs; @MikeZaccardi
7. It’s been a while since the Russell 2000 hit a record high.
Source: @KevRGordon
8. Hedge funds’ gross leverage has risen to multi-year highs, while net leverage increases have stalled.
Source: Goldman Sachs; @dailychartbook
9. Corporate margin growth has peaked, although costs appear under control so far.
Source: Alpine Macro
10. Since 1926, the top 3% of US companies have generated all net shareholder wealth, underscoring the highly concentrated impact of a small subset of firms on long-term stock market returns.
Source: BofA Global Research
The share of US companies responsible for 50% of net wealth creation has declined significantly over time, dropping from 0.35% (1926-2016) to 0.26% (1926-2022). This reflects an even greater concentration of wealth generation among fewer firms.
Source: BofA Global Research
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Credit
1. US high-yield bond spreads (OAS) are nearing multi-year lows.
• US HY OAS/IG OAS ratio has dropped to multi-year lows, indicating that high-yield spreads have narrowed relative to investment-grade spreads. This compression suggests reduced risk premiums for high-yield bonds, reflecting investor appetite for credit risk and confidence in economic conditions.
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2. Historically, mortgage bonds have been highly correlated with longer-maturity TIPS, potentially serving as an inflation hedge.
Source: PGM Global
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Rates
1. Retail sentiment on Treasuries is extremely gloomy.
Source: BofA Global Research
2. It is atypical for Treasury yields to rise significantly following the start of a Fed rate-cutting cycle, as seen in the current scenario. Historically, yields tend to decline in both recessionary and growth-scare environments
Source: Goldman Sachs; @MikeZaccardi
3. Here is a look at interest rates going back to 3000 BC.
Source: BofA Global Research
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Food for Thought
1. Largest companies by revenue:
Source: Visual Capitalist Read full article
2. Insured losses from hail damage relative to the national average:
Source: @WSJ Read full article
3. Sectors with the highest employment of foreign-born workers in 2023:
Source: @economics Read full article
4. Minimum wage increases in 2025:
Source: @chartrdaily
5. Remote and hybrid work in the US:
Source: Gavekal Research
6. Playoff outcomes of the top 20 point differential teams:
Source: r/DataIsBeautiful
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