A narrow selloff

The Daily Shot: 28-Jan-25
Equities
Alternatives
Energy
Commodities
Rates
Cryptocurrency
Emerging Markets
India
China
The Eurozone
Europe
The United Kingdom
The United States
Food for Thought



 

Equities

1. Let’s take a look at Monday’s market action.
 
Although the selloff was sharp, it remained narrowly focused. The losses were concentrated in the tech sector, especially semiconductors.
 
Semiconductors:
 

 
NVIDIA:
 

 
Broadocm:
 

 
The selloff was particularly painful as the sector experienced substantial inflows last week.
 

 
This chart shows the largest single-day market-cap losses.
 
Source: @technology   Read full article  
 
Some AI-focused names also took a hit.
 

 
On the other hand, the Dow closed up, …
 

 
… and the average S&P 500 stock was flat (the equal weight index in the chart below).
 

 
Remarkably, market breadth improved on Monday (2 charts).
 

 
Source: @TheTerminal, Bloomberg Finance L.P.  
 
Even within the tech sector, performance was mixed. Semiconductor and AI-focused stocks declined, while some software firms—potential beneficiaries of cheaper AI models spurred by DeepSeek’s open-source success—outperformed (2 charts).
 

 

 
The S&P 500 Financials Index hit a record high.
 

 
US bank stocks have caught up to their forward earnings trend after significantly undershooting over the past few years.
 
Source: MRB Partners  
 
Stock-bond correlations were negative on Monday, with bonds acting as a hedge again.
 

 
China’s tech stocks outperformed.
 

 
Here is Monday’s performance across key segments of the market.
 

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2. The Nasdaq 100 E-mini futures made a lower price high but are holding support above its 200-day moving average.
 

 
2. Here is a look at Nvidia’s massive earnings rise and analysts’ forecasts for continued strength. Are these forecasts too upbeat?
 
Source: Deutsche Bank Research  
 
3. The earnings season is still underway, but here are the latest EPS and sales beat rates by sector.
 

 
4. The Vanguard S&P 500 ETF (VOO)/Total World Stock Index ETF (VT) price ratio is at the upper bound of its long-term trend channel.
 

 
5. Off-exchange trading is now over half of US equity market activity.
 
Source: @markets   Read full article  
 
6. Equity risk premium remains depressed.
 
Source: @WSJ   Read full article  
 
7. Goldman’s top-down estimates for 2025 EPS growth are notably lower than consensus bottom-up projections for most indices, particularly for European companies.
 
Source: Goldman Sachs; @MikeZaccardi  


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Alternatives

1. Here is a look at startup founding team ownership shares across VC funding rounds.
 
Source: Carta  
 
2. Global fintech VC deal activity continues to normalize.
 
Source: PitchBook  
 
3. European private equity activity recovered last year, while venture capital slowed. (2 charts)
 
Source: PitchBook  
 
Source: PitchBook  

——————–

 
4. Hedge funds have been selling tech megacaps.
 
Source: Goldman Sachs; @Mayhem4Markets  


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Energy

1. The global gasoline market is expected to be oversupplied over the next few years.
 
Source: BMI, Fitch Solutions Macro Research  
 
2. China’s oil demand has been leveling off.
 
Source: @financialtimes   Read full article  


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Commodities

1. Coffee prices continue to hit record highs.
 

 
2. Cotton prices dropped to the lowest level in four years.
 


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Rates

1. The 10-year Treasury yield held support at the 50-day moving average.
 

 
Here is another way to look at the chart above.
 

——————–

 
2. Bonds’ contribution to a 60% equity/40% bond portfolio performance has been limited over the past 25 years.
 
Source: State Street Global Advisors   Read full article  
 
Bonds have been more sensitive to movements in the S&P 500.
 
Source: State Street Global Advisors   Read full article  


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Cryptocurrency

1. Bitcoin continues to trade like a high-beta tech stock.
 

 
Source: @markets   Read full article  
 
Bitcoin is more correlated to Mag-7 stocks than to other names in the S&P 500.
 
Source: State Street Global Advisors   Read full article  

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2. Crypto funds saw inflows 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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3. XRP experienced an uptick in long liquidations after the crypto briefly dipped below $3 on Monday.
 
Source: Coinglass  
 
4. Strong flows to over-the-counter cryptocurrency brokers in China indicate ongoing crypto activity despite Beijing’s crackdown.
 
Source: @WSJ   Read full article  


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Emerging Markets

1. Let’s begin with Brazil.
 
Consumer confidence deteriorated this month.
 

 
Source: Reuters   Read full article  
 
The market expects a rate hike this week.
 
Source: @economics   Read full article  
 
The current account deficit was wider than expected.
 

 
USD/BRL is holding below its 50-day moving average.
 

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2. Next, we have some updates on Mexico.
 
Economists keep downgrading their forecasts for Mexico’s industrial production growth this year.
 

 
Inflation has been moving higher.
 

 
Economic activity climbed less than expected in November.
 

 
Last month’s trade surplus was below forecasts.
 

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3. Turkey’s industrial capacity utilization has been rolling over.
 


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India

1. India’s Nifty 50 Index broke below its 40-week moving average after reaching overbought levels.
 

 
2. The rupee is selling off again, with USD/INR nearing record highs.
 

 
3. Here is a look at India’s refined product demand.
 
Source: @heysambit, @SPGlobal  


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China

1. Tech stocks are outperforming.
 

 
2. Vanke has been taken over by the state.
 
Source: @business   Read full article  
 
China’s property market is increasingly dominated by state-owned enterprises.
 
Source: Gavekal Research  


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The Eurozone

1. While Germany’s Ifo index edged higher, the measure of business expectations declined again.
 

 
Source: ifo Institute  
 
Source: @economics   Read full article  

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2. China’s car exports have surged past Germany’s, marking a dramatic shift in global auto trade.
 
Source: @WSJ   Read full article  
 
3. The number of jobseekers in France increased by 114k in the fourth quarter, marking the largest quarterly rise since 2020. This sharp uptick highlights potential labor market strains amid economic uncertainty.
 

 
4. Could euro-area inflation undershoot the ECB’s target?
 
Source: @ANZ_Research  


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Europe

1. EUR/CHF held resistance at the 200-day moving amid increased global uncertainty.
 

 
2. Over the past decade, Central Europe and the Nordics have emerged as attractive locations for data center infrastructure.
 
Source: Barclays Research  
 
3. This map shows people at risk of poverty in Europe, by region.
 
Source: Eurostat   Read full article  


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The United Kingdom

1. Food prices jumped this month.
 

 
Source: @economics   Read full article  

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2. Leading indicators point to a rebound in UK industrial production.
 
Source: Simon White, Bloomberg Markets Live Blog  


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The United States

1. New home sales in December exceeded expectations.
 

 
By region (seasonally adjusted):
 
Source: @TheTerminal, Bloomberg Finance L.P.  
 
By stage of construction:
 
Source: @TheTerminal, Bloomberg Finance L.P.  
 
Inventories held above 2023 levels.
 

 
Source: Reuters   Read full article  

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2. The Dallas Fed’s manufacturing index surged this month as demand improved.
 

 
The index of expected order growth hit the highest level since 2021.
 

 
CapEx plans increased.
 

 
Manufacturers expect faster inflation ahead.
 

 
Source: Dallas Fed   Read full article  

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3. Are job postings on Indeed stabilizing after a three-year decline?
 

 
4. Real wages have risen over the past three years, even with the fall in nominal wages.
 
Source: SOM Macro Strategies  


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Food for Thought

1. AI model performance scores (2 charts):
 

 
Source: @technology   Read full article  
 
DeepSeek vs. OpenAI:
 
Source: @chartrdaily  

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2. AI infrastructure spending:
 
Source: @technology   Read full article  
 
3. Projections for the number of deepfake videos:
 
Source: BofA Global Research  
 
4. Obamacare applications by state:
 
Source: Reuters   Read full article  
 
5. Global leader approval ratings:
 
Source: Morning Consult  
 
6. Horses per square mile:
 
Source: r/DataIsBeautiful  
 

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