Consumer spending accelerated in Q4, boosted by households front-running tariffs

The Daily Shot: 31-Jan-25
The United States
Canada
The United Kingdom
The Eurozone
Japan
Emerging Markets
Cryptocurrency
Commodities
Energy
Equities
Credit
Rates
Global Developments
Food for Thought



 

The United States

1. US Q4 GDP growth was below expectations but aligned with the Atlanta Fed’s GDPNow estimate (chart).
 

 
Source: @axios   Read full article  
 
Consumer spending accelerated, driven by households rushing to front-run tariffs.
 

 
Business investment weighed on Q4 GDP growth, as Boeing strike disruptions impacted business equipment spending.
 

 
After two consecutive quarterly declines, housing investment rebounded.
 

 
Surprisingly, net exports contributed positively to growth.
 

 
As we saw yesterday (chart), destocking dampened growth last quarter.
 

 
Domestic demand growth remained robust (2 charts).
 

 
Source: @TheTerminal, Bloomberg Finance L.P.  

——————–

 
2. Initial jobless claims hit a multi-year low last week.
 

 
Source: Reuters   Read full article  
 
This chart shows the trend in continuing jobless claims.
 

——————–

 
3. The stock market is pricing in a sharp rebound in US factory activity.
 
Source: @TheTerminal, Bloomberg Finance L.P.  
 
4. Without seasonal adjustments, pending home sales dropped to their lowest level since the National Association of REALTORS began reporting the index in 2001.
 

 
Rising mortgage rates suggest ongoing weakness in pending home sales, …
 
Source: Pantheon Macroeconomics  
 
… which, in turn, signals softness in existing home sales.
 
Source: Pantheon Macroeconomics  

——————–

 
5. Household wealth has grown since the financial crisis, while debt relative to net worth has declined.
 
Source: BlackRock Investment Institute  


Back to Index

 

Canada

1. The loonie dropped to the lowest level since 2020 on tariff concerns.
 

 
Source: BBC   Read full article  
 
The cost of hedging against CAD downside risks has surged.
 
1- week risk reversal:
 

 
1-week implied vol:
 

——————–

 
2. Bond yields continue to sink.
 

 
3. The S&P/TSX Composite hit a record high, …
 

 
… boosted by mining stocks.
 

 
Source: Reuters   Read full article  

——————–

 
4. Here is a breakdown of Canada-US trade by category.
 
Source: @financialtimes   Read full article  
 
5. Small Canadian exporters are becoming nervous.
 
Source: CFIB  


Back to Index

 

The United Kingdom

1. Stocks continue to surge.
 

 
2. Mortgage approvals inched higher in December.
 


Back to Index

 

The Eurozone

1. The ECB delivered another rate cut as economic growth stalls.
 

 
Source: @financialtimes   Read full article  
 
Economists (chart below) and the market (2nd chart) expect three more ECB rate reductions this year.
 
Source: @TheTerminal, Bloomberg Finance L.P.  
 
Source: @TheTerminal, Bloomberg Finance L.P.  
 
The market has repriced the ECB rate trajectory lower.
 

 
The euro and bond yields declined.
 

 

 
Stocks continue to surge, …
 

 
…. with banks outperforming.
 

 
Unlike in the US, European growth stocks have been underperforming value.
 
Source: BofA Global Research  

——————–

 
2. As noted yesterday, Spain’s Q4 GDP growth surpassed expectations, with Portugal also posting strong growth.
 

 
However, that’s where the good news ends.
 
Germany (contraction):
 

 
France (contraction, but strong domestic demand):
 

 
Source: Pantheon Macroeconomics  
 
Italy (flat again):
 

 
The Eurozone (flat):
 

 
Source: Reuters   Read full article  
 
Here are the GDP trajectories for Germany and Spain.
 
Source: @DanielKral1  


Back to Index

 

Japan

1. The Tokyo CPI topped expectations in January.
 

 
Food inflation has been accelerating.
 

 

 
Source: @economics   Read full article  

——————–

 
2. Retail sales were stronger than expected in December.
 

 
3. Industrial production inched higher.
 

 
4. The unemployment rate declined.
 

 
5. JGB yields keep climbing.
 


Back to Index

 

Emerging Markets

1. Mexico’s GDP contracted more than expected in Q4.
 

 
Source: Reuters   Read full article  
 
Bond yields are moving lower.
 

 
The budget deficit has blown out.
 

——————–

 
2. Brazil’s broad inflation index points to faster price increases.
 

 
Formal job creation was very low in December.
 

——————–

 
3. Argentina’s central bank reduced rates again as inflation slows.
 

 
Source: Reuters   Read full article  

——————–

 
4. South Africa’s central bank cut rates this week.
 

 
Here is a look at historical projections for rate trajectories in South Africa.
 
Source: Codera Analytics  

——————–

 
5. Philippine stocks are nearing bear market territory.
 
Source: @DavidInglesTV, @BloombergTV  
 
6. Funds focused on EM debt registered strong inflows.
 
Source: BofA Global Research  


Back to Index

 

Cryptocurrency

1. Some altcoins, such as XRP and Solana, had a strong January, although prices have pulled back over the past week.
 
Source: @TheTerminal, Bloomberg Finance L.P.  
 
2. Roughly 24% of the top 50 altcoins have outperformed BTC over the past month.
 
Source: Blockchain Center  
 
3. The SOL/BTC and SOL/ETH price ratios have risen.
 
Source: @KaikoData  
 
4. Here is a look at Bitcoin price performance from prior cycle lows.
 
Source: @glassnode  


Back to Index

 

Commodities

1. Gold prices hit a record high amid trade uncertainty.
 

 
This chart shows COMEX gold inventories.
 
Source: @financialtimes   Read full article  

——————–

 
2. Iron ore futures continue to rebound.
 


Back to Index

 

Energy

1. US oil and gas producers have lowered output growth and employee hours.
 
Source: The Crude Chronicle  
 
2. Here is a look at the LNG market.
 
Source: The Economist   Read full article  
 
Goldman anticipates strong natural gas demand growth, driven by increasing power needs from data centers.
 
Source: Goldman Sachs; @MikeZaccardi  


Back to Index

 

Equities

1. Futures are up this morning as the market reacted positively to Apple’s earnings.
 

 

——————–

 
2. Welcome to the “retail put.” According to JP Morgan, retail traders poured over $8 billion into equities last week—the largest weekly inflow in two years.
 
Source: JP Morgan Research; @WallStJesus  
 
3. Financials are seeing strong inflows.
 
Source: BofA Global Research  
 
4. Companies have expressed optimism in this earnings season.
 
Source: BofA Global Research; @SamRo  
 
5. Macro hedge funds have sharply reduced their exposure to equities.
 
Source: Nomura Securities; @WallStJesus  
 
6. US nominal earnings growth has outperformed nominal GDP growth since the 1990s.
 
Source: Deutsche Bank Research  
 
7. Individual stocks significantly underperformed the S&P 500 last year (again).
 
Source: @markets   Read full article  


Back to Index

 

Credit

1. Leveraged loan repricing activity remains elevated, …
 
Source: @business   Read full article  
 
… amid robust demand.
 
Source: BofA Global Research  
 
Leveraged loan spreads continue to tighten.
 
Source: Deutsche Bank Research  

——————–

 
2. High-yield bond funds are seeing inflows.
 
Source: BofA Global Research  
 
3. JP Morgan’s positioning indicator suggests that credit is nearing overbought territory.
 
Source: @markets   Read full article  


Back to Index

 

Rates

1. On average, the US issues more debt in a week than the entire outstanding debt of some advanced economies.
 
Source: BlackRock Investment Institute  
 
Treasury issuance is expected to remain elevated in 2025, with net coupon issuance driving the bulk of new debt supply. Wells Fargo forecasts $1.9 trillion in coupon issuance, reflecting sustained federal borrowing needs.
 
Source: Wells Fargo Securities  

——————–

 
2. MRB Partners estimates a neutral rate of 4.5%, which is well above the Fed’s latest estimate of 3%.
 
Source: MRB Partners  


Back to Index

 

Global Developments

1. Central banks’ rate-cutting frenzy has peaked.
 
Source: BofA Global Research  
 
2. This chart highlights the cyclical nature of the semiconductor industry. The Philadelphia Semiconductor Index (SOX) rolling returns tend to lead world semiconductor sales.
 
Source: @JeffreyKleintop  


——————–

Back to Index

 

Food for Thought

1. Global jet retirements and average retirement age trends:
 
Source: The Economist   Read full article  
 
2. Housing concerns and rent distress in OECD countries:
 
Source: IMF   Read full article  
 
3. Homeowners without insurance by state:
 
Source: Semafor  
 
4. Projected impact of immigration on the US budget deficit:
 
Source: @economics   Read full article  
 
5. EU countries’ defense spending and Ukraine aid by proximity to Moscow:
 
Source: The Economist   Read full article  
 
6. Decade of the most recent skyscraper completed:
 
Source: r/mapmixed  
 

——————–

 
Have a great weekend!


Back to Index