The Daily Shot: 03-Feb-25
• The United States
• Canada
• The Eurozone
• Europe
• Asia-Pacific
• China
• Emerging Markets
• Cryptocurrency
• Commodities
• Energy
• Equities
• Credit
• Global Developments
• Food for Thought
The United States
1. The US is imposing 25% tariffs on imports from Mexico and Canada. Canadian energy products will be subject to a 10% tariff, and Chinese imports will be subject to an additional 10% tariff.
Source: CBS News Read full article
Source: Reuters Read full article
The US dollar is up sharply, …
… potentially leading to further tightening of financial conditions this week.
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2. The US Employment Cost Index rose at a faster pace in Q4, driven by wage growth.
3. Consumer inflation accelerated in December, according to the PCE report.
Here is the supercore PCE (monthly changes).
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4. Consumer spending growth was robust going into the year-end, topping expectations.
Source: BofA Global Research Read full article
• The increase in spending was not matched by higher savings, …
Source: @TheTerminal, Bloomberg Finance L.P.
… as consumers sought to front-run tariffs.
Source: @TheTerminal, Bloomberg Finance L.P.
Saving as a share of disposable income dropped further.
• This chart shows personal income, excluding government checks.
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5. Generally, labor market conditions remain favorable, which could support consumption.
Source: MRB Partners
• Nominal total consumption growth has been running above the pre-covid rate.
Source: Morgan Stanley Research
• Morgan Stanley expects goods spending to outpace services.
Source: Morgan Stanley Research
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6. Importers have been getting ready for tariffs.
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Canada
1. The loonie plunged to its lowest level since 2003 following the US tariff announcement.
The cost of protecting against CAD downside risks continued to rise.
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2. Which sectors are most vulnerable?
Source: S&P Global Ratings
3. The economy contracted in November, but estimates show a rebound in December.
Source: @WSJ Read full article
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4. The BoC estimated that real GDP would be about 4% lower than otherwise, driven by the 25% tariff scenario and that there would be no recovery thereafter.
Source: MRB Partners
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The Eurozone
1. The euro is down sharply on US tariff threats.
Source: BBC Read full article
Demand for downside protection on the euro surged relative to upside protection.
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2. Year-over-year CPI gains in January remained largely unchanged from December in both Germany and France.
Dutch inflation slowed.
• Inflation expectations were unchanged in December.
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3. January was a good month for European stocks.
Source: S&P Dow Jones Indices
4. Euro-area business confidence improved in January.
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Europe
1. Which countries are most exposed to US tariffs?
Source: Nomura Securities
2. Last year, the proportion of European companies listing on domestic exchanges sank to a record low. According to PitchBook, structural issues are pushing more businesses to list in the US.
Source: PitchBook
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Asia-Pacific
1. South Korea’s trade deficit was wider than expected in January, …
… but exports surprised to the upside.
• Manufacturing activity registered modest growth in January.
Source: S&P GlobalĀ PMI
• South Korea’s industrial production surged in December.
• Stocks are down sharply on US tariff concerns.
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2. Taiwan’s manufacturing growth slowed.
Source: S&P GlobalĀ PMI
3. Next, we have some updates on Australia.
• The Aussie dollar is down sharply.
• Retail sales topped expectations.
• Credit growth is improving.
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China
1. The offshore yuan is down on the US tariff announcement.
2. Manufacturing growth is stalling as employment contracts.
Source: Caixin GlobalĀ Read full article
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3. Here is a look at China’s steel demand.
Source: @financialtimes Read full article
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Emerging Markets
1. The Mexican peso tumbled this morning on US tariff news.
Which sectors are most exposed to tariffs?
Source: S&P Global Ratings
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2. The Indian rupee hit a record low.
3. Next, let’s run through Asian manufacturing PMIs.
• ASEAN (very slow growth):
Source: S&P GlobalĀ PMI
• Indonesia (growth accelerating):
Source: S&P GlobalĀ PMI
• Malaysia (weak):
Source: S&P GlobalĀ PMI
• The Philippines (slower growth):
Source: S&P GlobalĀ PMI
• Thailand (back in contraction):
Source: S&P GlobalĀ PMI
• Vietnam (soft):
Source: S&P GlobalĀ PMI
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4. Finally, let’s take a look at performance data for January.
• Currencies:
• Bond yields:
• Equity ETFs:
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Cryptocurrency
1. Bitcoin was down sharply but held support at $90k.
2. Ether tumbled on trade jitters.
Source: @crypto Read full article
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Commodities
1. Speculative accounts are boosting bets on corn …
\
… and soybeans, …
… while increasing bets against wheat.
• Corn futures are down sharply.
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2. Speculative accounts boosted their bets on coffee futures.
3. Here is a look at January’s performance.
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Energy
1. Crude oil is up due to supply concerns as tariffs take effect.
Source: Reuters Read full article
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2. US fracking activity finally stabilized last week.
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Equities
1. Stock futures are down this morning following the tariff announcement.
• Which sectors are most vulnerable?
Source: S&P Global Ratings
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2. The S&P 500 breadth has been rapidly expanding.
Source: SentimenTrader
3. Equity inflows accelerated last week, …
Source: Deutsche Bank Research
… driven by tech. Tech positioning has risen, …
Source: Deutsche Bank Research
… keeping Deutsche Bank’s overall positioning indicator elevated.
Source: Deutsche Bank Research
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4. On a relative basis, the S&P 500 consumer discretionary sector’s valuation appears stretched.
Source: Morgan Stanley Research
• Consumer durables and apparel stocks are trading at a relative discount to the S&P 500.
Source: Morgan Stanley Research
• The consumer staples sector is trading at a relative discount to the S&P 500, while food and beverage stocks are trading at a premium. (2 charts)
Source: Morgan Stanley Research
Source: Morgan Stanley Research
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5. The S&P 500 equal-weight index is starting to improve in relative terms, albeit within a long-term downtrend.
6. The put-call ratio is at multi-year lows.
Source: Deutsche Bank Research
7. The average global stock/bond correlation remains elevated.
Source: Aazan Habib, Paradigm Capital
8. The majority of January’s market gains were driven by multiple expansion.
9. Next, we have some performance data for January.
• Sectors:
• Factors:
• Macro basket pairs’ relative performance:
• Thematic ETFs:
• Largest US tech firms:
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Credit
1. US high-yield bond issuance advanced last week.
Source: PitchBook
2. Securitized single-A spreads remain well above corporate bond spreads.
Source: Deutsche Bank Research
3. Here is a look at January’s performance.
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Global Developments
Let’s take a look at last month’s performance.
• Currencies:
• Bond yields:
• Equity ETFs:
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Food for Thought
1. Shipments of Champagne:
Source: @JeffreyKleintop
2. Countries with the largest public pension funds:
Source: Visual Capitalist Read full article
3. Marriage rates and birth rates:
Source: @financialtimes Read full article
4. Median homeownership tenure in major US cities:
Source: @WSJ Read full article
5. The rise of prompt engineering in tech teams:
Source: Deutsche Bank Research
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