The Daily Shot® Brief

Greetings,

 

The United States: The NAHB homebuilder sentiment index showed a modest improvement this month, driven by a pullback in mortgage rates.

Equities: The SPDR S&P 500 ETF (SPY) saw a record spike in inflows last Friday (SPY is the largest ETF).

Demand for small-cap options created a sharp divergence between VIX and RVX (Russell 2000 VIX equivalent).

Japan: Despite all the rumors of policy tightening, the BoJ did not signal a rate hike ahead. The yen dropped in response.

Energy: The Houthi threat is disrupting shipping markets, boosting natural gas prices in Europe.

Rates: There is little agreement on the direction of Treasury yields next year.

Emerging Markets: Argentina cut rates after the massive currency devaluation.

Food for Thought: Listening to festive music:

Edited by William Villacis

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Greetings,

 

Equities:  Roughly 48% of Russell 2000 stocks made a 63-day high, reaching the fifth-highest level in history.

Commodities: The copper market is expected to be in surplus next year.

Credit: Downgrades continue to outnumber upgrades at lower rating levels.

Rates: US real rates have only recently turned positive and are not yet at restrictive levels by historical standards.

The United Kingdom: Capital Economics sees the BoE on hold longer than the Fed or the ECB due to elevated inflation. But once the BoE begins cutting rates, it will do so faster than the market expects.

The Eurozone: The euro-area composite PMI index is firmly in contraction territory signaling a recession.

Emerging Markets: BofA’s private clients have been dumping EM debt.

Food for Thought: Homelessness in the US:

Edited by William Villacis

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Greetings,

 

The United States: Adjusted for inflation, retail sales have been accelerating.

The United Kingdom: The pound jumped.

China: The PBoC accelerated liquidity injections to boost economic growth.

Energy: Crude oil bounced from the recent lows.

Equities: Market breadth has improved dramatically. Here is the percentage of S&P 500 stocks trading above their 200-day moving average.

Food for Thought: Number of curse words on streaming services:

Edited by Josh Oldmixon

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Greetings,

 

The United States: After the Fed’s “pivot” signal, markets have the first rate cut slated for March.

The yield curve steepened (bull steepening).

The Eurozone: Bond yields and swap rates declined sharply after the Fed’s pivot. The euro jumped.

Asia-Pacific: Asian currencies surged as the dollar weakened.

Equities: 90% of S&P 500 members are above their 50-day moving average.

Retail investors haven’t been this bullish since early 2021.

Credit: Credit spreads tightened sharply in response to the Fed’s pivot.

Food for Thought: Views on canine vaccines:

Edited by William Villacis

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Greetings,

 

The United States: On the other hand, smaller cities have been pushing up rent inflation.

The United Kingdom: Net unemployment claims:

Japan: Small non-manufacturing firms:

Energy: US natural gas futures are getting obliterated.

Equities: The S&P 500 has diverged from its earnings revision breadth.

Credit: Interest coverage ratios are trending lower.

Food for Thought: US population growth:

Edited by Josh Oldmixon

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Greetings,

 

Equities: The Dow rally looks stretched.

Credit: Weekly bankruptcy filings rose as the Fed hiked rates, although still below prior cycle highs.

The United States: This chart shows the year-to-date employment gains by industry.

The Eurozone: This table shows some scenarios for the ECB’s policy stance this week (from ING).

Japan: The markets now see almost zero chance of a rate hike this month.

China: Economic activity is starting to improve.

Cryptocurrency: Bitcoin saw a sharp pullback on Monday, with leveraged players forced to exit.

Food for Thought: High demand for pilots:

Edited by William Villacis

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Greetings,

 

The United States: Last month’s job gains topped expectations. However, excluding government jobs, the figure was roughly in line with economists’ estimates.

The United Kingdom: Construction activity continues to shrink.

Commodities: Gold is testing support near $2000/oz.

Equities: Broader US market performance would require strength in cyclical stocks relative to tech.

Energy: Crude oil has declined for seven consecutive weeks.

Food for Thought: NYC subway ridership:

Edited by Josh Oldmixon

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Greetings,

 

The United States: Student loans held by the federal government declined further on a year-over-year basis due in part to debt forgiveness.

Europe: Switzerland’s central bank continues to shrink its balance sheet.

Emerging Markets: Here is Colombia’s core inflation.

Commodities: US wheat futures are rebounding.

Equities: US stocks have outperformed international shares by over 10% year-to-date.

Credit: This chart shows the number of US Chapter 11 bankruptcy filings.

Rates: Reserve balances are climbing despite the Fed’s QT (which tends to be a tailwind for stocks).

Food for Thought: US home buyers’ average age:

Edited by Josh Oldmixon

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Greetings,

 

Energy: Brent crude declined sharply on Wednesday as the US gasoline inventory build boosted concerns about weakening demand.

Commodities: Sugar futures are plunging. Declining crude oil prices pressure the ethanol market, prompting global sugar mills to shift their focus from ethanol to sugar production. This change tends to increase sugar supplies.

Credit: Blackstone’s mortgage REIT is in Muddy Waters’ crosshairs.

Rates: Options bets on a further rally in TLT (iShares 20 Plus Year Treasury Bond ETF) have surged.

Equities: The S&P 500 typically struggles when the Fed is easing into tight credit conditions.

Emerging Markets: India’s stock market capitalization hit a record high.

Japan: JGB yields surged in response to a potential BOJ rate hike.

Food for Thought: Share of global semiconductor production:

Edited by William Villacis

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Greetings,

 

The United States: October job openings surprised to the downside, suggesting that labor market imbalances continue to ease.

The United Kingdom: Company closures have been outpacing business creation.

Asia-Pacific: Singapore’s retail sales growth has stalled.

Commodities: The correction is sugar futures continues.

Equities: Share buybacks have accelerated, …

… but are still below last year’s levels year-to-date.

Rates: JP Morgan’s active clients are very bullish on Treasuries.

Food for Thought: North Koreans escaping to South Korea:

Edited by Josh Oldmixon

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