The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

By Anonymous

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Twitter: @SoberLook




The Daily Shot: 04-Sep-18
• The United States
• Canada
• The United Kingdom
• The Eurozone
• Europe
• Japan
• Asia - Pacific
• China
• Emerging Markets
• Cryptocurrency
• Commodities
• Energy
• Equities
• Credit
• Rates
• Global Developments
• Food for Thought

The United States

1. Let's begin with the latest Q2 GDP revision.

Net exports and business investment were revised higher, but consumer spending was adjusted down. The net effect was a 0.1% upward change in the quarterly GDP.

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

Here is an updated attribution chart.

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

The Q3 growth consensus forecast remains around 3% (annualized).

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

2. The PCE inflation report was in line with forecasts as the core PCE (the Fed's preferred measure) finally reached the 2% target.

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

Here is the trimmed mean PCE inflation measure.

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

With inflation hitting the Fed's target, the probability of a rate hike this month is now fully baked in.

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

3. Personal income growth was a bit softer than expected, but consumer spending remains strong (second chart below).

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot
The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

4. Consumer sentiment continues to hit cycle highs in response to the job market's strength.

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

However, the spread between expectations and current conditions keeps widening.

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

5. Home price appreciation has slowed some but remains well above the rise in wages.

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

More first-time homebuyers are entering the market. According to Genworth, the US had the "most first-time homebuyers for a second quarter since 1999. First-time homebuyers accounted for 36% of single-family home sales in Q2, the highest share for a second quarter since 2000."

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

Source: Genworth Mortgage Insurance; Read full article

6. Regional manufacturing surveys in August were mixed. The net effect points to robust (albeit moderating) manufacturing activity in the US. Here is an estimate for the ISM manufacturing PMI at the national level (will be released today).

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

7. Next, we have some updates on the labor markets.

More factories are saying that labor shortages are holding back production.

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

Source: WSJ.com, h/t Paul Menestrier; Read full article

Small businesses are struggling to fill job openings (NFIB survey). Is this trend telling us that labor force participation should improve?

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

Source: Deutsche Bank Research

Gallup defines "engaged" employees as "involved in, enthusiastic about and committed to their work and workplace." American workers are increasingly engaged.

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

Source: Gallup; Read full article

8. US farm income continues to trend lower. The second chart below shows the regional changes.

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

Source: @FarmPolicy, @USDA_ERS; Read full article

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

Source: @FarmPolicy, @USDA_ERS


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Canada

1. The Canadian dollar is drifting lower on NAFTA uncertainty.

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

2. The GDP growth jumped in Q2 but was a bit softer than expected.

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

3. Canopy Growth, a cannabis firm, is now the largest member of Canada's healthcare index.

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

Source: @TheStalwart; Read full article


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The United Kingdom

1. Consumer credit growth was softer than expected.

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

2. The UK's manufacturing sector expansion continues to moderate.

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

Here is a measure of business sentiment.

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

3. Home price appreciation is still slowing.

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

4. Foreigners have been dumping gilts, which resulted in a steepening of the yield curve (second chart below).

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

Source: @ReutersJamie, @VPatelFX, @david_milliken

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

Source: @ReutersJamie; Read full article

5. Speculative accounts are pressing their bets against the pound.

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot


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The Eurozone

1. Economic data from the Eurozone has been softer, but is not "falling out of bed."

Economic confidence:

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

Consumer sentiment:

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

German consumer confidence:

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

German manufacturing PMI (a measure above 50 means growth):

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

Germany's business climate unexpectedly rebounded.

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

Source: ifo; Read full article

However, Italy's manufacturing sector stalled.

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

Source: IHS Markit; Read full article

2. Italian bond spreads to Germany remain elevated on budget concerns (see story).

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

3. The Eurozone's consumer inflation was softer than expected, with the core CPI stuck at 1%.

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

Source: @JanVonGerich

Here is Germany's CPI (back below 2%).

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot


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Europe

1. Below are some updates on Sweden.

Manufacturing activity is slowing:

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

However, manufacturing confidence beat expectations.

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

Retail sales are now below last year's levels.

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

2. Does the EU conjure up a positive or negative image?

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

Source: European Commission


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Japan

1. Economic data from Japan has been mixed.

Industrial production (down three months in a row):

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

Vehicle production:

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

Construction orders:

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

CapEx:

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

Retail sales:

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

2. The job market continues to tighten.

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

3. Consumer inflation is finally grinding higher.

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot


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Asia - Pacific

1. South Korea's sentiment indicators are moving lower.

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

Source: @ANZ_Research

2. Here are some updates on Australia's economy (not good).

Building approvals:

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

House prices (11 months of declines):

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

Source: @BloombergAU; Read full article

CapEx:

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

Retail sales:

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot


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China

1. The renminbi has stabilized after Beijing's interventions.

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

2. China's manufacturing activity is moderating.

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

3. Corporate bond spreads have been widening.

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

Source: WSJ.com, h/t Paul Menestrier; Read full article

4. Construction firms are facing tighter liquidity conditions.

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

Source: @economics; Read full article

5. China's shrinking labor force will become a drag on growth.

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

Source: Liberty Street Economics; Read full article


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Emerging Markets

1. Most EM currencies remain under pressure.

Brazilian real:

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

Argentine peso:

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

Indian rupee:

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

South African rand:

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

Indonesian rupiah:

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

The Turkish lira is tumbling again.

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

Even the Malaysian ringgit is struggling.

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

Here is a summary.

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

Source: @Ole_S_Hansen

2. EM bond prices continue to sink.

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

Source: @TheTerminal

3. To halt the currency declines, Argentina's central bank hiked rates to 60%.

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

Source: @financialtimes; Read full article

The nation will be forced by the IMF to undertake significant austerity measures. Another deep recession is coming.

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

Source: Reuters; Read full article

4. Here are some updates on Brazil.

Domestic bond yields keep climbing.

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

The fiscal situation is deteriorating again.

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

Despite the central bank rate cuts, credit card rates remain close to 300%.

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

Source: WSJ.com, h/t Paul Menestrier; Read full article

The manufacturing sector is recovering from truckers' strike.

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

Source: IHS Markit; Read full article

5. Mexico's manufacturing expansion is slowing.

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

Source: IHS Markit; Read full article

6. India's GDP beat expectations (second chart shows quarterly GDP attribution).

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot
The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

Source: @ANZ_Research

7. The Russian ruble has disconnected from oil prices.

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

Source: @economics, @sjinlondon; Read full article

8. Finally, we have some updates on Turkey. Welcome to stagflation.

The nation's sovereign credit default swap spreads have blown out.

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

Inflation is out of control (exceeding economists' forecasts).

- CPI:

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

- Core CPI:

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

- PPI:

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

The manufacturing sector is in contraction mode.

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

Source: IHS Markit; Read full article

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot


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Cryptocurrency

1. Bitcoin is attempting another recovery.

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

2. More firms are considering or implementing blockchain technology.

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

Source: WSJ.com, h/t Paul Menestrier; Read full article


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Commodities

1. The African Swine Fever appears to be spreading in China.

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

Source: @cjrdvm

So far, it hasn't helped US hog prices much.

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

2. The US runs a trade surplus in dairy products with Canada.

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

Source: WSJ.com, h/t Paul Menestrier; Read full article

3. Copper is struggling again (chart below shows copper futures in Shanghai).

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

4. Speculative investors are boosting their bets against silver.

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot


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Energy

1. Crude oil rebounded over the past few days on tighter US inventories.

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

Hedge funds are boosting their bets on oil.

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

Source: @Ole_S_Hansen

However, US energy shares are struggling.

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

2. The Brent curve is back in backwardation (negatively sloping curve).

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot
The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

3. Here is the total US crude oil production.

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

4. Transport bottlenecks for the Permian Basin oil producers are getting worse. Here is the Midland - Cushing WTI spread.

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

Source: @TheTerminal


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Equities

1. Let's begin with the S&P 500 performance attribution update.

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

2. Fewer stocks are outperforming the market (worsening market breadth).

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

Source: @Callum_Thomas, @bySamRo

3. The newly created Communications Services sector is lagging the market.

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

Last week, Electronic Arts contributed to the sector's underperformance.

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

4. Long/short hedge funds are long the market.

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

Source: JPMorgan, @Sunchartist

5. This chart shows US corporate profits as a percentage of the GDP.

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

Source: @axios; Read full article

6. Realized volatility is shrinking.

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

7. The VIX - S&P 500 inverse correlation broke down last week.

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

Source: @trevornoren; Read full article


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Credit

1. Investors pulled a big chunk of capital from the largest investment-grade corporate bond ETF.

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

Source: @TheTerminal

2. Leveraged loan recovery rates are expected to be lower going forward.

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

Source: Moody's, @StrategicBond

3. After bringing back cash from offshore accounts (for tax reasons), US multinationals have less of a need to issue debt.

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

Source: Goldman Sachs, @StrategicBond


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Rates

1. Here are the drivers of Treasury yield changes.

The month of August:

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

Year-to-date:

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

Year-to-date attribution based on term premium and risk-neutral yield:

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

2. This chart shows the spread between short-term rates three years from now vs. one year from now. The market now expects the Fed to cut rates shortly after the tightening cycle is over.

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot


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Global Developments

1. Hedge funds' positioning in safe-haven assets shows complacency.

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

Source: @AndreasSteno; Read full article

2. Here is the Q2 GDP growth by country.

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

Source: @chartoftheday; Read full article

3. There are more signs of slowing global trade activity.

Cargo volumes:

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

Source: @economics; Read full article

Merchandise trade:

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

Source: @economics; Read full article


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Food for Thought

1. Car insurance costs by state:

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

Source: @howmuch_net; Read full article

2. Public transit ridership in the US:

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

3. US land usage:

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

Source: @business; Read full article

4. Drug overdose trends:

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

Source: @voxdotcom; Read full article

5. Surprise hospital bills:

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

Source: Kaiser Family Foundation; Read full article

6. White House press briefings (number of minutes):

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

Source: @MikeDorning, @benwinck, @bpolitics; Read full article

7. How much does a pint of beer cost?

The Daily Shot: More First-Time Home Buyers Are Taking the Plunge - Daily Shot

Source: Mekko Graphics; Read full article

The Daily Shot provides objective and disinterested analysis and commentary regarding macroeconomic and market trends. Other than indirectly through country or sector specific exchange-traded or mutual funds, the author of the Daily Shot does not have any interest in or own any of the individual securities which may be mentioned. The Daily Shot does not provide investment advice or any recommendations regarding particular securities. Nothing in the Daily Shot should be relied upon in making an investment decision, nor considered to be a solicitation to offer or buy any securities.

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