- There is a significant need for new infrastructure.
- Source: Apollo.
Macroeconomics
Snippets on the big picture.
Consumer Spending is Late Cycle
- Often discussed, but in fact consumption decline is a late cycle phenomenon.
CPI Upside Explained
- CPI stopped going down. Why? It is largely down to two components (Source).
- Auto insurance – though this is surprising as repair cost growth is moderating.
- Shelter – which is a difficult component full of assumptions.
- FT Alphaville has a deeper look – suggesting things aren’t so grim.
Leading Indicator of Remodeling Activity
- Harvard tracks the short-term outlook for home improvement spend.
- “The indicator, measured as an annual rate-of-change of its components, is designed to project the annual rate of change in spending for the current quarter and subsequent four quarters, and is intended to help identify future turning points in the business cycle of the home improvement and repair industry.“
- Right now a bottom is seen in Q3 2024. The trajectory is a big upgrade on their previous outlook.
Cash on sidelines
- Plenty of liquidity in MMF as % of disposable income.
- Source.
Restaurant Traffic
- Traffic and sales to restaurants in the US are falling.
- Source.
Inverted Curve Record
- The yield curve has been inverted for a record number of days.
Diversification?
- Morningstar is out with some analysis on diversification of various asset classes.
- Lots of surprising conclusions – for example not all liquid alts are genuine diversifiers.
Fragmentation
Financial Repression Over
- Financial repression has never before happened during peacetime, and we have just exited this period.
- Source: JPM.
Flash GDP Estimates are Always too Pessimistic
- “As you can see, with the notable exception of 2020 — which was, well, an unusual year — initial estimates of global growth have been consistently too pessimistic, and final revisions have on average pushed up GDP growth by 0.55 percentage points a year in the 12 years to 2021.“
- Source: FT.
30 Surprising Things from OurWorldinData
- Someone went through every page and listed their 30 most surprising things.
- 26. In the UK, more than half of crimes are estimated to be caused by alcohol consumption.
Chinese Economic Disclosures
- The Chinese authorities have substantially decreased the number of economic indicators published.
- Source: JPM.
State Level Data as a Recession Indicator
- “Conveniently, the Philly Fed publishes monthly coincident indicators for each state. Aggregating the 50 signals into a composite index provides a somewhat different view of the US business cycle vs. traditional top-down metrics.“
- The current signal is issuing a warning.
- Source.
Jobless Claims about to Rise?
- Jobless claims “are still very low by historical standards. We expect that to change soon. The WARN numbers, capturing advance notice of plant closures and mass layoffs, have jumped recently and point to initial claims rising significantly over the next few months ..”
- Source: Pantheon Macro via Carl.
German House Prices
- Residential property prices are down sharply in what was once seen as a sure bet market.
- This is the case across all major cities.
- Source: Apollo.
Where are we in the Cycle?
- Recession? Soft landing? TS Lombard try to answer in this essay.
- The premise is that the COVID-related “cycle” should be dismissed – something we have just about worked off.
Sad State of UK Capital Markets
- The UK is the only major region where the number of liquid companies (defined as having more than $1m of average daily traded value over six months) is down since 2003.
- Source: FT Alphaville.
Job Cuts
- Mentions of job cuts during earnings calls are on the rise.
Narratives Before Recession
- Typically the chatter around soft landing peaks just as recessions happen.
- Source: LGIM
