The Daily Shot: 06-Apr-20
• Administrative Update
• The United States
• The Eurozone
• Europe
• Asia – Pacific
• China
• Emerging Markets
• Commodities
• Energy
• Equities
• Credit
• Global Developments
• Food for Thought
Administrative Update
Please note that the Daily Shot will not be published this Friday, April 10th.
The United States
1. Let’s begin with the March employment report.
• The US lost about 700k jobs (Morgan Stanley’s forecast was spot on).
Given the initial unemployment claims figures, the March report was just the tip of the iceberg.
Source: @WSJ Read full article
• The leisure and hospitality sector was hit the hardest.
Source: Reuters Read full article
Source: Deutsche Bank Research
Below are the sectors with the highest percentage gains and losses.
Source: @bbgvisualdata Read full article
Here is the demographic breakdown of US job losses.
Source: Reuters Read full article
• The unemployment rate jumped.
But this move higher is only the beginning. The unemployment rate is expected to hit a multi-decade high over the next couple of months.
Source: @WSJ Read full article
• The number of Americans not at work for “other reasons” spiked.
Source: Morgan Stanley Research
• Measures of underemployment rose sharply as well (see definition of U-6 unemployment rate).
The monthly increase in the number of Americans who work part-time for “economic reasons” was the largest on record.
• The labor force participation rate declined.
A record number of Americans exited the labor force (in one month).
Here are the flows from “employed” to “not in labor force.”
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2. Next, we have a few additional updates on the labor market.
• We are likely to see another multi-million jump in initial unemployment claims.
Source: @markets Read full article
Below is the change in “file for unemployment” online searches from the previous week.
Source: Economic Policy Institute
• Here is a survey on lost pay/income.
Source: @MorningConsult
• 62% of Americans have been working remotely.
Source: Gallup Read full article
• In some industries, laid-off workers will make more from the enhanced unemployment insurance than they did in their job.
Source: Morgan Stanley Research
• Without the unemployment benefits, many Americans will quickly run out of savings.
Source: @MorningConsult
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3. The Citi Economic Surprise Index has been plummetting.
4. US financial stress indicators have risen sharply.
Source: Deutsche Bank Research
5. Companies are tapping their revolving credit lines at an unprecedented pace. This chart shows the weekly changes in business loan balances at banks (the second chart shows total bank assets).
6. The ISM Non-Manufacturing Index was surprisingly resilient in March.
But just as we saw in the manufacturing report (#6 here), the ISM indicator was distorted by supplier delivery disruptions.
Source: Oxford Economics
The deterioration in the ISM employment indicator was quite pronounced.
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7. Is the number of new COVID-19 cases in the US about to peak?
Emergency room visits at New York City hospitals signal stabilization.
Source: NYC Department of Health and Mental Hygiene, @Birdyword Read full article
The Eurozone
1. The collapse in the euro-area service-sector activity has been unprecedented.
• Italy:
• Spain:
• Germany (updated):
• France (updated):
• The Eurozone:
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2. Output prices are pointing to deflation.
Source: Danske Bank
3. Many Europeans continue to work despite the lockdowns.
Source: TS Lombard
4. Numerous mid-sized German manufacturers continue to operate.
Source: @WSJ Read full article
5. Supplier disruptions have worsened.
Source: Danske Bank
6. The ECB has now used most of the policy tools available to it.
Source: Pictet Wealth Management
Europe
1. Consumer confidence plummetted in the UK.
2. Norway’s unemployment rate rose sharply as the epidemic and depressed oil prices pressure the economy.
3. European corporate bond issuance hit a record high.
Source: @markets Read full article
4. While credit institutions hold a lower percentage of all euro-area financial assets, the ratio of assets to GDP has remained mostly stable.
Source: ECB
5. Which industries are slashing dividends?
Source: @markets Read full article
6. Shopping centers’ foot traffic collapses.
Source: @business Read full article
Asia – Pacific
1. Japan’s consumer confidence tumbled last month.
2. Next, we have some updates on Singapore.
• Here is the manufacturing PMI.
• Equity investors appear to be upbeat on Singapore.
• Is Singapore experiencing a second wave of coronavirus infections?
Source: Danske Bank
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3. Here is Fitch Ratings’ forecast for Australia’s and New Zealand’s GDP.
Source: Fitch Ratings
China
1. Let’s start with the PBoC’s midpoint setting for USD/CNY.
2. Shrinking exports will put further pressure on China’s labor market.
Source: Gavekal
Indebted households will face headwinds.
Source: @WSJ Read full article
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3. The gap between domestic and international flights continues to widen.
Source: Goldman Sachs
Emerging Markets
1. Let’s begin with Mexico.
• The markets were disappointed by the government’s stimulus plan.
Source: Reuters Read full article
The peso hit a new low.
• Mexico’s consumer confidence has been resilient.
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2. Next, we have some updates on Chile.
• Vehicle sales:
• Credit and debit card purchases:
Source: Scotiabank Economics
• Consumer confidence:
Source: Goldman Sachs
• The Chilean peso:
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3. Brazil’s service sector activity is collapsing.
4. This chart shows Goldman’s current activity indicators (CAI) for select LatAm economies.
Source: Goldman Sachs
And here is the LaAm currency index.
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5. India’s epidemic is in the early stages.
Source: Gavekal
• Testing has been limited.
Source: @WSJ Read full article
• The healthcare system could be overwhelmed.
Source: Gavekal
• The rupee is trading near record lows.
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6. Russia’s service sector is deep in contraction territory.
7. South Africa’s business activity has plummetted.
The rand hit another record low.
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7. Saudi Arabia’s economy is in trouble.
8. EM local-currency bond funds have experienced massive outflows.
Source: Goldman Sachs
Commodities
1. Funds have dramatically shortened their exposure to commodities.
Source: @Ole_S_Hansen
2. The rout in US livestock futures continues.
Source: Reuters Read full article
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3. Milk futures are also under pressure.
Source: @markets Read full article
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4. Isopropyl alcohol prices spike.
Source: @WSJ Read full article
Energy
1. Brent crude rose 40% last week.
Source: @markets Read full article
2. The US rig count continues to tumble.
3. This chart shows global crude oil demand.
Source: @WSJ Read full article
Equities
1. Stock futures are higher in early trading amid hopes that the number of new COVID-19 cases is about to peak.
2. This chart shows the 2-month changes in asset managers’ S&P 500 futures positioning.
Source: @movement_cap
3. Earnings estimates continue to see downward adjustments.
Source: @FactSet Read full article
4. The MSCI World Index is starting to outperform the 30-year Treasury bond.
Source: BCA Research
5. It’s been a rough few weeks for REITs.
Source: @WSJ Read full article
Credit
1. Rating downgrades are accelerating (see definition of fallen angels).
Source: Alpine Macro Read full article
2. The iShares high-yield ETF (HYG) recently made a new low versus the iShares investment-grade ETF (LQD).
Source: @DantesOutlook
3. How exposed are US banks to the hotel industry?
Source: S&P Global Market Intelligence Read full article
4. Bank deposits spike as a result of the Fed’s QE (see #3 here).
Source: @WSJ Read full article
5. This chart shows the share prices of mortgage servicers.
Source: @tracyalloway Read full article
Global Developments
1. The Fed’s securities holdings could double this year.
Source: Nordea Markets
The rapid monetary expansion could put substantial pressure on the US dollar.
Source: Nordea Markets
Speculative accounts continue to bet against the US currency.
Source: Goldman Sachs
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2. Morgan Stanley expects the G3 central banks to boost their balance sheets by 16% of GDP.
Source: Morgan Stanley Research
3. How long will the global recession last?
Source: Oxford Economics
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Food for Thought
1. Which products are selling well these days?
Source: @WSJ
Source: @luxury Read full article
Source: @luxury Read full article
And of course, alcohol, …
Source: @luxury Read full article
… and guns:
Source: BuzzFeed News Read full article
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2. Online ad prices:
Source: @WSJ Read full article
3. Local TV viewership:
Source: @WSJ Read full article
4. US health insurance CPI:
Source: Gavekal
5. The US vs. the Eurozone life expectancy:
Source: @bopinion Read full article
6. Undiagnosed COVID-19 cases:
Source: The Economist Read full article
7. Support for more stimulus in the US:
Source: @DataProgress
8. Most common activities among Americans stuck at home:
Source: Morning Consult Read full article
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