Some Americans Will Get a Raise by Filing for Unemployment

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Please note that the Daily Shot will not be published this Friday, April 10th.


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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  


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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  


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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  


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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  


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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  


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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  


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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  


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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  


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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  


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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  


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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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