The Daily Shot: 12-May-20
• The United States
• Canada
• Europe
• Asia – Pacific
• China
• Emerging Markets
• Cryptocurrency
• Commodities
• Energy
• Equities
• Credit
• Rates
• Global Developments
• Food for Thought
The United States
1. Let’s start with some high-frequency data.
• Federal tax receipts continue to slow.
Source: Deutsche Bank Research
• Mobility indicators point to some recovery in activity.
Source: Arbor Research & Trading
Here is road traffic since the beginning of April.
Source: Barclays Research
• Rail freight is rebounding.
Source: Gavekal
• The Johnson Redbook same-store sales (year-on-year change) is at record lows, but the decline appears to be slowing.
Here is Morgan Stanley’s retail sales tracker.
Source: Morgan Stanley Research
• Consumers remain cautious about spending time in public spaces.
Source: @CivicScience
That’s why “reopening” doesn’t necessarily bring about quick improvements in consumer activity. Here are some examples.
Source: Opportunity Insights Team Read full article
• But confidence is gradually lifting.
Source: Morning Consult Read full article
• The stock market has been signaling stabilization in economic activity. Here is the ratio of cyclical to defensive sectors.
Source: Gavekal
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2. Next, we have some updates on the labor market.
• Low-wage industries were hit particularly hard in April.
Source: Morgan Stanley Research
• The unemployment rate will climb further.
Source: ING
• The percentage of sectors with job gains has collapsed.
Source: Morgan Stanley Research
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3. Americans have been delaying bill payments.
Source: doxo INSIGHTS
And mortgage forbearance rates keep rising, albeit at a slower pace.
Source: Mortgage Bankers Association
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3. The Paychex April small business employment index hit a record low. Workers’ hours were cut sharply.
Source: Paychex/IHS Markit Small Business Employment Watch
4. Automobile sales hit a multi-decade low last month.
5. Nomura expects a sharp CPI decline in April.
Source: Nomura Securities
Used cars will be a drag on inflation in the months to come.
Source: Pantheon Macroeconomics
Canada
1. Consumer confidence is rebounding from extreme lows.
2. The decline in workers’ hours has been unprecedented.
Source: Scotiabank Economics
3. Most layoffs appear to be “temporary.”
Source: Scotiabank Economics
4. Canada is well-positioned for fiscal stimulus.
Source: CIBC Capital Markets
5. Speculators are increasingly net-short the loonie.
Source: Longview Economics
Europe
1. Italian industrial output collapsed in March.
2. Sweden’s unemployment rate rose in April but remains well below the financial-crisis highs.
Consumption tumbled in March.
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3. Switzerland’s 2yr yields are now higher than Germany’s. Will the SNB cut rates?
Source: Pavilion Global Markets
4. Below this year’s UK household spending vs. 2019.
Source: @financialtimes Read full article
5. Countries with a higher percentage of the population working from home saw smaller reductions in working hours.
Source: European Foundation for the Improvement of Living and Working Conditions Read full article
Asia – Pacific
1. Japan’s leading index fell further in March.
2. South Korea’s small and medium-sized businesses (SMEs) are struggling.
Source: ANZ Research
3. Here is New Zealand’s Truckometer Heavy Traffic Index.
4. Australia’s business and consumer confidence is recovering from extreme lows.
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5. This chart shows the percentage of employment in services.
Source: ANZ Research
China
1. The yield curve continues to steepen.
2. Credit expansion is running well ahead of historical trends.
Here is the broad money supply (M2).
Source: Goldman Sachs
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3. The headline inflation is moderating as meat prices stabilize.
Core inflation is trending lower.
Producer prices are back in deflation mode.
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4. The strength in exports last month was probably related to the backlog of orders, not new demand.
Source: @DavidInglesTV
5. Economic activity continues to recover.
Source: Alpine Macro
Emerging Markets
1. Private net savings offset EM countries’ fiscal deficits.
Source: IIF
2. Access to banking is still limited in many EM economies.
Source: Gavekal
3. EM currencies have yet to see a risk-on rally.
Source: @DLineCap
By the way, asset managers are extremely net short EM currencies.
Source: ANZ Research
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4. Corporate defaults are coming.
Source: @financialtimes Read full article
Cryptocurrency
The Bitcoin hash rate hit a record high.
Source: coinnounce.com Read full article
Source: @hodlonaut
Commodities
1. Gold miners are outperforming FANG stocks.
Source: @axios Read full article
2. Speculative net short positioning in corn futures is at an extreme.
Source: Longview Economics
3. Bloomberg’s grains index is hovering near multi-decade lows.
Energy
1. The largest energy firms saw substantial declines in operating cash flow in the first quarter.
Source: @markets Read full article
2. LNG imports have been slowing in key Asian markets over the past few years…
Source: Fitch Solutions Macro Research
…which has kept prices depressed. But a bottom is likely in, according to Fitch.
Source: Fitch Solutions Macro Research
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3. Renewable energy continues to increase market share.
Source: @WSJ Read full article
Source: @WSJ Read full article
Equities
1. What are investors’ biggest concerns?
Source: Evercore ISI, @LizAnnSonders
2. Companies that source most of their revenues from outside of the US proved to be more resilient this past quarter.
Source: @FactSet
3. This chart shows the S&P 500 performance in different inflation regimes.
Source: Economic Perspectives
4. Here is the performance by sector since the start of the crisis.
Source: @LizAnnSonders
5. Healthcare funds see record inflows.
Source: Arbor Research & Trading
6. The market is starting to focus on the 2020 election. Below is the S&P 500 implied volatility curve on May 4th and May 11th.
Source: @markets Read full article
Credit
1. Analysts are anticipating a wave of bankruptcies.
Source: @AndreasSteno
2. EBITDA adjustments have artificially depressed corporate leverage estimates.
Source: @business Read full article
This chart shows various leverage ratio projections if EBITDA is cut by 25% to 75% this year.
Source: PitchBook
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3. Here is the rating distribution of European companies.
Source: @WSJ Read full article
4. Next, we have an update on leveraged loans from S&P.
• The March sell-off did not have a significant impact on the gap between CCC+ and B- issuers.
Source: S&P Global Market Intelligence
• Prices on BB-rated loans have outpaced B-rated debt since March,
Source: S&P Global Market Intelligence
• Here is the monthly primary CLO volume.
Source: S&P Global Market Intelligence
Rates
1. Let’s start with some updates on the Fed’s stimulus operations.
• The balance sheet expansion has slowed.
• Excess reserves hit a new record.
• Below are some trends in the Fed’s liquidity and credit facilities.
– Commercial Paper Facility:
– Money Market Mutual Fund Facility:
– The PPP Facility (small business lending):
– FX swap lines (3 charts):
Source: JP Morgan, {ht} Adam Kneller
Source: @WSJ Read full article
Source: @ericbeebo, @Brad_Setser
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2. Growth in the US broad money supply (M2) has now exceeded 20%.
3. Money market funds’ assets keep hitting record highs.
4. Treasury market liquidity is stabilizing as bid/ask spreads tighten.
Source: Morgan Stanley Research
5. The cyclical/defensive equities ratio is signaling higher Treasury yields.
Source: @ISABELNET_SA, @MorganStanley
Global Developments
1. Implied volatility has been tumbling across global markets, helped by the Fed’s massive stimulus measures.
Source: Arbor Research & Trading
2. This chart shows bond purchases by central banks.
Source: @RobinBrooksIIF, @UgrasUlkuIIF, @mcastellano44, @IifPaola
3. 2019 brought a cooldown for some of the most overheated housing markets.
Source: Oxford Economics
4. Here are the contributions to world GDP growth.
Source: The Economist, @adam_tooze Read full article
5. Assets at state-owned enterprises keep climbing.
Source: IMF Read full article
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Food for Thought
1. Changes in consumer purchasing behaviors:
Source: Morning Consult Read full article
2. Layoffs at startups:
Source: @WSJ Read full article
3. Homeowners aged 65+ with a mortgage:
Source: @WSJ Read full article
4. Asian and Latino immigrants arriving in the US:
Source: Pew Research Center Read full article
5. Approval ratings for world leaders:
Source: The Economist, @adam_tooze Read full article
6. Earnings from outpatient care:
Source: @WSJ Read full article
7. US reliance on China for key medical supplies:
Source: @fwred
8. Leisure time in the US:
Source: U.S. Bureau of Labor Statistics Read full article
9. Proposed MLB regional divisions for 2020:
Source: @WSJ Read full article
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