The Daily Shot: 10-Jun-20
• The United States
• Canada
• The United Kingdom
• The Eurozone
• Asia – Pacific
• China
• Emerging Markets
• Equities
• Alternatives
• Credit
• Rates
• Global Developments
• Food for Thought
The United States
1. Let’s begin with the April job openings report.
• Job vacancies declined further.
• Construction registered a small increase, …
… but most other sectors saw deterioration in demand.
– Hotels and restaurants:
– Retail:
• Layoffs moderated, while the quits rate continued to fall.
• Here is the Beveridge curve.
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2. The uncertainty surrounding the May employment report was exacerbated by much lower participation in the household survey. The process was also modified due to safety issues.
Source: Deutsche Bank Research
3. The NFIB small business sentiment index improved in May.
Below are some of the NFIB index components.
• Hiring:
• Sales expectations:
• CapEx expectations:
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4. This map shows the percentage of PPP loans that have been approved.
Source: S&P Global Market Intelligence
5. The wholesale inventories-to-sales ratio hit a record high. The second and third charts below show the ratio for durable and nondurable goods.
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6. The rate lock volume is up 18% year-over-year as homebuyers rush to lock in record-low mortgage rates.
Source: AEI Housing Center
Rate lock activity was terrible at the peak of the pandemic but has recovered quite well since then.
Source: AEI Housing Center
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7. Drawing a straight line through the rebound in air travel suggests that activity will fully recover in August. Analysts are skeptical.
Source: @carlquintanilla, @fundstrat
8. US consumers are gradually getting more comfortable with resuming some activities, but it will be a long time before confidence is fully restored.
Source: Morning Consult Read full article
9. The Fitch Ratings GDP tracker has bounced from extreme lows.
Source: Fitch Ratings
However, the NY Fed’s weekly economic activity index declined last week.
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10. The US dollar’s slide continues, which should aid the recovery.
Canada
1. Here is the number of Canadians (% of labor force) who have received CERB
payments.
Source: Institute for Government Read full article
2. Short covering and retail investors’ appetite for stocks has pushed equities higher, according to Scotiabank.
Source: Hugo Ste-Marie, Portfolio & Quantitative Strategy Global Equity Research, Scotia Capital
The MSCI Canada growth/value relative performance is approaching prior extremes. (Chart shows 13-week relative return).
Source: Hugo Ste-Marie, Portfolio & Quantitative Strategy Global Equity Research, Scotia Capital
The United Kingdom
1. The pound has been rallying, although it’s mostly the weakening dollar story.
2. Downside risks to the housing market remain elevated.
Source: Pantheon Macroeconomics
3. The BoE QE program has kept up with the government’s debt issuance.
Source: Pantheon Macroeconomics
4. Is the UK ready for the “no-deal” WTO option?
Source: Institute for Government Read full article
The Eurozone
1. Let’s begin with Germany.
• The nation’s trade surplus collapsed in April as exports plummetted (2nd chart).
• Truck toll mileage is recovering.
Source: Destatis
• The Rhine’s water levels are quite low, which may create the shipping bottlenecks we saw a couple of years ago (see story).
Source: @business Read full article Further reading
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2. In France, industrial output plummetted in April.
However, industrial sentiment improved sharply last month.
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3. Home prices are at risk.
Source: Pantheon Macroeconomics
4. Banks’ credit default swap spreads have been tightening.
Source: @WSJ Read full article
Asia – Pacific
1. Japan’s producer prices continue to decline.
Machine tool orders were down over 50% from May of last year.
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2. South Korea’s labor market showed a modest improvement last month.
Source: Goldman Sachs
But the unemployment rate climbed.
The won rebound continues.
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3. Australia’s consumer confidence is approaching pre-crisis levels.
China
1. The CPI declined more than expected last month as meat prices stabilized.
The core CPI remained steady.
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2. Producer prices moved deeper into deflation territory, which points to further weakness in industrial profits.
Source: World Bank Read full article
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3. ChiNext has massively outperformed large-caps this year.
4. Many migrant workers haven’t returned to cities.
Source: @WSJ Read full article
Emerging Markets
1. India’s high-frequency indicators have been tanking.
Source: ANZ Research
2. EM gross government debt is at a historical high as primary balances have worsened significantly.
Source: Barclays Research
• Sovereign hard-currency bond issuance is running at a record pace.
Source: Barclays Research
Source: Barclays Research
• This chart shows EM external debt-to-GDP ratios by region.
Source: Bruegel Read full article
• Foreign holdings of EM Asia government debt vary significantly by country.
Source: World Bank Read full article
Equities
1. About 74% of equity indices globally are now at least 20% above this year’s lows.
Source: @topdowncharts
2. The S&P 500 has diverged from corporate margins.
Source: @TaviCosta
3. This chart shows sector weights in the low-volatility factor ETF (USMV) versus the S&P 500.
Source: Factor Research
Overweight positions in utilities and real estate, as well as underweight positions in tech, detracted from year-to-date returns.
Source: Factor Research
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4. Nasdaq is ahead of the New York Stock Exchange in IPO volume.
Source: @WSJ Read full article
5. The smallest companies of the small-cap index have been outperforming.
Source: Yardeni Research
Alternatives
1. Hedge funds’ exposure to the market is rising.
Source: @ISABELNET_SA, @GoldmanSachs
2. KKR has been writing a lot of checks since the start of the crisis.
Source: @BloombergQuint, @Redfin, @wsj, @ISABELNET_SA, @LizAnnSonders, @USDOL, @GregDaco, @tracyalloway, @dlacalle_IA, @RobinBrooksIIF, @M_C_Klein
3. Private equity is finding its way into 401k accounts (as part of diversified funds).
Source: Bloomberg Law Read full article
4. Next, we have some data on space startup financing.
Source: Bryce Space and Technology Read full article
5. Private credit AUM has been climbing rapidly in recent years.
Source: @WSJ Read full article
Who owns private credit?
Source: Deutsche Bank Research
Credit
1. According to a survey from Absolute Strategy Research, institutional investors are overwhelmingly optimistic about high-yield and investment-grade corporate credit. (2 charts)
Source: Absolute Strategy Research
Source: Absolute Strategy Research
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2. Banks issue the bulk of the Eurozone’s commercial paper. But over time, non-financial corporations have become more active in the market.
Source: ECB Read full article
The average maturity of recent commercial paper issuances has decreased markedly since January.
Source: ECB Read full article
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3. Since the start of the crisis, borrowers with top credit scores have increasingly dominated the US auto loan market.
Source: J.D. Power
Rates
Treasuries are starting to look attractive for yen-based investors.
h/t @mccormickliz
Global Developments
1. Global manufacturing PMIs are improving but remain at depressed levels.
Source: SunTrust Private Wealth Management
Source: Alpine Macro
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2. Next, we have some data on fiscal stimulus around the world (4 charts).
Source: Fitch Ratings
Source: @WSJ Read full article
Source: McKinsey & Company Read full article
Source: McKinsey & Company Read full article
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3. Here is the number of new coronavirus cases by region.
Source: @jessefelder, CNN Read full article
4. Based on the 12-month forward earnings expectations, stock valuations look rich.
Source: @markets Read full article
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Food for Thought
1. Smartphone shipments:
Source: Statista
2. The most effective ads:
Source: Morning Consult Read full article
3. US automobile sales vs. leases since the start of the crisis:
Source: J.D. Power
4. Largest cities by population:
Source: UN Read full article
5. According to the Economist, democracies have limited movement more effectively during lockdowns.
Source: The Economist Read full article
And autocratic governments may be cooking their COVID-19 statistics.
Source: The Economist Read full article
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6. K-12 employment in the US:
Source: EPI Read full article
7. Support for the protests:
Source: Morning Consult Read full article
8. The structure of China’s government:
Source: ANZ Research
9. The best-selling arcade games:
Source: Statista
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