The Daily Shot: 23-Jun-20
• The United States
• The United Kingdom
• The Eurozone
• Europe
• Asia – Pacific
• China
• Emerging Markets
• Equities
• Credit
• Rates
• Global Developments
• Food for Thought
The United States
1. Let’s begin with the housing market.
• The existing home sales report for May was disappointing, with sales down almost 27% from May of 2019 (second chart).
This chart shows the year-over-year changes by region.
Source: @MacrobondF Read full article
• The median price growth rate declined.
• Inventories of existing homes for sale remain at multi-year lows.
However, when measured in months of supply, inventories are above 2016 levels. This is due to the sharp slowdown in sales (above).
Nonetheless, the average time houses are in the market is consistent with previous years, and homes have been selling quicker on average.
Source: Scotiabank Economics
• Mortgage applications (chart below) and mortgage rates (second chart) point to a sharp rebound in home sales this month.
Source: Pantheon Macroeconomics
Source: Piper Sandler
Other indicators also point to strength in the housing market.
Source: BCA Research
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2. Mortgage forbearance requests have slowed.
Source: Mortgage Bankers Association
3. Next, let’s take a look at some economic activity indicators.
• Foot traffic by metro size (AEI monitors foot traffic “to retail establishments, restaurants, shopping malls, hotels, movie theaters, airports, hospitals, and other places of commerce …” ):
Source: AEI Housing Center
• Driving, walking, and public transit:
Source: @WSJ Read full article
• Flying:
Source: @WSJ Read full article
• Mobility trends by destination:
Source: ANZ Research
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4. The Chicago Fed’s national activity index rebounded in May.
Source: @GregDaco, @ChicagoFed
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5. Credit expansion is expected to provide a tailwind for the GDP.
Source: @ISABELNET_SA, @DeutscheBank
6. According to Morgan Stanley, the federal budget deficit will be the highest since 1943.
Source: Morgan Stanley Research
7. Here are some of the states with rising rates of infections.
Source: Arbor Research & Trading
The United Kingdom
1. The CBI report showed industrial orders remaining exceptionally weak this month.
Source: Reuters Read full article
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2. Wages are probably declining at this point.
Source: Pantheon Macroeconomics
3. Here is the Bank of England’s balance sheet.
Source: @markets Read full article
The Eurozone
1. The preliminary Markit PMI report shows improvement in business activity this month (topping economists’ estimates). French businesses are in growth mode (PMI > 50).
• French manufacturing and services PMI:
Source: @nghrbi
• German PMI:
– manufacturing:
– services:
– composite:
Source: @IHSMarkitPMI Read full article
• The Eurozone PMI:
Source: @IHSMarkitPMI Read full article
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2. Consumer confidence is rebounding.
3. Lufthansa bonds tumbled after Thiele’s threat to block the rescue plan because it dilutes current shareholders (see story).
Source: @Schuldensuehner Further reading
Europe
1. The Norwegian Krone has suffered during the dollar’s rise, which contributed to a negative terms of trade shock via commodities, according to Danske Bank.
Source: Danske Bank
2. The Swiss monetary base hit a new record as the SNB expands its balance sheet.
3. This chart shows the trends in EU trade this year.
Source: Eurostat Read full article
4. Who owns each nation’s government debt?
Source: Eurostat Read full article
Asia – Pacific
1. Japan’s factory activity deteriorated further in June.
The contraction in services has slowed.
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2. Australia’s business activity has stabilized.
China
1. Bond yields keep climbing.
Here is the spread to Treasuries.
Source: @DavidInglesTV
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2. The renminbi dipped and then rebounded in response to some confusing messaging from the White House.
Source: Reuters Read full article
3. The Ministry of Finance’s issuance of CNY 1 trillion of special treasury bonds in the next few weeks will be a prelude to China’s bond supply peak this year, according to ANZ Research.
Source: ANZ Research
4. The PBoC has emphasized long-term liquidity injections this year.
Source: ANZ Research
5. This chart shows China’s financial conditions index.
Source: VOX EU Read full article
Emerging Markets
1. Turkey’s economy has been under severe pressure.
• Industrial production:
Source: TS Lombard
• Retail sales:
Source: TS Lombard
Nonetheless, the stock market is rapidly rebounding.
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2. India’s energy consumption is not recovering to last year’s levels.
Source: ANZ Research
Separately, this chart shows India’s trade with China.
Source: Gavekal
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3. Argentina’s fiscal deficit has blown out.
Source: IIF
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4. Remittances across EM economies plummetted this year.
Source: Pew Research Center Read full article
Equities
1. The US-China trade tensions are back in the news. But for now, all is well.
Source: MarketWatch Read full article
2. Will the dollar’s decline lead to US equity underperformance relative to the rest of the world?
Source: Danske Bank
3. Large firms are sitting on a great deal of cash.
Source: @WSJ Read full article
4. Corporate profits have remained flat and even dropped as the S&P 500 market cap made new highs.
Source: Piper Sandler
5. “Staying in” stocks are outperforming “going out” sectors again as the number of new infections remains elevated (3 charts).
Source: Arbor Research & Trading
Source: Arbor Research & Trading
Source: Arbor Research & Trading
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6. Who owns US equities?
Source: Goldman Sachs, @Callum_Thomas, @PriapusIQ
Credit
1. According to Oxford Economics, corporate credit in advanced economies hit a record high as a percentage of GDP.
Source: Oxford Economics
2. High yield debt issuance this month has been unprecedented.
Source: LCD/S&P Global Market Intelligence
3. Fitch revised its default rate forecast sharply higher.
Source: Fitch Ratings
4. Automakers’ debt increased significantly in recent years.
Source: @WSJ Read full article
Rates
1. Money market funds registered some outflows in recent weeks.
2. The Fed’s crisis-fighting facilities have not been utilized much so far.
Source: Oxford Economics
3. The Fed now owns a meaningful portion of long-term Treasury securities.
Source: @adam_tooze Read full article
Global Developments
1. The largest economies are running unprecedented fiscal deficits.
Source: Morgan Stanley Research
2. This chart shows how strict social distancing measures have been in select countries.
Source: CIBC Capital Markets
3. Many mutual funds suspended redemptions this year.
Source: Fitch Ratings
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Food for Thought
1. Commercial property prices:
Source: @WSJ Read full article
2. Who delivered US packages in 2019?
Source: Digital Commerce 360 Read full article
3. The structure of CEO compensation:
Source: @WSJ Read full article
4. How comfortable are Americans with the following activities?
Source: Statista
5. The percentage of 23- to 38-year-olds who are married:
Source: Pew Research Center Read full article
6. New COVID-19 cases by region:
Source: Statista
7. Views on vaccination:
Source: @CivicScience Read full article
8. Video game sales:
Source: Statista
9. The most expensive Google keywords:
Source: WordStream Read full article
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