The Daily Shot: 13-Jul-20
• Equities
• Credit
• Rates
• Commodities
• Energy
• Emerging Markets
• China
• The Eurozone
• The United Kingdom
• Canada
• The United States
• Food for Thought
Equities
1. Technical indicators point to further upside for the S&P 500.
Source: CNBC Read full article
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2. Tech mega-caps increasingly dominate the US benchmark.
Source: Yardeni Research
3. The equal-weight S&P 500 index continues to underperform.
Source: Further reading
And market breadth indicators have been rolling over (2 charts).
Source: @LizAnnSonders
Source: @Not_Jim_Cramer
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4. Volatility markets are showing a bit of unease with Nasdaq’s largest stocks, as valuations increasingly look rich (second chart). VXN is the VIX-equivalent for the Nasdaq 100.
Source: @jessefelder Read full article
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5. Robinhood retail traders favor certain small-to-mid-cap value stocks, which has led to an above-market performance for those shares.
Source: SPDR Americas Research, @mattbartolini
Source: SPDR Americas Research, @mattbartolini
This chart shows the Goldman Sachs index of retail investors’ favorite shares.
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6. The S&P 500 has outpaced the increase in US disposable personal income.
Source: Caldan Partners Read full article
7. According to Citigroup’s market sentiment index, investors have been quite bullish.
Source: @ukarlewitz, @hmeisler
8. Here is the P/E ratio of the Russell 2000 (small caps) relative to the S&P 500 P/E.
Source: @Not_Jim_Cramer
9. Global companies with China exposure have been outperforming.
10. The gap between US and European indices continues to widen.
Source: Goldman Sachs
Credit
1. We’ve had a record number of large healthcare bankruptcies this year.
Source: @lisaabramowicz1, @joshfromalaska
2. Credit quality for global retailers has deteriorated further in 2020.
Source: Credit Benchmark
3. Next, we have some data on delinquencies in commercial real estate.
• Delinquencies by property type:
Source: Mortgage Bankers Association
• CMBS portfolio delinquency changes since 2019:
Source: S&P Global Market Intelligence
Rates
1. Speculative investors are now net long the 10yr note futures.
2. Here are the trends in foreign vs. domestic demand for Treasuries.
Source: @markets Read full article
3. Does the improvement in economic data signal higher Treasury yields?
Source: Société Générale, @Schuldensuehner
4. Here are some updates on the Fed’s stimulus programs.
• The balance sheet continues to shrink.
• Below are the reserve balances (following the balance sheet lower).
And this chart shows the composition of reserves.
Source: Liberty Street Economics Read full article
• Liquidity facilities contributed to the drop in the US central bank’s balance sheet.
– Liquidity swaps with other central banks:
– The repo facility (ample liquidity diminished the need for this program):
• The Fed’s corporate bond purchases have been tiny in comparison to its other programs.
Source: @markets Read full article
Commodities
1. Steel and iron ore futures continue to rally.
• Steel rebar (Shanghai):
• Iron ore (Singapore):
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2. Copper has gone vertical as speculative accounts boost their bets (second chart).
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3. Next, we have some updates on precious metals.
• Gold vs. silver:
Source: @jsblokland
• Gold fund flows:
Source: @ISABELNET_SA, @BofAML
• Gold/oil ratio:
Source: @jessefelder Read full article
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4. Speculative accounts have turned bullish on US soybeans.
5. US lumber futures continue to rally on improving demand.
Source: @WSJ Read full article
Energy
1. Is the US rig count bottoming?
2. Last month’s Dallas Fed Energy survey showed that nearly 75% of energy and production firms are expected to restore their curtailed output over the next three months.
Source: Pavilion Global Markets
3. Stockpiles of gasoline and distillate fuel (which includes diesel used in the transport sector) remain elevated. This is a sign that refiners will be slow to accept increased crude shipments from drillers, according to Pavilion Global Markets.
Source: Pavilion Global Markets
4. Here is the US upstream oil & gas investment trend, by year.
Source: @WSJ Read full article
5. This chart shows US employment in oil field services (OFS).
Source: PESA, {ht} Princeton Energy Advisors Read full article
Emerging Markets
1. Let’s start with some updates on Russia.
• Key economic indicators:
Source: @financialtimes Read full article
• Trade balance:
• Support for Putin:
Source: The Economist, @adam_tooze Read full article
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2. Israel’s consumer confidence took a turn for the worse last month.
3. India’s coronavirus pandemic is exploding.
Source: JHU CSSE
4. Mexico’s industrial production deteriorated further in May.
China
1. Credit growth remains robust.
• Bank loans:
• Aggregate financing:
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2. Here is Goldman’s China macro policy proxy, with the latest easing driven by fiscal expansion.
Source: Goldman Sachs
3. Foreign investors have been buying Chineses stocks via Stock Connect (Hong Kong – Mainland China link).
Source: @WSJ Read full article
4. China’s shares still look cheap relative to the US.
Source: The Economist, @adam_tooze Read full article
5. The renminbi’s share as an international payment currency has been relatively flat.
Source: ECB Read full article
Here is the currency’s share of reserves.
Source: @tracyalloway Read full article
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6. The Hong Kong dollar ended last week with some volatility.
Source: @markets Read full article
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7. Hong Kong’s interbank rates continue to decline.
The Eurozone
1. Italian industrial production rebounded sharply in May.
French factory output also bounced.
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2. Germany’s exports to the rest of Europe have weakened this year.
Source: Pantheon Macroeconomics
3. Greece is back in deflation.
4. Will the ECB’s balance sheet hit €5 trillion next year?
Source: @markets, {ht} @Schuldensuehner Read full article
5. The Eurozone’s interbank rates are back to pre-crisis levels as concerns about the banking system abate.
Source: @Isabel_Schnabel
6. This spike in savings bodes well for consumption later this year.
Source: @fwred
7. Several EU members have been seeking to join the Eurozone.
Source: @markets Read full article
The United Kingdom
1. The GDP contraction this year has been unprecedented in recent centuries.
Source: Deutsche Bank Research
2. Fiscal deficit spikes, …
Source: Barclays Research
… but low rates should restrain debt interest expenses.
Source: Barclays Research
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3. Britons don’t like to wear face masks.
Source: @YouGov Read full article
Source: @financialtimes Read full article
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4. Demand for German citizenship jumped ahead of Brexit.
Source: Statista
Canada
1. The June employment report surprised to the upside.
• Employment change (2 charts):
Source: Scotiabank Economics
• The unemployment rate:
• Labor force participation:
• Hours worked:
Source: Scotiabank Economics
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2. Housing starts were robust last month.
3. This chart shows the ratio of the Fed’s vs. BoC’s balance sheet.
Source: ING
The United States
1. Let’s begin with some updates on inflation.
• Producer price inflation has been soft.
However, the core PPI ex. trade services (business markups), ticked higher last month.
• Nomura’s estimates show the core CPI increasing in June.
Source: Nomura Securities
Food inflation is moderating.
Source: Nomura Securities
Nomura also expects rent CPI to slow as concerns persist about households’ ability to pay (second chart).
Source: Nomura Securities
Source: Nomura Securities
• Here are the CPI trends for medical care and shelter.
Source: Pavilion Global Markets
• As the US population growth improves over the next decade, so should the velocity of money. As a result, some analysts expect inflation to pick up.
Source: Longview Economics
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2. How does the US fiscal balance change compare to Europe?
Source: Oxford Economics
3. Below is the Wall Street Journal’s survey of economists on risks to the GDP growth forecasts.
Source: @WSJ Read full article
4. This chart shows household wealth changes by age group.
Source: @financialtimes Read full article
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Food for Thought
1. Paying a ransomware demand:
Source: @WSJ Read full article
2. Top supercomputers:
Source: Statista
3. Cloud adoption:
Source: Morgan Stanley Research
4. Ban TikTok?
Source: @dwertime, @MorningConsult Read full article
5. US COVID-related restrictions status:
Source: @ISABELNET_SA, @GoldmanSachs
6. Face mask usage:
Source: Gallup Read full article
7. Daily new COVID infections per million:
Source: Pantheon Macroeconomics
8. Migrations of inventors:
Source: Kerr, Kerr, Özden, Parsons Read full article
9. Views on polygamy:
Source: Gallup Read full article
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