June Retail Sales Near Pre-Crisis Levels

The Daily Shot: 17-Jul-20
The United States
The United Kingdom
The Eurozone
Europe
China
Emerging Markets
Commodities
Energy
Equities
Credit
Rates
Global Developments
Food for Thought



 

The United States

Retail sales rose sharply in June, exceeding expectations.
 

 
Here is the control group index.
 

 
The absolute level of sales is almost back to pre-crisis levels.
 

 
This chart shows the June changes by sector.
 
Source: @GregDaco  
 
Sectors hit the hardest during the lockdowns rebounded further last month.
 
Source: ING  
 
Demand for automobiles has recovered.
 
Source: @WSJ   Read full article  

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2. The declines in initial jobless claims have stalled.
 

 
This chart includes the PAU claims.
 
Source: @GregDaco  
 
Here is a summary.
 
Source: Economic Policy Institute  
 
The labor market recovery may take years.
 
Source: @ISABELNET_SA, @MorganStanley  

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3. The July Philly Fed regional manufacturing index continues to show robust factory activity.
 

 
New orders:
 

 
Employment:
 

 
Employee workweek:
 

 
Expected shipments:
 

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4. The NY Fed’s regional service-sector activity also stabilized this month.
 

 
Employment is still weak but improving.
 

 
However, the region’s business climate remains challenging.
 

 
And outlook has worsened since June.
 

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5. US freight activity shows some improvement.
 
Source: Cass Information Systems  
 
Shipping prices remain soft.
 
Source: Cass Information Systems  

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6. Homebuilder optimism has recovered amid robust demand.
 

 
Mortgage rates hit another record low (2 charts).
 


 
The strength in mortgage applications bodes well for the housing market.
 
Source: Moody’s Analytics  

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7. Despite the recent favorable economic data, the challenges of getting the pandemic under control have put the recovery on hold (2 charts).
 

Source: @GregDaco, @OxfordEconomics  


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The United Kingdom

1. Unemployment claims declined in June.
 

 
2. Remarkably, the unemployment rate is holding below 4%.
 

 
3. Furloughs hit the lower-paid workers the hardest.
 
Source: ING  
 
4. The massive spike in savings should boost consumption in the months ahead.
 
Source: The Economist   Read full article  
 
5. Shorter-term gilt yields continue to hit new lows.
 

 
But the yield curve has been steepening.
 


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The Eurozone

1. Is the Eurozone-US inflation differential signaling a stronger euro ahead?
 
Source: Hugo Ste-Marie, Portfolio & Quantitative Strategy Global Equity Research, Scotia Capital  
 
2. Will we see a centralized bond issuance program to fund the pandemic stimulus?
 
Source: @markets   Read full article  
 
3. Eurozone financial conditions have improved markedly.
 

 
4. Trade surplus increased more than expected in May.
 

 
But trade activity remained soft.
 
Source: Eurostat   Read full article  


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Europe

1. EU car registrations are rebounding.
 

 
2. Here are the Q2 GDP estimates by country.
 
Source: @ReutersGraphics  
 
3. The Swedish krona continues to recover.
 

 
4. Poland’s core CPI is at multi-year highs.
 
Source: ING   Read full article  


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China

1. The market rally is fading.
 

 
2. China’s industrial rebound is leveling off.
 
Source: Gavekal   
 
3. Corporate bond yields are elevated relative to the US.
 
Source: @DavidInglesTV  


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Emerging Markets

1. Indonesia’s central bank cut rates again.
 

 
2. Russia’s industrial output didn’t budge in June.
 

 
3. Many EM economies are seeing a burgeoning middle class that will continue to grow for the next decade, according to JP Morgan.
 
Source: J.P. Morgan Asset Management   


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Commodities

1. Global copper inventories have been declining.
 
Source: @WSJ   Read full article  
 
2. Shares of mining firms are outperforming as industrial metal prices recover.
 

 
3. US lumber futures continue to soar.
 

Source: MarketWatch   Read full article  

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4. Tuna prices have risen due to lockdown-driven demand.
 
Source: @WSJ   Read full article  


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Energy

US natural gas futures are giving up the recent gains, as rising inventories weigh.
 

 
Natural gas in storage is now at the top of the five-year range.
 


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Equities

1. Tech fund inflows have been unprecedented.
 
Source: BofA Merrill Lynch Global Research, @WallStJesus  
 
2. Here is the ratio of Nasdaq 100 to Russell 2000.
 
Source: @markets   Read full article  
 
3. The “staying in” sectors continue to outperform.
 
Source: Arbor Research & Trading  
 
4. This chart shows the distribution of ten-year market returns going back to 1880.
 
Source: @ISABELNET_SA, @GoldmanSachs  


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Credit

1. USD investment-grade bond yields keep hitting new lows, with the Bloomberg/Barclays index dipping below 2% for the first time. It’s an opportunity for companies to lock in record-low financing costs.
 

 
2. Global corporate bond sales have been unprecedented (2 charts).
 
Source: @markets   Read full article  
Source: Capital Economics  

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3. Credit downgrades hit a new record in Q2.
 
Source: Moody’s Investors Service, @lisaabramowicz1  
 
4. Corporate defaults climbed sharply last quarter.
 
Source: IIF  
 
This chart shows cumulative oil patch defaults in North America.
 
Source: Haynes & Boone, @lisaabramowicz1   Read full article  

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5. Here is an update on US banks’ loan loss provisions.
 
Source: @lisaabramowicz1, @markets   Read full article  
 
6. US small business lending declined this year.
 
Source: ANZ Research  


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Rates

1. The market is still pricing negative rates in the US, starting in the middle of next year.
 

Source: Reuters   Read full article  
 
There are certainly no rate hikes on the horizon.
 
Source: @ISABELNET_SA, @GoldmanSachs  

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2. The 30yr TIPS yield (real rates) hit a record low.
 

 
3. The US broad money supply growth has been unprecedented.
 


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Global Developments

1. Global debt hit a new record, both in absolute terms and as a percentage of the GDP.
 
Source: IIF  
 
Here is the global bond market.
 
Source: J.P. Morgan Asset Management  
 
This chart shows the total bond issuance in developed economies.
 
Source: IIF  


 
2. How long will it take for output to recover to pre-crisis levels?
 
Source: IHS Markit   Read full article  


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Food for Thought

1. The world’s highest-paid athletes:
 
Source: Forbes, Tilo Marotz  
 
The change in players’ earnings (2020 vs. 2019):
 
Source: Forbes   Read full article  

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2. Who is hiring in the US?
 
Source: CareerBuilder   Read full article  
 
3. US advertising spending:
 
Source: @adam_tooze, The Economist   Read full article  
 
4. The cost of running water and sewer services:
 
Source: The Guardian   Read full article  
 
5. What is morally acceptable in the US?
 
Source: Gallup   Read full article  
 
6. Trump vs. Biden, a demographic breakdown of poll data:
 
Source: @WSJ   Read full article  
 
7. “Secret” voters:
 
Source: @bpolitics   Read full article  
 
8 Support for PPP loans to businesses:
 
Source: Morning Consult  
 
9. UFO evidence:
 
Source: @YouGovAmerica   Read full article  

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Have a great weekend!


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