The Daily Shot: 05-Aug-20
• The United States
• Canada
• The United Kingdom
• The Eurozone
• Asia – Pacific
• China
• Emerging Markets
• Commodities
• Energy
• Equities
• Credit
• Rates
• Global Developments
• Food for Thought
The United States
1. Let’s begin with the housing market.
• High-frequency indicators point to accelerating home price appreciation in recent weeks.
Source: AEI Housing Center
• Record low interest rates have made home affordability the best it’s been in four years.
Source: Black Knight
Here is the last time housing was this affordable, by state.
Source: Black Knight
• However, CoreLogic expects home prices to be below current levels next summer.
Source: CoreLogic
• Weak consumer confidence could weigh on housing-related inflation going forward.
Source: BofA Merrill Lynch Global Research
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2. Next, we have some updates on the labor market.
• July is usually a slow month for payrolls.
Source: CIBC Capital Markets
• This chart shows unemployment income replacement rates by occupation.
Source: Scotiabank Economics
• The Paychex/Markit small business employment index fell to new lows last month.
Source: Paychex | IHS Markit Small Business Employment Watch Read full article
However, weekly hours improved further.
Source: Paychex | IHS Markit Small Business Employment Watch Read full article
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3. Credit card delinquencies have been relatively low in recent months.
Source: @WSJ Read full article
Credit/debit card spending has been flat since mid-June and remains more than 10% below last year’s levels.
Source: JP Morgan, @jessefelder Read full article
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4. Factory orders rose sharply in June, boosted by automobile demand (2nd chart).
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5. Manufacturers think that customers’ inventories are too low, which could support factory activity in the months ahead.
Source: @RenMacLLC
6. Planned capital expenditures are starting to recover.
Source: Morgan Stanley Research
7. Goldman’s current activity indicator (CAI) declined last month.
Source: Goldman Sachs
8. Unlike the worst quarter of the 2007-09 recession, last quarter’s GDP decline was driven primarily by the unprecedented drop in demand for services, according to Bain.
Source: Bain & Company
9. E-commerce sales have risen well above trend.
Source: BofA Merrill Lynch Global Research
10. US foreign trade remains depressed.
Source: @GregDaco
Canada
1. The Canadian dollar has rebounded to pre-crisis levels.
The rally was driven by US dollar weakness and the rebound in crude oil.
Source: CIBC Capital Markets
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2. Consumer confidence is recovering.
3. The manufacturing sector swang into growth last month.
The United Kingdom
1. Loan loss provisions spiked this year.
Source: @markets Read full article
2. This chart shows the proportion of employees who have lost work (by age group).
Source: Resolution Foundation Read full article
The Eurozone
1. Spain’s unemployment unexpectedly decreased last month.
2. The fiscal situation in France has been deteriorating.
Source: Pantheon Macroeconomics
3. Italy’s 30yr bond yield is nearing record lows.
4. Germany has provided the most aid to firms compared to other European countries.
Source: Pavilion Global Markets
5. The euro-area effective retirement age has been rising this century.
Source: ECB Read full article
Asia – Pacific
1. Japan’s service sector is still in contraction mode (PMI < 50).
2. Singapore’s business activity (manufacturing & services) is yet to stabilize.
Source: IHS Markit Read full article
3. The inverse correlation between Asian shares and the US dollar is near multi-year highs.
h/t Moxy Ying
4. Next, we have some updates on Australia.
• Service sector activity is expanding at the fastest pace in years.
• Online searches for “unemployment” are moderating.
Source: Goldman Sachs
• Construction is still weakening but at a slower pace.
• Mortgage financing for owner-occupied housing rebounded sharply in June.
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5. Finally, here is a look at New Zealand’s employment report.
• The labor market remained resilient in Q2, helped by government support.
• Remarkably, the unemployment rate declined (economists expected a sharp increase).
• However, hours worked plummetted.
Source: Goldman Sachs
• Labor force participation fell.
• Labor costs grew at the slowest pace in years.
• The Kiwi dollar jumped in response to the surprisingly strong employment figures.
China
1. The renminbi continues to advance against the dollar (although it has weakened against a basket of currencies – #2 here)
Widening rate differentials with the US are supporting China’s currency.
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2. The services PMI unexpectedly declined last month but remains in growth mode.
3. China was the world’s third-largest source of foreign investment during the 2016-19 period, according to ANZ.
Source: ANZ Research
Emerging Markets
1. Let’s begin with LatAm vehicle sales in July.
• Chile:
• Mexico:
• Brazil:
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2. Next, we have some additional updates on Brazil.
• Industrial production (strong rebound):
• Electricity consumption:
Source: Morgan Stanley Research
• Workplace-visits relative to other LatAm economies:
Source: ING
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3. It seems that Argentina has reached a deal on debt restructuring.
Source: @WSJ Read full article
Bond prices climbed.
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4. Indonesia’s GDP declined more than expected last quarter.
5. Here are some updates on India.
• Top-rated firms have access to debt financing at record-low rates.
h/t Rahul Satija
• RBI’s aggressive rate cuts have not resulted in stronger bank lending.
Source: ING
• Private equity deal count is rising in India, outpacing both the US and China.
Source: DeepMacro
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6. Turkey’s funding markets are under stress, with the overnight borrowing costs soaring.
Source: @IceCapGlobal
Sovereign credit default swap spreads are elevated relative to other EM economies.
Source: @NancyRLazar1
And the stock market has rolled over.
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7. EM dollar-denominated bond yields are at multi-year lows.
Source: @ISABELNET_SA, @MorganStanley
8. EM fund flows have recovered.
Source: Goldman Sachs
Commodities
1. Let’s begin with precious metals.
• Gold blasted past $2k.
• ETF holdings of gold now exceed Germany’s gold reserves.
Source: @markets Read full article
• BofA clients are increasing their holdings of precious metals ETFs.
Source: BofA Merrill Lynch Global Research
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2. Corn prices in China have been climbing.
Source: @WSJ Read full article
But that’s not the case in the US – despite higher purchases from China (2nd chart).
Source: @WSJ Read full article
This chart shows the amount of US corn and soybeans sold.
Source: @ReutersCommods, @kannbwx Read full article
The US-China deal review is coming up.
Source: Reuters Read full article
Energy
1. Brent is at resistance.
2. China’s purchases of US energy products have been well below target.
Source: Reuters Read full article
Here is the distribution of US energy products sold to China.
Source: Reuters Read full article
Equities
1. Volatility could rise sharply this year.
Source: MarketDesk Research
2. The Nasdaq put/call ratio shows risk appetite at extreme levels.
Source: @RunItTwice2
3. Directing order flow from retail investors has been very profitable this year.
Source: @jessefelder Read full article
4. E*TRADE customers sharply reduced their exposure to real estate and consumer staples last month.
Source: E*TRADE Financial Corporation
5. The amount of SPAC capital raised this year has been impressive.
Source: Goldman Sachs, @tracyalloway
6. Apple’s weight in the S&P 500 is a record for single-stock concentration.
Source: @StrategasRP
7. Passive ETFs continue to enjoy massive inflows. That’s not the case for passive mutual funds.
Source: @DaveNadig, @EricBalchunas
8. There have been quite a few ETN liquidations this year.
Source: Bloomberg Law Read full article
9. Here is the average performance of a stock after a share split.
Source: @StrategasRP
Credit
1. European M&A-related high-yield issuance has picked up.
Source: @WSJ Read full article
2. Credit inflows have been robust.
Source: BofA Merrill Lynch Global Research
3. Tightening credit standards at banks point to much higher defaults for high-yield debt.
Source: Deutsche Bank Research
4. Retailmageddon has accelerated this year.
Source: @lisaabramowicz1, @joshfromalaska, @theterminal
Rates
1. Treasury yields keep drifting lower.
Source: @TheTerminal
The trading range has been tightening.
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2. TIPS yields (effective real rates) continue to tumble.
Source: @Not_Jim_Cramer
3. This chart compares the 2020 Fed currency swap balances with the levels we saw after the financial crisis.
Source: @WSJ Read full article
4. So far, neither repo nor effective fed funds rates show any liquidity tightness in money markets.
Source: Pavilion Global Markets
Global Developments
1. Close to 70% of restaurants globally have reopened, according to OpenTable.
Source: Morgan Stanley Research
2. This chart shows the changes in property sales this year.
Source: Fitch Ratings
3. Online search activity for commercial real estate has leveled off.
Source: Arbor Research & Trading
4. Global manufacturing returned to growth in July.
Source: World Economics Read full article
Source: @JeffreyKleintop
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Food for Thought
1. Reopening plans at US colleges:
Source: Statista
2. MLB TV ratings relative to last season:
Source: @WSJ Read full article
3. Comfort levels with various activities for Millennials and baby boomers:
Source: Morning Consult Read full article
4. US crime statistics for 2020 relative to previous years:
Source: The Economist Read full article
5. Flexible options for employees:
Source: @WSJ Read full article
6. Views on the Confederate flag:
Source: Morning Consult Read full article
7. The 2020 decline in CO2 emissions in perspective:
Source: ECB Read full article
8. US cannabis retail sales estimates:
Source: Marijuana Business Daily
9. The most-Googled “why do” question in each state:
Source: Mental Floss Read full article
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