Worried about getting sick and facing closed schools/daycare, workers at hotels and restaurants are quitting

The Daily Shot: 11-Aug-20
The United States
The United Kingdom
The Eurozone
Europe
Asia – Pacific
China
Emerging Markets
Commodities
Equities
Credit
Global Developments
Food for Thought



 

The United States

1. June job openings surprised to the upside, driven by a jump in vacancies at hotels, restaurants, and bars (2nd chart).
 


 
Part of the reason for the increase in the Food & Accommodation job openings was the wave of voluntary resignations. Here is the quits rate.
 

 
Usually, increased resignations indicate confidence in the labor market. Workers either already have another job or are sure they can find one. However, in this situation, employees quit because they are worried about getting sick and/or need to stay home with their children because of closed schools/daycare.
 
Source: Reuters   Read full article  
 
Job openings were less impressive in other areas, such as manufacturing.
 

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2. Here are some additional trends in the labor market.
 
Households are uneasy about keeping their job over the next five years.
 
Source: Deutsche Bank Research  
 
The number of Americans who are not in the labor force but want a job has risen sharply in 2020.
 

 
Labor market recoveries typically lag improvements in consumption and economic growth.
 
Source: Morgan Stanley Research  

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3. Here is Goldman’s economic sentiment tracker based on Twitter.
 
Source: Goldman Sachs  
 
4. Next, let’s take a look at some inflation trends.
 
Nomura sees lower core CPI growth in July, with the slowdown driven by rent inflation (second chart).
 
Source: Nomura Securities  
Source: Nomura Securities  
 
High-frequency indicators point to pressure on rents, as many households struggle to make payments.
 
Source: Nomura Securities  
 
Food inflation is moderating as supply bottlenecks ease (see chart).
 
Source: Nomura Securities  
 
Will low resource utilization keep a lid on inflation?
 
Source: Piper Sandler   
 
Inflation-related online search activity spiked this year.
 
Source: Arbor Research & Trading  

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5. US private-sector financial assets hit a new record as a percentage of the GDP. The spike in the money supply drove much of the recent increase.
 
Source: @ISABELNET_SA, @BofAML  
 
6. This chart shows the COVID policy response (authorized vs. deployed).
 
Source: ANZ Research, CRFB  
 
And here are the components of government support for households.
 
Source: Morgan Stanley Research  


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The United Kingdom

1. As we mentioned previously, the BoE is far more optimistic about growth than independent economists.
 
Source: @financialtimes   Read full article  
 
2. While the headline policy rate has stayed flat, unconventional policy measures have pushed the shadow rate to deeply negative levels, according to Longview Economics.
 
Source: Longview Economics  
 
3. The sharp loosening of monetary policy has been driving mortgage rates lower.
 
Source: Longview Economics  
 
4. The housing market rebounded in response to pent-up demand and lower rates.
 
Source: @markets   Read full article  
 
The demand for consumer credit is improving, along with house price growth.
 
Source: Longview Economics  

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5. The labor market remains fragile.
 
Source: Pantheon Macroeconomics  
 
Vacancies point to substantial job losses ahead.
 
Source: @samueltombs  

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6. Finally, this chart shows Google mobility trends for the UK.
 
Source: Hugo Ste-Marie, Portfolio & Quantitative Strategy Global Equity Research, Scotia Capital  


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The Eurozone

1. Investor confidence is rebounding.
 

 
2. The Bank of France’s industrial sentiment index shows full recovery in July.
 

 
3. Germany’s market-based inflation expectations are moving higher.
 

 
4. Finland’s industrial production deteriorated further in June.
 


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Europe

1. Here are some updates on Sweden.
 
Household consumption remains soft (data through June).
 

 
The recovery in Sweden’s manufacturing PMIs could support the Swedish krona.
 
Source: BCA Research  
 
According to Variant Perception, “… daily new cases for Sweden are falling faster than other DM countries. With mobility less restricted than in many other countries, yet new cases remaining low and deaths falling to zero, this tentatively suggests Sweden may be close to its herd immunity threshold.”
 
Source: Variant Perception  

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2. Norway’s CPI is approaching multi-year highs.
 


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Asia – Pacific

1. Here is Singapore’s updated GDP growth through Q2.
 
Source: @DavidInglesTV  
 
2. Next, we have some updates on Australia.
 
Business confidence:
 

Source: ABC News   Read full article  
 
Consumer confidence:
 

 
Food and alcohol consumption in Victoria:
 
Source: CBA, @Scutty  


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China

1. Car sales have rebounded.
 
Source: @markets   Read full article  
 
2. Chinese manufactured imports (net of imports for reexport) continue to decline (as % of GDP).
 
Source: @Brad_Setser  
 
3. Chinese bank shares have diverged from the renminbi.
 
Source: @TaviCosta  
 
4. Here is the evolution of China’s current account.
 
Source: @Brad_Setser  
 
5. Capital flows to China suffered from increased tension with the US.
 
Source: IIF  
 
6. China’s reforestation programs have been successful.
 
Source: Alpine Macro  


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Emerging Markets

1. IIF estimates that EM securities attracted around $15.1 billion in July, lower than the $29.2 billion in June.
 
Source: IIF  
 
2. A weaker dollar could help the relative performance of EM equities.
 
Source: Hugo Ste-Marie, Portfolio & Quantitative Strategy Global Equity Research, Scotia Capital  
 
3. EM stocks could see further gains based on money supply growth and rebounding commodity prices.
 
Source: BCA Research  
 
4. This chart shows the changes in Brazil’s FX reserves and the Brazilian real.
 
Source: Variant Perception  
 
5. The Chilean peso rally is fading.
 

 
6. Israel’s consumer confidence is back near the lows.
 

 
7. Boosting manufacturing has been challenging for many EM economies.
 
Source: @WSJ   Read full article  


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Commodities

1. The gold/silver ratio hit the lowest level since early 2017.
 

 
Gold returns tend to be the best when real rates are between -0.5% and 0.5%.
 
Source: Variant Perception  

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2. China’s iron ore futures continue to rally.
 

 
3. Fitch expects a full recovery for most commodities by 2021.
 
Source: Fitch Solutions Macro Research  


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Equities

1. Fund flows have diverged from market performance (2 charts).
 
Source: @markets   Read full article  
 
Source: @Callum_Thomas, @topdowncharts  

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2. Earnings calls show more optimism.
 
Source: BofA Merrill Lynch Global Research, @WallStJesus  
 
3. How concentrated are the various US indices?
 
Source: @ISABELNET_SA, @MorganStanley  
 
4. Short interest in S&P 500 stocks has been declining.
 
Source: @themarketear  
 
5. Here is SPY (SPDR S&P 500 ETF) relative to its 1-year volume-weighted average price.
 
Source: JP Morgan, @themarketear  
 
6. Morgan Stanley’s market timing indicator is in the “overbought” territory.
 
Source: Morgan Stanley Research, @dlacalle_IA  
 
7. This chart from Bloomberg compares global stock market capitalization with the world GDP.
 
Source: @SriniSivabalan, @TheTerminal  
 
8. Retail trading activity accelerated this summer.
 
Source: @axios   Read full article  
 
9. Apple’s market value is approaching the capitalization of Russell 2000.
 
Source: @Not_Jim_Cramer  
 
10. Here is the total IPO volume by industry.
 
Source: @WSJ   Read full article  
 
10. Dividend aristocrats have diverged from bond yields.
 
Source: @ISABELNET_SA, @jpmorgan  
 
11. On Monday, we saw rotation out of growth into value, with smaller shares benefitting.
 
Value vs. growth:
 

 
Equal-weight S&P 500:
 

 
Small caps:
 

 
This growth/value rotation was visible in sector performance.
 
Winners:
 
Banks:
 

 
Energy:
 

 
Industrials and transportation:
 


 
Metals & Mining:
 

 
Losers:
 
Healthcare:
 

 
Tech:
 

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12. Finally, shares favored by retail investors continue to perform well.
 


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Credit

1. Sub-investment-grade companies are borrowing at record-low rates.
 
Source: @markets   Read full article  
Source: @tracyalloway, @PSeligson, @gowrinyc   Read full article  

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2. Next, we have some updates on securitization.
 
Investment-grade securitization volumes have been declining.
 
Source: Deutsche Bank Research  
Source: Deutsche Bank Research  
 
Who owns CLO debt?
 
Source: @markets   Read full article  
 
Below are CMBS portfolio delinquency rates by sector.
 
Source: @WSJ   Read full article  

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3. Here is what the US banking system is reporting for loan loss provisions.
 

 
4. Fixed-income investors face lower income and higher volatility.
 
Source: Nuveen   Read full article  


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Global Developments

1. How do businesses view growth prospects?
 
Source: Oxford Economics  
 
What will be the shape of the recovery?
 
Source: The Conference Board  

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2. Global equity markets have been highly correlated.
 
Source: MarketDesk Research  
 
3. These charts show the evolution of central banks’ balance sheets.
 
The 12-month change:
 
Source: Deutsche Bank Research  
 
Total size:
 
Source: Deutsche Bank Research  
 
4. The US dollar could be in the midst of a bearish cycle.
 
Source: Alpine Macro  


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Food for Thought

1. Additional expenses to reopen public schools:
 
Source: @markets   Read full article  
 
2. Airbnb occupancy rate:
 
Source: ANZ Research  
 
3. Grocery product availability in the US:
 
Source: @WSJ   Read full article  
 
4. Google search traffic for different activities:
 
Source: The Economist   Read full article  
 
5. The risk of infected students returning to school:
 
Source: The New York Times   Read full article  
 
6. Vaccine developers:
 
Source: @adam_tooze, @NAR   Read full article  
 
7. The US Supreme Court approval rates:
 
Source: Gallup   Read full article  
 
8. Confidence in attending religious services:
 
Source: @pewresearch   Read full article  
 
9. Distances traveled by Mars and Moon rovers:
 
Source: Statista  

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