The Daily Shot: 13-Aug-20
• Administrative Update
• The United States
• Canada
• The United Kingdom
• Europe
• Asia – Pacific
• Emerging Markets
• Commodities
• Energy
• Equities
• Rates
• Global Developments
• Food for Thought
Administrative Update
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The United States
1. Let’s begin with with the CPI report which surprised to the upside.
• The headline CPI:
• The core CPI:
The monthly increase in the core CPI was the largest in almost 30 years.
The sharp move higher was due to the bounce in mobility-related sectors.
Source: Nomura Securities
Let’s run through the year-over-year changes in some of the CPI components.
• Food:
• Rent:
• New cars:
• Apparel:
Buying men’s suits is so 2019 …
• Airline fares:
• Medical care:
• Appliances:
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2. Longer-term market-based inflation expectations continue to grind higher (2 charts).
3. Mortgage applications for house purchase are leaving last year’s borrowing activity in the dust.
Loan refinancing volumes are also elevated.
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4. Lower-end rental housing collections have declined sharply this year.
Source: @markets Read full article
5. Next, we have a couple of updates on the labor market.
• Reasons for unemployment:
Source: ANZ Research
• Goldman’s unemployment rate forecast:
Source: @ISABELNET_SA, @GoldmanSachs
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6. Trucking transport demand has accelerated.
Source: @business Read full article
7. Goldman’s IT CapEx index hit a record low.
Source: @ISABELNET_SA, @GoldmanSachs
8. The budget gap widened less than expected last month.
Will the massive budget deficit pressure the US dollar?
Source: @jessefelder Read full article
Canada
1. The loonie continues to grind higher.
2. Housing starts topped economists’ estimates.
The United Kingdom
1. As we saw yesterday, the Q2 GDP decline exceeded 20%. Here is a comparison to other economies.
Source: Pantheon Macroeconomics
The contraction would have been worse if it wasn’t for the relative strength in UK exports. The decline was almost half of what economists were expecting.
Other components of the GDP saw extreme contraction.
• Private consumption:
• Government spending:
• Investment:
This chart shows the GDP changes by sector from January to June.
Source: Pantheon Macroeconomics
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2. Economic activity improved in June.
• Manufacturing output (year-over-year):
• Construction output (year-over-year):
• Services (month-over-month):
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3. Trade remains in surplus.
4. The housing market has rebounded. But can this momentum be sustained amid weakness in the labor market and the wind-down of government support?
Source: Reuters Read full article
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5. British parents have been more affected by the crisis than non-parents.
Source: @bpolitics Read full article
Europe
1. Sweden’s CPI surprised to the upside.
2. Germany’s ZEW indicator points to an acceleration in manufacturing activity.
Source: BCA Research
3. Here is the euro-area industrial production growth (through June).
Source: ING Read full article
Asia – Pacific
1. This chart shows the increase in retail stock trading in select countries.
Source: Credit Suisse, @tracyalloway
2. New Zealand’s yields continue to fall in response to the RBNZ announcement (#3 here).
3. Australia’s jobs report was stronger than expected.
• Job gains:
• The unemployment rate (below forecasts):
• The participation rate:
• Hours worked:
Source: Goldman Sachs
Emerging Markets
1. Brazil’s June retail sales exceeded economists’ forecasts (now up vs. 2019).
Sales outperformed other economies.
Source: @SergiLanauIIF
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2. Mexico’s job losses continue to moderate.
3. South Africa’s business sentiment remains near record lows (through July).
Retail sales are recovering (through June).
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4. The Turkish lira hit another record low.
5. Here is the gap in manufacturing output between June 2020 and December of 2019.
Source: @SergiLanauIIF
This scatterplot shows the latest PMI vs. the 3-month PMI change (level vs. momentum).
Source: Deutsche Bank Research
Commodities
1. Gold held the uptrend support.
Source: barchart.com
2. Bloomberg’s grains index is rebounding from extreme lows.
Energy
1. US crude oil output is declining again.
2. US gasoline demand continues to recover.
3. Refinery runs remain weak.
4. This chart shows US inventories of crude oil and gasoline, measured in days of supply.
5. WTI crude is testing the 200-day moving average resistance.
Equities
1. The average holding period for stocks has declined sharply over the past few decades.
Source: @jessefelder, Reuters Read full article
2. Buffer ETFs are becoming popular. They buy downside protection, financing these purchases by giving up some upside.
Source: @markets Read full article
3. Is M&A activity about to accelerate?
Source: @WSJ Read full article
4. How strong is the feedback loop between US stocks and the Fed’s balance sheet?
Source: Tālis J. Putniņš
Rates
1. Treasury market implied volatility did not follow yields higher.
Source: @Not_Jim_Cramer
2. Pension funds’ fixed-income return projections have been too optimistic for decades (which often resulted in underfunding). This picture is not unique to CalPERS.
Source: CalPERS, @ldaalder
3. Global yield rankings seem to be a good predictor of relative performance.
Source: BCA Research
Global Developments
1. Freight shipping costs are at multi-year highs.
Source: @business Read full article
2. Next, we have ETF flows by asset class.
Source: JP Morgan, @ISABELNET_SA, @jpmorgan
3. Banks are better capitalized now than they were at the start of 2020.
Source: @financialtimes Read full article
4. Here is the evolution of business activity (PMIs) for some of the largest economies.
Source: Hugo Ste-Marie, Portfolio & Quantitative Strategy Global Equity Research, Scotia Capital
5. Finally, we have the Google search frequency for credit/lending.
Source: Arbor Research & Trading
Food for Thought
1. Business travel in 2020:
Source: @WSJ Read full article
2. The pandemic’s impact on major corporations:
Source: @howmuch_net Read full article
3. Time spent at parks vs. retail establishments and restaurants:
Source: The Daily Feather
4. Military spending (2 charts):
Source: Statista
Source: Visual Capitalist Read full article
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5. The maternal mortality ratio:
Source: UN Read full article
6. The impact of skipping a meal:
Source: @USDA_ERS Read full article
7. Salaries of H-1B visa holders:
Source: Britta Glennon, University of Pennsylvania Read full article
8. The best employers for women:
Source: Statista
9. Eliminating the penny:
Source: @CivicScience Read full article
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