The Daily Shot: 21-Aug-20
• The United States
• Canada
• The United Kingdom
• The Eurozone
• Europe
• Japan
• Asia – Pacific
• China
• Emerging Markets
• Energy
• Equities
• Credit
• Global Developments
• Food for Thought
The United States
1. The Philly Fed’s regional manufacturing report points to robust factory activity this month.
However, the pace of hiring and business outlook pulled back from the July levels.
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2. The Conference Board’s US leading index continued to strengthen last month.
3. The Oxford Economics recovery index is showing some improvement.
Source: Oxford Economics
4. Are brick-and-mortar retailers coming back to life?
Source: BCA Research
5. Bloomberg’s monthly economic expectations index and the weekly consumer sentiment index have both turned lower this month.
• Americans have become more nervous about personal finances.
• Sentiment among Republicans and Democrats has diverged sharply.
Source: @TheTerminal, Bloomberg Finance L.P.
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6. A record percentage of lenders tightened approval standards on credit cards. Will credit card charge-offs gap higher?
Source: @BittelJulien
7. After four weeks of declines, initial unemployment claims rose last week.
Source: Oxford Economics
8. Over the past decades, growth in R & D investment has been dominated by tech and pharma/”bioeconomy.”
Source: @adam_tooze Read full article
Canada
1. Consumer confidence is surging, along with improvements in housing and industrial sectors (based on internet search activity).
Source: Arbor Research & Trading
2. Home price appreciation remains robust.
3. The Canadian dollar continues to rally.
The United Kingdom
1. Consumer confidence remains extremely weak.
2. The gilt curve has been steepening.
The Eurozone
1. Construction output improved further in June.
2. In addition to the massive liquidity differential (#5 here), the political uncertainty in the US has been supporting the euro.
Source: Pantheon Macroeconomics
3. Here is the attribution of Spain’s historic GDP contraction.
Source: IIF
Total hours worked collapsed.
Source: IIF
Europe
1. Let’s start with Switzerland.
• Industrial production tumbled in Q2.
• Exports are rebounding. This chart shows the changes in Swiss watch sales.
• Switzerland is facing a second wave of COVID infections.
Source: ourworldindata.org
By the way, here is the situation in other European countries.
Source: @WSJ Read full article
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2. Next, we have some updates on Poland.
• Last month’s industrial output was stronger than expected (now up year-over-year).
• Employment is gradually recovering.
• Consumer confidence turned lower this month.
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3. Sweden’s unemployment rate appears to have peaked.
4. Stoxx 600 has a higher dividend payout ratio than the S&P 500 and Topix.
Source: Pavilion Global Markets
Japan
1. Inflation remains soft, with the core CPI coming in below consensus.
2. Condo sales rebounded last month.
3. The August PMI report shows business activity still in contraction mode (PMI < 50).
• Manufacturing:
• Services:
Asia – Pacific
1. South Korea’s exports improved further this month.
2. Taiwan’s export orders soared in July.
3. New Zealand’s credit card spending continues to recover.
Separately, the nation’s five-year government bond yield hit a record low on central bank buying.
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4. Next, we have some updates on Australia.
• The Markit PMI report shows manufacturing activity continuing to expand.
However, services are back in contraction territory.
Here is the composite output index.
Source: @IHSMarkitPMI Read full article
• The pandemic surge in Victoria has been a drag on retail sales (and is responsible for the downturn in business activity – above).
Source: ANZ Research
China
1. The renminbi continues to climb against the dollar.
2. The yield curve has flattened considerably since May.
The PBoC has kept liquidity relatively tight and resisted lowering short-term rates.
Source: Jing Zhao, @TheTerminal, Bloomberg Finance L.P.
3. Lending rates remain elevated.
Source: Pantheon Macroeconomics
4. Container freight activity is soaring.
Source: @JeffreyKleintop
5. China’s stock market has outperformed EM peers.
Source: @johnauthers, @bopinion Read full article
6. Next, we have a couple of updates on Hong Kong.
• The unemployment rate appears to have peaked.
• The CPI dipped into negative territory due to the government’s pandemic relief on public housing rentals.
Source:
Emerging Markets
1. Let’s begin with some updates on Russia.
• Retail sales:
• Wage growth:
• The unemployment rate:
• Cargo shipments:
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2. Turkey’s real yields are the lowest among EM economies.
Source: @markets Read full article
3. Argentina’s economic activity is recovering.
Separately, adverse weather is posing risks to Argentina’s record wheat crop.
Source: @markets Read full article
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4. Peru’s GDP dipped 30% in Q2.
Source: @markets Read full article
5. Lower commodity prices have depressed exports from major EM producers.
Source: Capital Economics
6. Will we see a rebound in EM currencies?
Source: @meremortenlund
Energy
1. The US oil futures curve is in contango. And the time spread (price between contracts) should remain wide at the front-end of the curve amid elevated inventories and high storage costs, according to Pavilion Global Markets.
Source: Pavilion Global Markets
2. Oil prices are nearing breakeven levels for core US shale plays.
Source: Pavilion Global Markets
3. This chart shows OPEC production data vs. targets.
Source: Reuters Read full article
4. Petroleum engineering college enrollment has been slowing, despite attractive pay for graduates.
Source: @WSJ Read full article
Equities
1. The Nasdaq 100 index continues to outperform, driven by the tech mega-caps (2 charts).
Source: BCA Research
But the Nasdaq 100 breadth has been deteriorating.
Source: @MacroCharts
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2. The speed of this market recovery has been remarkable.
Source: @HondoTomasz
We’ve had the shortest bear market in recent history.
Source: S&P Global Market Intelligence
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3. S&P 500 large trader call option buying (those buying more than 50 contracts) is at extreme levels (blue line).
Source: Knowledge Leaders Capital
And small trader call buying (less than 50 contracts) is even more extreme.
Source: Knowledge Leaders Capital
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4. This chart shows used car prices vs. the Nasdaq Composite. A spurious correlation? Or are both driven by a massive spike in US liquidity?
Source: @TaviCosta
5. Q2 earnings were better than expected, globally.
Source: Deutsche Bank Research
Companies that missed earnings were punished more than usual across all regions.
Source: Deutsche Bank Research
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6. The decline in share buybacks has been severe.
Source: @financialtimes Read full article
7. Active investors are running the highest equity exposure in over two years.
Source: Morgan Stanley, @ISABELNET_SA
8. This chart shows the Q2 revenue distribution for S&P 500 companies (by sector).
Source: @WSJ Read full article
Credit
1. US commercial paper outstanding declined sharply since the start of the recession as companies termed out their debt (tapping the bond market).
Source: @stlouisfed
2. This scatterplot shows the GDP growth vs. BBB bond spreads. Can you spot the Fed’s intervention?
Source: @michaellebowitz
3. Stressed debt in BDC portfolios (where coupon accruals have been halted) remains elevated. BDCs tend to lend to middle-market US firms.
Source: Lead Left Read full article
4. Corporate bankruptcies continue to climb.
Source: @byHeatherLong, @ConstanceHunter Read full article
5. Muni issuance has recovered.
Source: @WSJ Read full article
Global Developments
1. Risk reversals signal rising bearish sentiment on the US dollar.
Source: @markets Read full article
Below is a scatterplot of the year-to-date currency appreciation vs. bond yield changes.
Source: @RobinBrooksIIF
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2. Investors are finally returning to global equity ETFs.
Source: Arbor Research & Trading
3. Here is the average central bank policy rate.
Source: Morgan Stanley Research
4. Global leverage continues to climb.
Source: IIF
5. World trade has deteriorated dramatically this year.
Source: @markets Read full article
6. A W-shaped recovery?
Source: BofA Merrill Lynch Global Research, @Saburgs
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Food for Thought
1. PC and server shipments during the pandemic:
Source: BCA Research
2. Social media revenue per user:
Source: @chartrdaily
3. Turnout in presidential elections:
Source: @WSJ Read full article
4. The Democratic National Convention topics discussed:
Source: @FiveThirtyEight Read full article
5. The US swing voter:
Source: @WSJ Read full article
6. Food insecurity in the US (4 charts):
Source: Liberty Street Economics Read full article
Source: @WSJ Read full article
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7. Apprehensions along the US-Mexican border:
Source: @WSJ Read full article
8. US healthcare spending:
Source: @WSJ Read full article
9. Death announcements:
Source: @simongerman600 Read full article
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Have a great weekend!