The Daily Shot: 11-Sep-20
• The United States
• The United Kingdom
• The Eurozone
• Europe
• Japan
• New Zealand
• China
• Emerging Markets
• Commodities
• Energy
• Equities
• Food for Thought
The United States
1. Let’s begin with producer prices, which rose a bit more than expected.
A large portion of the core PPI increase was due to the rebound in business markups (“trade services”).
The year-over-year growth rate in the core PPI ex. trade services is barely above zero.
Next, let’s take a look at some transportation-related PPI trends, which tend to be sensitive to economic activity.
• Truck transportation of freight PPI:
• Semi truck prices:
By the way, heavy truck orders remain robust.
Source: FTR, Snippet.Finance Read full article
• Air transportation of freight (the spike is due to limited transport capacity globally):
• Air passenger transportation PPI:
• Passenger car rental:
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Finally, here are a couple of other trends we are following.
• Wireless telecom services PPI:
• Office and warehouse construction PPI:
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2. The sharp increase in used car prices could give a boost to the August CPI.
Source: Pantheon Macroeconomics
3. The latest weakness in the US dollar has been good for smaller US manufacturers by helping them compete on price. Smaller industrial firms have outperformed (the equal-weight stock index below gives smaller industrial firms more weight).
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4. Since we are on the topic of currencies, the dollar-yen volatility market is pricing in a substantial US election risk (2-month – 1-month vol spread).
Source: @vkaramanis_fx, @TheTerminal, Bloomberg Finance L.P.
5. The US wholesale inventories-to-sales ratio is back at pre-crisis levels.
Car inventories have tightened.
By the way, here is another pandemic-related development. Wholesalers are running low on booze.
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6. Consumer confidence continues to recover.
• Bloomberg’s sentiment indicator:
• Refinitiv/IPSOS index:
Source: Refinitiv/Ipsos Consumer Sentiment Index.
Source: Refinitiv/Ipsos Consumer Sentiment Index.
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7. The NY Fed’s national economic activity index keeps climbing.
8. The labor market remains soft, as new unemployment claims move higher.
Source: Oxford Economics
This chart shows the existing jobless claims (the total number of Americans receiving unemployment benefits).
Source: Oxford Economics
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9. Mortgage rates hit another record low.
As a result, nearly 20 million homeowners can now refinance their mortgage.
Source: Black Knight
The United Kingdom
The no-deal Brexit risk continues to rise.
Source: The New York Times Read full article
Below is the timeline.
Source: ING
The pound remains under pressure.
Here is the euro rising against the pound.
The GBP/USD sentiment in the options market has deteriorated.
The Eurozone
1. The ECB did not deliver the stimulus boost the market was expecting.
Source: Reuters Read full article
Moreover, the central bank boosted its inflation forecasts for the next two years.
Source: Pantheon Macroeconomics
The euro rose initially but then sold off. The long-euro trade remains very crowded.
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2. Next, we have some updates on France.
• Manufacturing output is rebounding (as of July).
• Home price appreciation has accelerated.
Source: INSEE Read full article
• The budget has deteriorated:
Source: Pantheon Macroeconomics
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3. Italian industrial production is recovering rapidly (as of July).
4. Germany’s activity index is up sharply.
Source: Longview Economics
Europe
1. Norway’s inflation surprised to the upside.
Source: Nasdaq Read full article
2. On the other hand, Sweden’s CPI remains benign amid soft demand (second chart).
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3. The S&P Europe 350 is relatively underweight technology versus the S&P 500.
Source: S&P Global Market Intelligence
4. The Icelandic krona had the best day in years (vs. EUR).
Japan
1. Producer prices are gradually recovering.
2. The dollar-yen correlation with Japan’s shares has weakened recently, which makes the stock market less vulnerable to currency fluctuations.
h/t @shoko_oda
3. Next, we have some updates on Japan’s political situation.
• Suga is likely to be the next PM.
Source: Reuters Read full article
Source: ANZ Research
• Suga does not see a need for another consumption tax hike over the next decade.
Source: @BloombergQuint Read full article
• Support for Abe rose sharply since the resignation news.
Source: Morning Consult
New Zealand
1. New Zealand joined the negative-rate club this week.
2. Home sales remain robust.
3. Manufacturing expansion slowed sharply last month after the post-lockdown rebound.
China
1. Investors are getting nervous about China’s tech stocks.
Source: @markets Read full article
2. Stock trading activity has moderated.
Source: @markets Read full article
3. Coal imports have slowed due to Beijing’s controls.
Source: Feifei Shen, @TheTerminal, Bloomberg Finance L.P.
Emerging Markets
1. Brazil’s retail sales have rebounded sharply, outperforming peers.
Source: @SergiLanauIIF
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2. Mexico’s same-store sales are improving.
3. South Africa’s industrial output surprised to the upside.
• Manufacturing:
• Mining:
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4. Israel’s consumer confidence remains depressed.
5. Egypt’s CPI has been trending lower.
6. Indonesia’s stock market has been underperforming.
Source: @TheTerminal, Bloomberg Finance L.P.
7. Here are the components of Thailand’s GDP.
Source: ING
8. This chart shows COVID-19 cases in Southeast Asia.
Source: ING
Commodities
1. Hedge funds are boosting their bets on copper.
2. Next, we have some updates on US agricultural commodities.
• Lean hogs:
Source: Successful Farming Read full article
• Corn:
• US soy exports to China:
Energy
1. Brent is testing support at $40/bbl.
Source: @TheTerminal, Bloomberg Finance L.P.
2. US gasoline demand remains at the lower end of the multi-year range.
3. This chart shows US crude oil and gasoline demand, measured in days of supply.
4. Alternative energy stocks have outperformed the broader energy space this year (2 charts).
Source: Gavekal
Source: Schroders Economics Team, @Callum_Thomas
Equities
1. The S&P 500 is back at its 50-day moving average. And based on stock futures, it appears that the support will hold again.
Source: barchart.com
2. Here is who bought the market since the lows.
Source: BofA Securities, @WallStJesus
• Retail investors have been punching above their weight by using options, which provide substantial leverage and can influence the market.
Source: @jessefelder, @FT Read full article
• Millennials and GenXers have increased their amount invested in the market.
Source: Investopedia Read full article
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3. This chart shows momentum and relative strength of sectors versus the S&P 500.
Source: BofA Securities
4. The gap between the best and the worst-performing sector has been unusually wide this year.
Source: @TeddyVallee
5. The US has the largest market cap relative to the M2 money supply versus other developed markets.
Source: Gavekal
6. Capital-scarce industries have been outperforming capital-abundant sectors this year.
Source: Variant Perception
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Food for Thought
1. US road traffic over time:
Source: Statista
2. New York City’s anemic recovery:
Source: Investopedia Read full article
Manhattan rental apartment glut:
Source: @luxury Read full article
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3. CEO compensation vs. the stock market:
Source: @acemaxx, @LarryMishel, @EconomicPolicy Read full article
4. Prices paid by consumer per billion dollars worth of content:
Source: @adam_tooze, @profgalloway Read full article
5. Tech employees’ political donations:
Source: BCA Research
6. Worn out by political posts on social media (2 charts):
Source: @pewresearch Read full article
Source: @CivicScience Read full article
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7. World Trade Center-related FDNY deaths by year:
Source: Statista
8. College students driving the COVID spike:
Source: @JedKolko, @indeed
9. NFL betting:
Source: American Gaming Association
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Today’s edition of The Daily Shot is dedicated to all the men and women who lost their lives on 9/11.
Have a great weekend.