US freight activity is rebounding

The Daily Shot: 22-Sep-20
The United States
The United Kingdom
The Eurozone
Asia – Pacific
China
Emerging Markets
Cryptocurrency
Commodities
Energy
Equities
Credit
Food for Thought



 

The United States

1. US household net worth rose sharply last quarter (biggest quarterly gain since 1952) as the stock market recovered.
 

 
2. The expiration of the $300/week unemployment benefits this month will reverberate through the economy.
 
Source: BCA Research  
 
3. Next, we have some updates on the labor market.
 
Labor underutilization continues to be a concern (2 charts).
 
Source: ANZ Research  
Source: ANZ Research  
 
More of the layoffs have become permanent.
 
Source: The Daily Feather  
 
Job-related online search activity remains below last year’s levels.
 
Source: Arbor Research & Trading  

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4. Here is Morgan Stanley’s projection for the pace of growth in disposable income.
 
Source: Morgan Stanley Research  
 
5. Similar to the leading index, the Chicago Fed National Activity Index showed a smaller increase last month.
 

 
6. Freight activity is rebounding.
 
Source: Cass Information Systems  
 
Truckload rates have increased sharply.
 
Source: Cass Information Systems  
 
However, intermodal shipment prices remain depressed.
 
Source: Cass Information Systems  

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7. Has the US dollar bottomed?
 
Source: @TheTerminal, Bloomberg Finance L.P.  


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The United Kingdom

1. Are UK exporters ready to start paying a 3% tariff to the EU?
 
Source: BCA Research  
 
2. The UK stock market’s share of the MSCI EAFE index capitalization keeps shrinking.
 
Source: @JeffWeniger  
 
UK banks continue to underperform.
 
Source: S&P Global Market Intelligence  

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3. Here are a couple of charts on mobility.
 
Tube usage:
 
Source: @financialtimes   Read full article  
 
Cars vs. trains:
 
Source: @financialtimes   Read full article  
 
Mobility is expected to take a hit again as the nation struggles with higher infection rates.
 
Source: @bpolitics   Read full article  

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4. Finally, here are a couple of poll results.
 
Views on the no-deal outcome:
 
Source: BCA Research  
 
The Prime Minister’s approval ratings:
 
Source: Morning Consult  


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The Eurozone

1. European shares sold off sharply on Monday, but markets are stable this morning.
 
Source: @markets   Read full article  

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2. EUR/USD options are pricing in a significant US election risk.
 
Source: Anil Varma, Bloomberg Finance L.P.  
 
3. These charts show the evolution of corporate and household debt in the Eurozone.
 
Source: Natixis  
 
4. The budget gap continues to widen.
 
Source: Pantheon Macroeconomics  


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Asia – Pacific

1. Japan’s service sector activity remains soft.
 
Source: Pantheon Macroeconomics  
 
2. South Korea’s KOSPI index is testing support at the 50-day moving average.
 
Source: @TheTerminal, Bloomberg Finance L.P.  
 
3. Taiwan’s export orders continue to beat expectations.
 

 
4. Next, we have some updates on Australia.
 
Consumer confidence:
 

 
Payrolls (3 charts):
 
Source: Goldman Sachs  
Source: @ANZ_Research, @cfbirch  
 
New infections:
 
Source: Goldman Sachs  
 
By the way, will we see a third wave?
 
Source: @WSJ   Read full article  

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The collapse in immigration and its impact on home prices:
 
Source: Fitch Ratings  
 
The Aussie dollar (at 50d moving average):
 


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China

1. Mainland shares are trading at a premium vs. Hong Kong.
 
Source: @WSJ   Read full article  
 
2. China’s consumption recovery has lagged other major economies.
 
Source: Gavekal   
 
Households have been more cautious about spending.
 
Source: Gavekal   

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3. Loan rates are expected to drift lower.
 
Source: Pantheon Macroeconomics  
 
4. Hong Kong’s CPI is rebounding.
 


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Emerging Markets

1. Let’s begin with some updates on India.
 
The recovery will take some time.
 
Source: Pantheon Macroeconomics  
 
India has a large trade deficit with China.
 
Source: Natixis  
 
Here is a breakdown of India’s import dependence on China.
 
Source: Natixis  
 
India’s foreign direct investment has been concentrated in services and information/commercial technology (ICT).
 
Source: Natixis  
 
India’s infrastructure spending has been stuck in low gear since 2012.
 
Source: Natixis  

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2. Lebanon’s inflation hit 120%.
 

 
3. This chart shows remittances as a share of each country’s GDP.
 
Source: OECD   Read full article  
 
4. The MSCI Emerging Market Index is more exposed to technology and consumer discretionary than the MSCI DM.
 
Source: MarketDesk Research  


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Cryptocurrency

1. The Bitcoin – gold correlation hit the highest level in years.
 

 
2. Here is Bitcoin’s stock-to-flow trajectory.
 
Source: @100trillionUSD  


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Commodities

1. The US dollar rebound is putting pressure on commodities.
 

 
Gold is at the lower Bollinger band.
 
Source: barchart.com  
 
Shares of gold miners took a hit in recent days.
 

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2. Silver is lower again in early trading.
 

 
3. Have diamond prices bottomed?
 
Source: @WSJ   Read full article  


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Energy

1. Brent held resistance at the 200d moving average.
 

 
2. BCA Research expects oil demand growth to exceed the increases in supply next year.
 
Source: BCA Research  
 
The recovery in oil prices from all-time lows has done little to support energy stocks.
 
Source: BCA Research  

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3. US natural gas has cratered in recent days.
 

 
4. Here is how Americans view different energy sources.
 
Source: Morning Consult   Read full article  


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Equities

1. QQQ (Nasdaq 100 ETF) experienced some outflows.
 
Source: @markets   Read full article  
 
However, the 3x leveraged Nasdaq 100 ETF continues to see inflows.
 
Source: @markets   Read full article  

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2. FANG stocks are at the 50-day moving average.
 

 
3. Bank shares tumbled on Monday, driven in part by this story.
 

 
4. Next, we have some updates on small-cap stocks.
 
Unprofitable companies are becoming a large component of the market.
 
Source: BofA Securities  
 
Small-cap stocks tend to outperform during an economic recovery …
 
Source: BofA Securities  
 
… and when credit spreads tighten.
 
Source: BofA Securities  
 
Small-caps also have a higher hit-rate in November and December.
 
Source: BofA Securities  

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5. The equity-to-bond ratio has diverged from consumer sentiment.
 
Source: @BittelJulien  
 
6. The outperformance of the five largest stocks in the S&P 500 has been driven by higher earnings.
 
Source: Capital Economics  
 
7. Here is the VIX futures curve.
 
Source: @tracyalloway  
 
Volatility is expected to remain elevated even after the elections.
 
Source: @ISABELNET_SA, @GoldmanSachs  


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Credit

1. HYG, the largest high-yield ETF is testing support at the 200-day moving average.
 
Source: @TheTerminal, Bloomberg Finance L.P.  
 
2. The on-the-run investment-grade CDX spread is back near 50 bps after the fallen angels were removed from the index in the latest roll.
 

 
3. US small caps are running record leverage.
 
Source: BofA Securities  


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Food for Thought

1. Employment by company size:
 
Source: @adam_tooze, @FT   Read full article  
 
2. The cost of thriving:
 
Source: BofA Merrill Lynch Global Research, @MoHossain  
 
3. Most and least affordable US cities:
 
Source: US CARES Unempl   Read full article  
 
4. The Spanish Flu impact on births:
 
Source: The Brookings Institution   Read full article  
 
5. Counting mail-in ballots:
 
Source: @WSJ   Read full article  
 
6. The latest poll results (2 charts):
 
Source: @WSJ   Read full article  
Source: Morning Consult   Read full article  
 
Swing states in 2020 vs. 2016:
 
Source: Mehlman Castagnetti Rosen & Thomas  

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7. Cyber attacks on utilities:
 
Source: Morning Consult   Read full article  
 
8. Electric vehicle costs:
 
Source: @financialtimes   Read full article  
 
9. HBO vs. Netflix:
 
Source: Statista  

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