The Daily Shot: 28-Sep-20
• The United States
• The United Kingdom
• The Eurozone
• China
• Emerging Markets
• Commodities
• Equities
• Credit
• Global Developments
• Food for Thought
The United States
1. The August durable goods orders figure was disappointing.
However, capital goods orders, a proxy for business investment, showed robust growth.
The dollar amount of capital goods orders hit the highest level since 2018.
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2. Next, we have a couple of updates on inflation.
• BlackRock expects a higher inflation regime in the medium term (well above market-based inflation expectations).
Source: BlackRock
• Inflation has been driven by demand this year.
Source: @WSJ Read full article
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3. According to Homebase, small business recovery has stalled.
Source: @homebase_data Read full article
This chart shows population-adjusted business closures.
Source: Yelp
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4. The largest decline in credit/debit card spending has been among Americans with the best credit scores.
Source: Moody’s Analytics
Bank of America’s card data showed a slowdown in restaurant spending.
Source: BofA Securities, @WallStJesus
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5. How will a protracted election uncertainty impact different asset classes?
Source: MarketDesk Research
6. Next, we have some updates on trade.
• US imports by country of origin:
Source: Jungle Scout
• By product:
Source: Jungle Scout
• West Coast import- and export-related activity:
Source: Cass Information Systems
The United Kingdom
Government borrowing spiked this year amid unprecedented spending.
Source: The Guardian Read full article
But this stimulus is about to slow, creating a drag on the recovery.
Source: Pantheon Macroeconomics
Moreover, the second wave will pressure the service sector.
Further reading
The Eurozone
1. The euro-area broad money supply expansion is off the peak.
Business loan growth remains elevated.
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2. Here is the growth rate in household deposits and loans.
Source: ECB Read full article
And this chart shows private deposits by country.
Source: Pantheon Macroeconomics
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3. Where will the core CPI bottom?
Source: @NordeaMarkets
A low term premium relative to breakeven rates suggests that the market is pricing persistent ECB quantitative easing, according to Deutsche Bank.
Source: Deutsche Bank Research
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4. Here is an overview of the ECB’s executive board (over time).
Source: @markets Read full article
5. Who are the biggest beneficiaries of the EU stimulus program (2 charts)?
Source: @bpolitics Read full article
Source: @bpolitics Read full article
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6. Germany’s orders-to-inventory ratio spiked this summer.
Source: @OliverRakau
Auto manufacturers have been especially upbeat.
Source: @OliverRakau
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7. Italian sentiment indicators surprised to the upside.
8. The STOXX 600 index is at support.
The STOXX 600 Banks index hit a new low.
China
1. Industrial profits growth remains robust.
2. China’s export strength this year has been remarkable.
Source: TS Lombard
Source: Variant Perception
Exports shifted from COVID-related products to a broader set of goods.
Source: Gavekal
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3. China is leading the global recovery in industrial production.
Source: Barclays Research
4. Outbound tourism has collapsed this year.
Source: Pantheon Macroeconomics
5. Property investment is likely to be sustained, given the rise in land transactions.
Source: Barclays Research
6. This recovery has been much faster than what we saw after earlier periods of economic weakness.
Source: Gavekal
7. Electric vehicle growth is expected to accelerate over the next couple of decades.
Source: Statista
Emerging Markets
1. The Russian ruble has been lagging crude oil and other EM currencies.
Source: @TheTerminal, Bloomberg Finance L.P.
Source: @TheTerminal, Bloomberg Finance L.P.
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2. Was the unexpected rate hike in Turkey enough to halt the lira’s decline?
Separately, Turkey’s tourism industry remains depressed.
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3. Hungary’s economic sentiment recovery has stalled.
4. Next, we have some updates on India.
• Consumption:
Source: TS Lombard
• Trade deficit (narrowed on weak import growth):
Source: TS Lombard
• The World Economics SMI (still in contraction territory):
Source: World Economics
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5. Mexico’s economy continued to recover in July, but there is a long road ahead.
6. Colombia’s central bank cut rates below 2% for the first time.
Commodities
1. Precious metals continue to struggle.
Hedge funds have been reducing their exposure to gold.
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2. Here is how key commodities performed during previous sharp increases in inflation expectations, according to Morgan Stanley.
Source: Morgan Stanley Research
Equities
1. Speculative accounts have been hedging their portfolios by shorting index futures, especially the Nasdaq 100.
This chart shows large speculators’ total positioning in Nasdaq, S&P 500, and Dow Jones futures.
Source: @sentimentrader
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2. US stocks have underperformed this month.
3. The S&P 500 has underperformed bond indices in 2020.
Source: @WSJ Read full article
4. Investors pulled a substantial amount of capital out of equity funds last week (2 charts).
Source: Goldman Sachs
Source: @ISABELNET_SA, @BofAML
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5. US IPO activity hit a year-to-date record.
Source: @WSJ Read full article
Average first trading day gains of IPOs have trended higher over the past few years, but remain below peak levels of the dot-com boom.
Source: Robeco Read full article
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6. Options markets have priced in a significant election-related risk.
Source: S&P Global Market Intelligence
Here is a comparison to previous elections.
Source: Hugo Ste-Marie, Portfolio & Quantitative Strategy Global Equity Research, Scotia Capital
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7. The market will be more sensitive to earnings surprises in the weeks ahead.
Source: @ISABELNET_SA, @GoldmanSachs
Credit
1. High-yield funds experienced some outflows last week.
Source: @financialtimes Read full article
2. North American investment-grade corporate leverage hit a new high.
Source: Goldman Sachs
3. This chart shows the evolution of US household vs. corporate debt.
Source: @jsblokland
Global Developments
1. How will the outcome of the US election impact the currency market?
Source: @WSJ Read full article
2. The lockdown stringency has been highly correlated with the GDP decline.
Source: ING
3. How long can households cover their living expenses after a job loss?
Source: @bopinion Read full article
4. This chart shows governments’ support for the labor market in March versus September.
Source: BlackRock
5. How do businesses view the global recovery?
Source: Oxford Economics
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Food for Thought
1. Marriage penalty by state:
Source: @TaxFoundation Read full article
2. Property taxes by county:
Source: CNN Business, h/t @jdcmedlock
3. US low-wage workers:
Source: @KFF Read full article
4. The shift to online retail:
Source: Statista
5. US incumbent party’s margin of victory vs. job growth:
Source: Deutsche Bank Research
6. The predictive power of national polls preceding elections:
Source: JP Morgan
7. US solar installations:
Source: Porch.com Read full article
8. Nuclear weapons testing over time:
Source: @adam_tooze, Bulletin of the Atomic Scientists Read full article
9. Spending time eating and drinking:
Source: Statista
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