The Daily Shot: 07-Oct-20
• The United States
• Canada
• The United Kingdom
• The Eurozone
• Australia
• China
• Emerging Markets
• Commodities
• Equities
• Credit
• Rates
• Global Developments
• Food for Thought
The United States
1. The negotiations to implement another stimulus package appear to be over for now.
Source: Twitter
The stock market did not react well to the news.
Source: @TheStalwart Read full article
Economists are concerned about the looming “income cliff” as the LWSPA program expires.
Source: Oxford Economics
Source: @WSJ Read full article
To be sure, more stimulus is coming in the next few months. In the meantime, however, the loss of income will be a drag on growth.
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2. Next, we have some updates on the labor market.
• The rebound in job openings paused in August.
Not all sectors registered declines. Here is manufacturing, for example.
• Permanent unemployment is rising faster than in previous recessions.
Source: Oxford Economics
• Here is the employment recovery by educational attainment …
Source: @WSJ Read full article
… and by wage category.
Source: @WSJ Read full article
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3. The nation’s trade gap, excluding petroleum, hit a new high (second chart).
The trade deficit with Mexico is the largest on record amid increased US demand for automobiles.
By the way, Mexico has now undercut China for low-cost manufacturing.
Source: @adam_tooze, @KathrinHille Read full article
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4. The consensus for the Q3 GDP rebound is 25% (annualized). Nonetheless, the nation’s economic output will remain below the pre-crisis trend, according to JP Morgan.
Source: @ISABELNET_SA, @JPMorganAM
5. While vehicle miles have seen a V-shaped recovery thus far, rail and air passenger miles have barely registered an uptick.
Source: St. Louis Fed
6. Will political uncertainty put further downward pressure on the US dollar?
Source: BCA Research
7. Here is the evolution of mortgage delinquencies compared to regional post-hurricane trends.
Source: Black Knight
Below is the current status of COVID-19 related mortgage forbearances.
Source: Black Knight
Canada
1. Value stocks continue to underperform growth. But this could change if the Canadian 10-year yield starts to rise.
Source: Hugo Ste-Marie, Portfolio & Quantitative Strategy Global Equity Research, Scotia Capital
Currently, the 10-year yield is holding support. Will it break above the 200-day moving average?
Source: Dantes Outlook Read full article
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2. Canada-focused ETF short sellers continued to cover their positions through the September selloff.
Source: Hugo Ste-Marie, Portfolio & Quantitative Strategy Global Equity Research, Scotia Capital
3. The rebound in trade has stalled.
Source: Scotiabank Economics
4. This chart shows the recovery in home prices compared to previous downturns.
Source: Desjardins
The United Kingdom
1. Construction activity expanded rapidly last month.
Demand for build-to-rent homes has accelerated.
Source: @business Read full article
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2. EV sales are up sharply.
Source: Statista
The Eurozone
1. Let’s begin with Germany.
• Factory orders were quite strong in August.
But the rebound in industrial production appears to be losing momentum.
– Manufacturing sentiment suggests that there are further improvements ahead.
Source: Pantheon Macroeconomics
– Will we see a sharp increase in equipment investment?
Source: @OliverRakau
• Construction activity slowed last month.
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2. Spanish banks are most exposed to Turkey.
Source: TS Lombard
3. Euro-area disposable income is set to decline.
Source: Deutsche Bank Research
4. Here is the Eurozone’s share of the global GDP.
Source: ECB Read full article
Australia
1. Service sector activity deteriorated at a faster pace last month.
2. Australia is facing a fiscal cliff.
Source: UBS, @Scutty
3. Here is the 3-year government bond yield (record low).
China
1. Many China-focused funds are domiciled in Luxembourg.
Source: @financialtimes Read full article
2. China continues to expand its influence through international organizations.
Source: @WSJ Read full article
3. Hong Kong’s business activity is yet to stabilize.
Emerging Markets
1. Let’s begin with Mexico.
• Consumer confidence:
• Vehicle production:
• CapEx (through July):
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2. Brazil’s economic uncertainty is moderating.
Source: Goldman Sachs
The nation’s service sector has stabilized.
Source: IHS Markit Read full article
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3. Next, we have some updates on Russia.
• Consumer confidence:
• Inflation:
• The ruble (USD/RUB is testing resistance at 80):
Source: @TheTerminal, Bloomberg Finance L.P.
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4. EM currencies continue to lag.
Source: @AndreasSteno
5. Short interest in one of the largest local-currency bond ETFs (EMLC) has been climbing.
h/t @SriniSivabalan
6. Outflows from EM accelerated during the final weeks of September.
Source: IIF
Commodities
1. Despite the stalled rally, ETF holdings of gold continue to climb.
h/t @krystalchia
2. This chart shows the ratio of Goldman’s broad commodities index to the Dow.
Source: Die Incrementum AG
3. US wheat prices are higher due to drought conditions and strong international demand.
Here is Bloomberg’s grains index.
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4. Sugar futures continue to rally.
But supply is expected to increase substantially next year.
Source: @WSJ Read full article
Equities
1. Shares of smaller companies have been outperforming in recent days.
• The S&P 500 equal-weight index:
• Small caps:
By the way, the Russell 2000 index held resistance at the upper Bollinger band.
Source: barchart.com
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2. This market recovery has been “unloved.”
Source: Market Ethos, Richardson GMP
3. Will we see a recovery in fund flows after the elections?
Source: @ISABELNET_SA, @GoldmanSachs
4. Analysts expect a sharp rebound in earnings in Q3.
Source: Deutsche Bank Research
But year-over-year earnings growth, excluding loan loss provisions and energy, remains depressed.
Source: Deutsche Bank Research
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5. Next, we have some sector performance updates.
• Banks:
• Utilities:
• REITs:
• Consumer Staples:
• Semiconductors:
• Tech and Communication Services:
Source: @WSJ Read full article
• Biotech:
• US healthcare sector ETF flows have been trending lower.
Source: MarketDesk Research
Credit
1. Most of the US high-yield issuance last quarter was to refinance existing debt.
Source: @lcdnews, @JakemaLewis
2. Here is the quarterly loan issuance by region.
Source: @LPCLoans, @refinitiv
3. This chart shows liquidations vs. reorganizations by firm size.
Source: Brookings Economic Studies
Rates
1. Treasury implied volatility rose sharply on Tuesday.
2. Swaption skew shows a bias toward higher yields.
Source: Arbor Research & Trading
3. The longer end of the yield curve has been steepening (perhaps driven by inflation concerns).
Source: @lisaabramowicz1
4. According to Arbor Data Science, FOMC members have been in agreement lately.
Source: Arbor Research & Trading
Global Developments
1. Here is Goldman’s estimate of the lockdowns’ impact on the GDP.
Source: Goldman Sachs
2. How long will it take these economies to fully recover?
Source: Barclays Research
3. The US, Japan, and China are the biggest sources of GDP-weighted private debt.
Source: Deutsche Bank Research
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Food for Thought
1. Restaurant reservations by state:
Source: @WSJ Read full article
2. Holiday shopping online vs. in person:
Source: @business Read full article
3. US household and family size over time:
Source: Yardeni Research
4. Global educational attainment forecasts:
Source: OECD Read full article
5. Vaccine status:
Source: @business Read full article
6. Employment among US women by marital status (impacted by school closures?):
Source: @mikemadowitz
7. How much does the 2020 US presidential election matter?
Source: Desjardins
8. Enslaved Africans (1514-1866):
Source: Statista
9. What happens in an internet minute?
Source: Visual Capitalist Read full article
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