The Daily Shot: 16-Oct-20
• The United States
• The United Kingdom
• The Eurozone
• Europe
• Asia – Pacific
• China
• Emerging Markets
• Commodities
• Energy
• Equities
• Credit
• Global Developments
• Food for Thought
The United States
1. US factory activity remained robust this month.
• The NY Fed’s manufacturing index showed continuing growth in October.
– New orders strengthened, and workers’ hours climbed.
– Factories expect to keep hiring.
– Manufacturers are not as upbeat as they were after the lockdowns were lifted, but sentiment remains solid.
• The Philly Fed’s report was even stronger.
– Growth in new orders and shipments accelerated.
– Employees are putting in more hours.
– CapEx expectations have rebounded.
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2. The US dollar’s weakness continues to put upward pressure on import prices.
3. Containerboard inventories spiked this year amid an unprecedented increase in online sales.
Source: The Daily Feather
4. New unemployment applications are holding above one million per week.
Source: @GregDaco
5. US mortgage rates hit another record low this week.
6. How bad will the third wave get? According to Princeton Energy Advisors, were are headed for some 80 thousand daily new infections by Election Day.
Source: Princeton Energy Advisors
The United Kingdom
1. The spike in new COVID cases is not just about more testing.
Source: Pantheon Macroeconomics
2. The UK stock market continues to trade at a substantial discount to the rest of Europe. Typically, the pound’s weakness should boost the FTSE 100 relative to peers, but Brexit risk remains a concern.
Source: @mikamsika, Bloomberg Finance L.P.
3. Demand for London’s higher-end homes has been robust.
Source: @markets Read full article
4. Support for Scottish independence hit a record high (in recent history).
Source: Ipsos
Source: Ipsos
The Eurozone
1. The spike in new infections (#2 here) is starting to spook investors.
• Italian debt spreads widened sharply.
• Bund yields tumbled and …
Source: @TeddyVallee
• … the curve flattened.
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2. Before Thursday, the aggregate Eurozone sovereign spread (relative to expected overnight rates) has been tightening.
Source: ECB Read full article
3. Banks continue to underperform.
Source: @WSJ Read full article
4. Italian industrial orders are growing again (as of August).
5. The pandemic is putting downward pressure on consumer prices in France.
Source: Pantheon Macroeconomics
6. The ECB expects inflation to rebound next year.
Source: ECB Read full article
7. The Dutch unemployment rate appears to have peaked (see story).
Europe
1. Car registrations remain at the low end of the 5-year range.
2. Sweden’s unemployment rate is gradually easing.
3. Below is the latest COVID map.
Source: @financialtimes Read full article
4. Here is the International Tax Competitiveness Index.
Source: @TaxFoundation
5. Financial irregularities?
Source: Statista
Asia – Pacific
1. Japan’s household savings remain elevated.
Source: Barclays Research
2. Singapore’s exports have been strong.
3. Taiwan’s central bank continues to weaken the Taiwan dollar.
Source: @TheTerminal, Bloomberg Finance L.P.
4. Asia’s high-dividend stocks have underperformed other strategies.
Source: @business Read full article
5. We have a golden cross in Australia’s S&P/ASX 200 (a bullish sign).
6. New Zealand’s manufacturing sector remains in expansion mode.
China
1. BCA Research forecasts substantial rate increases next year.
Source: BCA Research
2. Rising interest rates and bond yields have been supportive of Chinese stocks.
Source: BCA Research
3. China’s push for full autonomy in semiconductors has accelerated this year.
Source: @adam_tooze, @FT Read full article
Emerging Markets
1. Brazil’s economic recovery slowed in August.
2. Colombia’s manufacturing and retail sales recovery stalled.
3. Peru, which has one of the highest COVID death rates globally, is struggling with high unemployment.
Source: @MaxCRoser Read full article
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4. India’s government announced a large new borrowing program, which is putting pressure on bonds.
Source: Reuters Read full article
Separately, India’s exports are growing again.
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5. Russia’s industrial production remains soft relative to pre-crisis levels.
Commodities
1. Silver is holding support.
Source: barchart.com
2. Drought in parts of the US is getting worse.
Source: The New York Times Read full article
Source: NOAA
Robust demand from China and the drought conditions in the US have been supporting grain prices.
Energy
1. US petroleum products inventories declined sharply last week.
2. US gasoline demand is back at the lower end of the 7-year range.
3. China appears to have used this crisis (and low oil prices) to build up its oil inventories.
Source: Gavekal
China’s renewable energy production has taken off.
Source: Alpine Macro
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4. Energy may be the only major industry that is starved of capital, according to Gavekal.
Source: Gavekal
Equities
1. Higher Treasury yields should benefit value stocks.
Source: SG Cross-Asset Research, @jessefelder, @AndrewLapthorne Read full article
2. Last month’s jump in producer prices is signaling an improvement in earnings (especially for industrials).
Source: @jsblokland
3. Homebuilders’ shares keep widening their outperformance vs. the S&P 500.
4. Call option activity in stocks popular with retail investors remains elevated. Here is the trend for Tesla.
Source: @SarahPonczek
Credit
1. US corporate high-yield spreads have diverged from bankruptcy filings.
Source: Quill Intelligence
2. Fallen angel volumes (investment-grade corporate debt downgraded to junk) are now higher than in 2009.
Source: Quill Intelligence
3. Private credit fundraising slowed last quarter.
Source: @markets Read full article
Global Developments
1. Let’s start with the contributions to the global fiscal deficit.
Source: @WSJ Read full article
2. Economies with the largest GDP declines this year should see a bigger bounce in 2021.
Source: Oxford Economics
3. Global manufacturing activity is accelerating.
Source: @ISABELNET_SA, @BofAML
4. So far, the massive expansion in the money supply has not resulted in much higher inflation.
Source: Alpine Macro
5. Finally, this chart shows lending growth for companies and households in the first half of 2020.
Source: @WSJ Read full article
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Food for Thought
1. Declines in cancer screening during the pandemic:
Source: @WSJ Read full article
2. Global poverty rate forecasts (2 charts):
Source: @adam_tooze, @WorldBank Read full article
Source: @WSJ Read full article
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3. US homeownership rates:
Source: @jeffsparshott, @WSJ
4. Fewer teens taking summer jobs:
Source: Brookings Economic Studies
5. Changes in college enrollment this year:
Source: @WSJ Read full article
6. EV battery demand:
Source: @WSJ Read full article
7. Poll results for Americans 65 and older:
Source: Morning Consult Read full article
8. North Korea’s ballistic missile launches:
Source: @financialtimes Read full article
9. Euro banknotes were designed to have “fictional” European-style bridges to make sure they don’t favor a particular country. The Dutch town of Spijkenisse went ahead and built real bridges that look like those on the notes.
Source: @page_eco
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Have a great weekend!