80 thousand daily new US infections by Election Day?

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  


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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  


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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).
 


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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  


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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.
 


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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  


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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.
 


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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.
 


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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   


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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  


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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  


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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!


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