The Daily Shot: 10-Nov-20
• Equities
• Credit
• Rates
• Cryptocurrency
• Commodities
• Emerging Markets
• China
• Asia – Pacific
• Japan
• The Eurozone
• Europe
• Canada
• The United States
• Food for Thought
Equities
1. Stocks rallied sharply on the US election outcome and vaccine news.
Source: Reuters Read full article
Treasury yields jumped, and gold prices declined.
The Dow surged nearly 3%, boosted by financials and energy.
However, the stock market gave up some of the gains amid concerns about the lack of fiscal stimulus.
Will a divided government pass another stimulus package as households exhaust their savings? If not, consumption will likely decline further.
Source: TS Lombard
Some of the sectors that have been lagging this year soared on hopes that the COVID battle will be won soon. Here is the percentage of the S&P 500 members that are above their 200-day moving average.
It’s worth noting that significant challenges remain before a vaccine is available broadly.
Source: Reuters Read full article
——————–
2. Let’s take a look at some equity factor moves.
• Smaller shares outperformed on Monday. Here is the equal-weight S&P 500 as well as the Russell 2000 index.
The one-day equal-weight index outperformance was the largest on record.
Source: @SarahPonczek
• High-dividend stocks soared.
Many of these shares are cheap relative to the broader market.
Source: BofA Global Research, @WallStJesus
• Value outperformed growth.
This chart shows Goldman’s “long value vs. secular growth” index (daily changes).
• Momentum stocks struggled on Monday (2 charts). Many of these firms benefitted from lockdowns earlier this year.
Source: @markets Read full article
——————–
3. Next, we have some sector charts.
• Banks: (hurt by COVID this year):
• Housing (boosted by COVID in 2020):
This chart shows banks vs. homebuilders year-to-date.
——————–
• Urban office REIT:
• Airlines:
• Aerospace:
• Travel stocks:
• Pharma:
• Consumer Staples:
• Consumer Discretionary:
• Energy:
• Tech and communication services (an effective COVID vaccine is not helpful for Netflix):
• Negative sentiment scores for Q3 earnings calls:
Source: BofA Global Research, @WallStJesus
• Economically sensitive sectors have been showing earnings strength relative to defensive areas.
Source: SunTrust Private Wealth Management
——————–
4. Lofty valuations remain a concern.
Source: @jessefelder Read full article
5. Retail investors’ stock picks continue to outperform.
6. When a US incumbent party loses, markets tend to sell off ahead of the election and rebound after.
Source: SunTrust Private Wealth Management
7. Here is a look at current dividend yields across developed economies.
Source: MarketDesk Research
Credit
1. US junk bond yields hit a record low.
Source: MarketDesk Research
——————–
2. US business loan balances continue to shrink as companies pay down their revolving facilities and refinance loans in the capital markets.
3. Investors have been buying up ETFs focused on mortgage-backed securities.
Source: Arbor Research & Trading
Rates
1. Treasury auction sizes will continue to increase at their current monthly rate, according to FHN Financial.
Source: FHN Financial
2. FHN Financial estimates next year’s borrowing needs (adjusted for reductions in the cash balance) at $3.15 trillion.
Source: FHN Financial
3. The Fed’s official communications have a renewed focus on short-term developments within the economy.
Source: Arbor Research & Trading
Cryptocurrency
Bitcoin did not manage to break resistance at $16k.
Source: @BloombergQuint Read full article
Commodities
1. The gold-to-silver ratio is breaking down again.
Source: @TaviCosta
2. US natural gas futures continue to weaken amid warmer weather.
Emerging Markets
1. The Turkish lira bounced sharply after the central bank governor was removed, and the finance minister resigned. But the rally appears to be short-lived.
2. EM currencies rallied sharply in recent days (below is the MSCI EM Currency Index).
Source: @lisaabramowicz1
3. Indonesia’s consumer sentiment remains depressed.
4. The Philippine economic recovery will take a while.
5. Mexico’s core CPI is holding below 4%.
Separately, this chart shows AMLO’s approval ratings.
Source: Barclays Research
——————–
6. Chile’s vehicle sales have fully recovered.
7. EM sovereign debt is outperforming amid strong inflows over the past month.
Source: MarketDesk Research
8. The tourism sector was crushed this year across EM economies.
Source: IIF
China
1. Consumer inflation tumbled last month …
… driven by food prices. Pork prices are now below last year’s levels.
The core CPI has been stable over the past couple of months.
——————–
2. Producer prices are still depressed.
3. The latest five-year plan reflects a shift in key strategies, focusing on areas such as security and technology.
Source: BCA Research
4. High-tech exports are rising.
Source: BCA Research
5. This chart shows China’s imports from the US vs. ASEAN.
Source: ANZ Research
Asia – Pacific
1. Taiwan’s exports surprised to the upside.
2. New Zealand’s credit/debit card spending remains robust.
Separately, this chart shows the RBNZ’s ownership of government bonds (vs. BoJ and the Fed).
Source: @markets Read full article
——————–
3. Australian and New Zealand bond yields are up sharply.
4. Australian consumer and business confidence indicators are recovering rapidly.
Japan
1. The leading index is now above pre-COVID levels (as of September).
2. The Nikkei topped 25,000.
Source: @DavidInglesTV
3. Domestic companies continue to be very sensitive to changes in USD/JPY.
Source: Variant Perception
4. Here are some GDP scenarios for Japan (from Barclays Research).
Source: Barclays Research
The Eurozone
1. The Sentix investor confidence indicator shows some resilience in the face of lockdowns.
2. The stock market rose sharply on Monday.
3. French economic activity won’t decline as much as it did in April.
Source: @markets Read full article
French industrial sentiment is holding up remarkably well.
——————–
4. Germany’s trade surplus jumped, boosted by weak imports (2nd chart).
——————–
5. Below is the share of employees in “lockdown” sectors.
Source: ECB Read full article
6. Here are the trends in banks’ net interest income over the past decade.
Source: @fwred
Europe
1. This chart shows the UK’s consumer confidence index and its components.
Source: TS Lombard
2. Norway’s factory output remains depressed.
3. Here are the Q4 GDP forecasts from Oxford Economics.
Source: Oxford Economics
Canada
USD/CAD is holding support.
Source: @TheTerminal, Bloomberg Finance L.P.
The United States
1. Employment at public schools and universities shows no signs of a rebound.
2. State and local infrastructure spending has declined over the past 60 years.
Source: Quill Intelligence
Source: Quill Intelligence
Most funding for infrastructure is provided by state and local governments.
Source: Quill Intelligence
——————–
3. Commercial truck sales are catching up to the broad recovery in auto sales.
Source: Variant Perception
4. Here are two updates on household credit.
• Mortgage delinquencies remain elevated relative to last year.
Source: CoreLogic
• Growth in student debt slowed over the past couple of years (the slowdown accelerated in 2020).
——————–
5. Many small businesses can’t pay their rent.
Source: Alignable
6. Next, we have some high-frequency indicators.
• Restaurant reservations:
Source: ANZ Research
• The ANZ recovery tracker:
Source: ANZ Research
• Economic activity vs. COVID cases:
Source: Deutsche Bank Research
• Hospitalizations by region:
Source: Barclays Research
• Will COVID-related deaths reach 2,000 per day?
Source: Princeton Energy Advisors
——————–
7. Consumer confidence among Republicans took a hit in recent days.
Source: Morning Consult
8. US financial conditions have eased significantly, helped by the stock market rally, a weak dollar, and tighter credit spreads.
Source: Goldman Sachs
9. Finally, this chart shows the status of the various COVID vaccine efforts.
Source: @business Read full article
——————–
Food for Thought
1. Favorability ratings of the US and China:
Source: ANZ Research
2. COVID fatalities vs. other causes of death:
Source: Deutsche Bank Research
3. Pollution-related deaths:
Source: Statista
4. US population growth:
Source: Oxford Economics
5. House seats gained/lost by president’s party in the first election:
Source: Mehlman Castagnetti Rosen & Thomas
6. Most-followed Twitter accounts:
Source: @simongerman600 Read full article
7. 5G speeds:
Source: Statista
8. Electric vehicles globally:
Source: Statista
9. US imports of Christmas tree lights:
Source: Yahoo Finance, @adam_tooze Read full article
——————–